    [Senate Hearing 106-367]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 106-367

     DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2000

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

                                    HEARINGS

                                    before a

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                           ONE HUNDRED SIXTH CONGRESS

                                 FIRST SESSION

                                       on

                               H.R. 2684/S. 1596

     AN ACT MAKING APPROPRIATIONS FOR THE DEPARTMENTS OF VETERANS AFFAIRS
    AND HOUSING AND URBAN DEVELOPMENT, AND FOR SUNDRY INDEPENDENT AGENCIES,
      BOARDS, COMMISSIONS, CORPORATIONS, AND OFFICES FOR THE FISCAL YEAR
               ENDING SEPTEMBER 30, 2000, AND FOR OTHER PURPOSES

                                   __________

            Corporation for National and Community Service
          Department of Housing and Urban Development
          Department of the Treasury
          Department of Veterans Affairs
          Environmental Protection Agency
          Executive Office of the President
          Federal Emergency Management Agency
          National Aeronautics and Space Administration
          National Science Foundation
          Nondepartmental witnesses

                                   __________

             Printed for the use of the Committee on Appropriations

     Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                     senate

                                     ______

                         U.S. GOVERNMENT PRINTING OFFICE
    54-239 CC                    WASHINGTON : 2000
    _______________________________________________________________________
                For sale by the U.S. Government Printing Office
    Superintendent of Documents, Congressional Sales Office, Washington, DC
                                     20402
                               ISBN 0-16-060224-6

                          COMMITTEE ON APPROPRIATIONS

                         TED STEVENS, Alaska, Chairman
    THAD COCHRAN, Mississippi            ROBERT C. BYRD, West Virginia
    ARLEN SPECTER, Pennsylvania          DANIEL K. INOUYE, Hawaii
    PETE V. DOMENICI, New Mexico         ERNEST F. HOLLINGS, South Carolina
    CHRISTOPHER S. BOND, Missouri        PATRICK J. LEAHY, Vermont
    SLADE GORTON, Washington             FRANK R. LAUTENBERG, New Jersey
    MITCH McCONNELL, Kentucky            TOM HARKIN, Iowa
    CONRAD BURNS, Montana                BARBARA A. MIKULSKI, Maryland
    RICHARD C. SHELBY, Alabama           HARRY REID, Nevada
    JUDD GREGG, New Hampshire            HERB KOHL, Wisconsin
    ROBERT F. BENNETT, Utah              PATTY MURRAY, Washington
    BEN NIGHTHORSE CAMPBELL, Colorado    BYRON DORGAN, North Dakota
    LARRY CRAIG, Idaho                   DIANE FEINSTEIN, California
    KAY BAILEY HUTCHISON, Texas          RICHARD J. DURBIN, Illinois
    JON KYL, Arizona
                       Steven J. Cortese, Staff Director
                     Lisa Sutherland, Deputy Staff Director
                   James H. English, Minority Staff Director
                                     ------

               Subcommittee on VA, HUD, and Independent Agencies

                    CHRISTOPHER S. BOND, Missouri, Chairman
    CONRAD BURNS, Montana                BARBARA A. MIKULSKI, Maryland
    RICHARD C. SHELBY, Alabama           PATRICK J. LEAHY, Vermont
    LARRY CRAIG, Idaho                   FRANK R. LAUTENBERG, New Jersey
    KAY BAILEY HUTCHISON, Texas          TOM HARKIN, Iowa
    JON KYL, Arizona                     ROBERT C. BYRD, West Virginia
                                           (ex officio)

                               Professional Staff

                                  Jon Kamarck
                              Carolyn E. Apostolou
                                    Cheh Kim

                            Paul Carliner (Minority)

                             Administrative Support

                                 Joseph Norrell
                             Liz Blevins (Minority)

                                C O N T E N T S

                                  ----------

                            Thursday, March 4, 1999

                                                                       Page

    Federal Emergency Management Agency..............................     1

                            Thursday, March 11, 1999

    Corporation for National and Community Service...................    77
    Department of the Treasury: Community Development Financial
      Institutions Fund..............................................   181

                            Thursday, March 18, 1999

    National Aeronautics and Space Administration....................   197

                            Tuesday, March 23, 1999

    Executive Office of the President: Office of Science and
      Technology Policy..............................................   307
    National Science Foundation......................................   307

                            Thursday, April 15, 1999

    Department of Veterans Affairs...................................   375

                            Thursday, April 22, 1999

    Department of Housing and Urban Development......................   475

                            Thursday, April 29, 1999

    Environmental Protection Agency..................................   609
    Executive Office of the President: Council on Environmental
      Quality and Office of Environmental Quality....................   839

        Material Submitted by Agencies Not Appearing For Formal Hearings

    Independent Agencies:
        Department of Health and Human Services......................   865
        American Battle Monuments Commission.........................   870
        Chemical Safety and Hazard Investigation Board...............   873
        Consumer Product Safety Commission...........................   880
        Court of Appeals for Veterans Claims.........................   883
        Department of Defense--Civil: Cemeterial Expenses, Army......   886
        Federal Deposit Insurance Corporation: Office of the
          Inspector General..........................................   894
        National Credit Union Administration.........................   895
        Neighborhood Reinvestment Corporation........................   897
        Selective Service System.....................................   902
        Community Development Financial Institutions.................   905
    Nondepartmental witnesses:
        Department of Veterans Affairs...............................   907
        Department of Housing and Urban Development..................   934
        Environmental Protection Agency..............................   964
        Federal Emergency Management Agency..........................  1039
        National Aeronautics and Space Administration................  1054
        National Science Foundation..................................  1060

     DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2000

                                  ----------

                            THURSDAY, MARCH 4, 1999

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:33 a.m., in room SD-192, Dirksen
    Senate Office Building, Christopher S. Bond (chairman)
    presiding.
        Present: Senators Bond, Stevens, and Mikulski.

                      FEDERAL EMERGENCY MANAGEMENT AGENCY

    STATEMENT OF JAMES L. WITT, DIRECTOR
    ACCOMPANIED BY:
            MIKE WALKER, DEPUTY DIRECTOR
            GARY JOHNSON, CHIEF FINANCIAL OFFICER
            CARRYE BROWN, ADMINISTRATOR, U.S. FIRE ADMINISTRATION

                OPENING STATEMENT OF SENATOR CHRISTOPHER S. BOND

        Senator Bond. Good morning. The subcommittee will come to
    order. Today we begin the deliberation of the fiscal year 2000
    budget for the VA, HUD, and Independent Agencies Subcommittee.
    This morning we will hear testimony on the Federal Emergency
    Management Agency's request. We welcome Director James Lee
    Witt; FEMA's new Deputy Director and former Acting Secretary of
    the Army, Mike Walker; and Gary Johnson, FEMA's Chief Financial
    Officer.
        The good news this morning is that we have not had many
    large-scale disaster events this year. Unlike last year when
    FEMA personnel were spread across the country responding to El
    Nino-related weather events, this year has been relatively
    quiet. Disaster cost projections to date fall below the 5-year
    historical average and we do not anticipate the need for a
    supplemental for the disaster relief fund, reversing a long-
    term trend. As of the end of January, FEMA had $2.3 billion in
    unobligated disaster relief funds.
        The bad news is that once again we face a very tough battle
    in the Appropriations Committee. The budget caps put in place
    by the 1997 Balanced Budget Act are extremely tight. Spending
    available for discretionary programs overall is $30 billion
    below the current year level. Unfortunately, the President's
    budget busted those caps by about $18 billion by assuming
    offsets from tobacco revenues, Superfund taxes, and other
    gimmicks which frankly have little or no chance of flying
    whatsoever. This makes our job harder because it raises
    expectations that we simply will not be able to fulfill.
        Within the VA-HUD Subcommittee, we have identified several
    areas of shortfall in the President's request. The largest such
    shortfall is within the VA medical care appropriation request
    which would be frozen at current levels, despite the fact that
    VA has identified many new requirements, such as treating
    patients with hepatitis C. VA estimates are that this problem
    alone will cost at least $500 million next year. Once again we
    will be forced to make some very difficult trade-offs in order
    to accommodate the dire needs.
        I congratulate you, Director Witt, at your success in the
    internal budget process at OMB. It is always nice to see who is
    a winner in that internal battle, and your star must be at the
    peak. While the VA-HUD Subcommittee portfolio would decline
    $1.7 billion overall under the President's budget request, OMB
    has smiled upon you and FEMA's budget would increase $84
    million, or 10 percent over the current year, for a total of
    $923 million. Do not count on that coming through the full
    process necessarily.
        FEMA proposes several new programs, such as a new $12
    million repetitive loss initiative aimed at eliminating those
    properties with significant repeat claims posing the biggest
    drain on the flood insurance fund, and a new flood map
    modernization fund to update and digitize FEMA flood maps.
    These programs, accompanied by some new requirements on
    policyholders currently under consideration, would help put the
    flood insurance program on a more sound footing. And I agree
    that is an urgent need. Nevertheless, I have grave reservations
    about a FEMA proposal for a mortgage fee to finance those
    requirements.
        There are also significant program enhancements proposed in
    the budget, such as the $25 million increase for the emergency
    food and shelter program, the $13 million increase to augment
    various activities at the U.S. Fire Administration, the $13
    million increase for anti-terrorism activities, which my
    ranking member and I have supported very strongly in the past,
    and additional funding for State preparedness activities. I
    also recognize and express my appreciation that FEMA's budget
    includes full funding of $5.9 million for the dam safety
    program, an increase of $2 million over the current level.
        Let me be quite clear. These are all critical activities
    which we support. However, the constraints imposed by the
    budget caps will make these demands quite difficult to fund
    fully. We will have many questions on each of these funding
    proposals as we seek to ascertain the priorities.
        In addition to FEMA's request for $923 million in
    discretionary appropriations, FEMA proposes $2.48 billion in
    off-budget disaster relief contingency funds. It is, frankly,
    very disappointing to me that once again the administration has
    chosen not to budget for these anticipated requirements under
    the budget caps. We know we will have disasters next year, and
    we know that the funding requirement will be several billion
    dollars. That is no mystery. We should budget for those
    requirements up front.
        Among the items not approved by OMB in FEMA's original
    budget proposal was a new mitigation grant program for
    universities which totaled $175 million in your proposal. OMB
    approved instead a $1 million study of such a program. I have
    already heard from a very important constituent in Missouri,
    Washington University in St. Louis, about their support for
    such an initiative. While clearly it is in the Nation's
    interest to protect our significant investment in university
    research, it would be tremendously difficult for us to find the
    funds for such a massive new spending program.
        There are many other areas we have a particular interest in
    this morning. At the top of the list is the Y2K computer
    problem that my ranking member will be addressing. It is my
    understanding that the National Association of Counties
    completed a survey in December which found that roughly half of
    the 500 counties which participated in the survey do not have a
    county-wide plan for addressing Y2K conversion issues. Almost
    two-thirds had not yet completed the assessment phase of their
    Y2K work. That is not encouraging, and that shows a potential
    problem.
        FEMA's role, relative to Y2K, is consequence management,
    and the agency received over $7 million through OMB from the
    Y2K contingency funds. We look forward to hearing what FEMA is
    doing to prepare for and minimize Y2K-related emergencies,
    particularly in the emergency services sector.
        We also look forward to hearing what FEMA is doing to
    improve the level of preparedness at the State and local level
    for acts of terrorism. FEMA is one of many agencies involved in
    this effort, perhaps too many. Unfortunately, my concern is
    there does not appear to be a strategic approach to this
    critical issue and that the roles of FEMA, DOD, and the
    Department of Justice remain confusing.
        We do not have a good handle on what remains to be done to
    ensure the readiness not just of the major metropolitan areas,
    but the country at large. In testimony before the House
    Government Reform and Oversight Committee last year, GAO raised
    many concerns about the Nation's domestic preparedness program
    for terrorism and it is urgent these issues be addressed.
        We also remain concerned about the disaster relief program.
    You and I have talked over the years about escalating costs of
    disaster relief and the need to tighten up this program. Since
    1989 we have spent $25 billion on FEMA disaster relief and
    there remains more than $2.6 billion in anticipated costs
    associated with open disasters.
        Mr. Witt, I commend you for a number of the initiatives you
    have implemented to improve the program, such as reengineering
    the public assistance program and the concerted effort to close
    out old disasters, which has returned hundreds of millions of
    dollars to the Disaster Relief Fund. This effort, spearheaded
    by Mr. Johnson, is in large part our reason for not needing to
    provide additional supplemental appropriations for FEMA in
    fiscal year 1999, and we acknowledge your good work in this
    area.
        We also recognize that you have proposed criteria for
    declaring disasters. I appreciate your effort here,
    particularly in the face of strong resistance in various
    quarters. Unfortunately, I am concerned that the criteria are
    no more stringent than the factors currently used to consider
    whether a disaster should be declared and do not take into
    consideration a State's economic health or the ability to raise
    public revenues to cover the cost of a disaster.
        Much remains to be done to eliminate the loopholes and
    streamline the program, both through the regulatory process and
    through legislation. We understand you plan to go forward with
    a requirement that public facilities be insured at least to 80
    percent of their replacement value. I would urge you to move
    expeditiously with that rulemaking which should result in
    savings to the Disaster Relief Fund.
        You may recall that in last year's Senate committee report,
    we asked for a report, now due within a few weeks, of FEMA's
    effort to propose through regulation administrative changes to
    reduce disaster relief costs. We hope we can see that report
    shortly.
        With respect to the Stafford Act legislation, FEMA just
    yesterday submitted another legislative proposal to OMB which
    includes several important proposals such as authority to
    reduce the Federal share of public assistance for projects
    which have incurred multiple losses. And I appreciate your
    diligence in again proposing legislative improvements.
        However, the package does not contain many of the proposals
    that were in the July 1997 set of proposed amendments and we
    need to understand why. Also, we urge you to work aggressively
    with the committees of jurisdiction to move legislation that
    would tighten up the Stafford Act, further streamline the
    program, and reduce disaster relief expenditures.
        With respect to mitigation activities, there are a number
    of concerns we have and some questions, concerns about the way
    the 404 hazard mitigation grant program is working, whether
    adequate cost-benefit procedures are being utilized, and
    whether these dollars are being put to the best uses. We have
    asked GAO to provide testimony for the record today, which I
    have reviewed and which will be inserted in the record
    following my opening statement, without objection, and ask that
    FEMA consider and respond to the issues raised by GAO.
        Last year we expressed concern about the need for improved
    interagency coordination on disaster preparedness, response,
    recovery, and mitigation activities. We continue to have strong
    concerns in this area. It is my understanding that despite
    language in the appropriations bill for the past several years
    requiring the close involvement of FEMA and other agencies in
    the distribution of emergency HUD CDBG monies for unmet needs,
    HUD has refused to follow the law's requirements. I am
    mystified as to how the initial round of funds from the fiscal
    year 1998 supplemental were distributed.
        This afternoon the full committee will mark up an emergency
    supplemental bill, and while there will not be any funds for
    FEMA disaster relief, I have asked to transfer to a new account
    at FEMA from HUD's emergency CDBG funds unobligated balances
    totaling over $313 million. That is in direct response to our
    concerns with how HUD has handled these funds. Given your track
    record, Mr. Witt, it is my expectation that FEMA will move out
    with funds in an expeditious manner after careful consideration
    of needs, priorities, and appropriate mitigation strategies. We
    expect FEMA to follow closely the detailed legislative
    requirements we will include for allocation of the funds and to
    keep us apprised on a regular basis.
        While I am very much concerned about expanding FEMA's roles
    and responsibilities, particularly without an explicit
    authorization, there is significant demand to address so-called
    unmet needs following recent disaster events. I strongly
    believe that, along with Stafford Act proposals currently on
    the table, the authorizers should look at this issue. Early
    this week I sent a letter to the chairman of the EPW Committee
    and the subcommittee chairman, Senators Chafee and Inhofe,
    asking them to consider this issue along with other cost-saving
    and streamlining reforms.
        In report language last year, we asked FEMA to convene an
    interagency group to assess areas of duplication and overlap,
    propose the streamlining of activities, and define clearly
    areas of responsibility among agencies. This report is due
    within a few weeks, and we look forward to getting a preview of
    that effort.
        Other areas of interest include FEMA's plan to implement
    the recent Blue Ribbon Panel recommendations to improve the
    U.S. Fire Administration and FEMA's efforts to consolidate
    further the non-disaster grants that go to States and whether
    there is adequate accountability in exchange for the increased
    flexibility provided to States.
        It is now a pleasure to turn to my ranking member, Senator
    Mikulski, for any statement she may have.

                             emergency supplemental

        Senator Mikulski. Thank you, Mr. Chairman. Before I give my
    opening statement, I note that the chairman of the full
    Appropriations Committee is here. I would be happy to yield to
    him because I know he has other duties, if he wishes to give a
    statement.
        I also would like to thank the chairman of the
    Appropriations Committee as we move into the supplemental as we
    met our supplemental emergency needs. This year the VA-HUD
    Subcommittee was not raided. As you know, we have often been
    viewed as the ATM machine for emergency supplementals. This
    year that dangerous trend I think from a fiscal standpoint has
    reversed. I really thank you for doing that.
        If you wish to make a statement, recognizing your other
    obligations, I would be happy to yield to you.

                        STATEMENT OF SENATOR TED STEVENS

        Senator Stevens. Well, you are very kind. I thank you,
    Senator Mikulski. As a matter of fact, we have three
    subcommittees meeting at the same time, and I have got another
    hearing of my own. So, I do appreciate the opportunity to be
    here to greet James Lee Witt and his colleagues.
        First, let me thank you for the prompt action on setting up
    the task force for our western Alaska fish disaster. I have
    heard from many of the Eskimo families out there. They would
    not have survived the winter had you not moved as expeditiously
    as you did.
        We have one issue in Alaska that I wanted to call your
    attention to. The Corps of Engineers built the Moose Creek Dam
    upstream from North Pole, Alaska. It is not quite the North
    Pole, but it is pretty far north. It has resulted in downstream
    flooding of about 50 homes, and it has been rezoned now so
    there will be no new homes. What is needed is some modification
    of these homes to prevent the additional flooding. I would like
    to see if you would work with us on that.

                               disaster insurance

        But that leads me into another thing, Mr. Witt. I was
    fortunate enough to ride with a friend on his boat through the
    inland waterway, and as we went down from Virginia on down to
    the Carolinas and Georgia, through that wonderful country, we
    just saw repeated areas which had been hit by either floods or
    hurricanes.
        The interesting thing about that for someone who is not
    from the area is the vision of the fickleness of these
    disasters. Portions were destroyed and others not touched. It
    is just like some of the fires up our way, as the swath of fire
    comes through and destroys areas and others are left untouched.
        I really admire this new initiative of yours, talking about
    the flood plain. I would hope that perhaps we could expand that
    to cover areas where we have had multiple disasters. I am
    thinking we should ask the people in the authorizing committee
    on HUD to see whether we should have Federal insurance for
    homes that are in areas that have been repeatedly subject to
    fire or flood or hurricane, and if we do, whether or not we
    should not require some specific types of protections.
        I noted along the inland waterway how many of the newer
    homes have been lifted up, some as high as 10, 12, 14 feet.
    Well, that just means those homes that were not hit last time
    are going to get it for sure the next time because they do not
    have that protection.
        It just seems to me we ought to further your initiative on
    preventive medicine in this area of disasters where we are
    spending so much of the taxpayers' money repeatedly in the same
    areas. I think this committee would be very much inclined to
    work with you and to work with the authorizing committees to
    give you even more authority. But somehow or other, between
    your agency and HUD, we ought to move out. As the chairman
    said, we have not had too many of these disasters this year.
    Maybe this is the year to move out and try to spend some money
    to prevent future disasters of the type that we have faced in
    the last few years.
        That is particularly so in the flooded areas. One fellow
    told me his place had been hit by floods three times, and he
    just rebuilt it at taxpayers' expense really in effect. So, I
    think we have to find a way to deal with this on a preventive
    basis.
        I really congratulate you for taking the initiative on
    that. What I would like to do is just broaden the horizon a
    little bit and take it beyond just the flood plain. I would be
    happy to talk to you about that another time.
        Thank you very much for your courtesy.
        Senator Bond. Thank you, Mr. Chairman. I had mentioned to
    Mr. Witt there were media articles on repeated disasters
    striking particularly along the Outer Banks. If they are
    secondary homes, I have a real question why we as taxpayers
    need to continue to rebuild them when they are built in areas
    which are subject to hurricanes, flooding, and other natural
    disasters. We worked in the flood insurance reform to get
    people out and make them take certain protective steps and have
    actuarially sound insurance. Frankly, you have put your finger
    on another very serious problem.
        Senator Stevens. Well, I spent part of my time in
    California, and I remember fires when I was a boy in the Santa
    Monica Canyon and slides and those homes were all rebuilt. I
    guess they have been rebuilt 8 or 10 times since then. I really
    think we have to have greater protection for the taxpayers.
    Most of those are, in fact, recreation homes that we are
    talking about, second homes. But there has to be some way to be
    fair about it and at the same time start preventing future
    losses to the taxpayers.
        Thank you very much.

                                  y2k hearing

        Senator Mikulski. Before the chairman goes, if I just might
    say Senator Bond and I will be talking about Y2K and counter-
    terrorism here. One of the things we were discussing is perhaps
    the need for a joint hearing between Defense, VA-HUD with FEMA,
    HHS, and CJS, and we would like to discuss this with you.
        Senator Stevens. You are talking about the full committee.
        Senator Mikulski. Let us do the full committee.
        Senator Stevens. Anytime you say.
        Senator Mikulski. Because we have got a lot of money going
    out there and some wisely focused and some, quite frankly, like
    the Keystone Cops.
        Senator Stevens. I will be happy to do that anytime and be
    sure we get the other chairmen and ranking members from those
    subcommittees involved.
        Senator Mikulski. Well, Senator Gregg has been deeply
    involved.
        Senator Stevens. Good. We will plan it. Thank you very
    much.
        Senator Bond. Senator Mikulski.

                     STATEMENT OF SENATOR BARBARA MIKULSKI

        Senator Mikulski. Thank you very much, Mr. Chairman.
        Once again, I am happy to join with you at really our first
    hearing of VA-HUD for fiscal year 2000. It is hard to believe
    that we are actually going to do a fiscal year for the new
    century and the new millennium. So, this really has to be I
    think a well-focused appropriations that looks not only at the
    immediate needs of our constituencies, but also the long-range
    needs of the Nation, which is why it is so important we do
    this.
        In a post-impeachment environment, everybody is talking
    about the new-found comity and bipartisanship, and we have been
    doing that for a long time together, and I look forward to our
    continued relationship to move the bill. Though you and I would
    disagree with President Clinton's agenda and President
    Clinton's budgetary arithmetic, I do think we do agree on so
    many things in this bill, and I believe even now with the
    issues that you have raised in your opening statement, I find
    myself so much in alignment with the questions that you have
    raised. So, I look forward to working with you.
        Mr. Witt, I want to thank you and the entire FEMA staff for
    their continued dedicated response to the various disasters
    within our Nation. FEMA has been absolutely upgraded, and I
    think we all know that if a Governor calls or disaster hits,
    that FEMA will be a 911, ready to be able to respond.
        We really admire that and want to continue both the funding
    sources as well as the culture of FEMA that you have
    established, but we now also want to institutionalize this so
    it is not based on one person's response or one person's
    directive. We believe in this appropriation, we have a great
    opportunity.

                              disaster prevention

        First, let me comment on the disaster aspects. I come from
    a background, as you know, of social work, of community
    organization, organizing people for self-help. I have a great
    passion for the field of public health, and what they say in
    public health is the best action is always prevention. In the
    field of public health, they do an audit of what people are
    most likely to have happen, what diseases will most attack
    children or the elderly, and they develop an immunization
    strategy. And this is what I am looking for in the pre-disaster
    mitigation effort, which is essentially almost like using the
    tools of epidemiology, where are the problems, what is the
    concrete, specific data, and then where do we need to immunize
    ourselves so we are not hit by a tragedy.
        So, therefore, in looking at the pre-disaster mitigation,
    we do not want to create a big program. We do not want it to be
    pork barrel. We do not want a new kind of local entitlement
    program where we are either FEMA's CDBG or FEMA revenue sharing
    by proxy. I think we are clear on that.
        What we are looking forward to do is how we can, in an
    organized, systematic way, identify those communities that are
    most at risk in terms of loss of life and loss of property to
    be able to deal with that.
        I understand from a preliminary look at data there are
    76,000 buildings that have repetitive losses, more than two
    loss claims in 10 years and they have cost the Federal
    Government $2.8 billion.
        We look forward to hearing your action plan based on that
    prevention model that does not create again a whole new fiscal
    black hole where suddenly--and Senator Bond will know this --
    there will be what we will call Project Impact creep so that
    something 100 miles away from a flood plain suddenly somebody
    at a local level is trying to put into it. So, we look forward
    to that.
        We also look forward to the issue that will not get a lot
    of attention but the necessary mapping of flood plains because
    that again is an important tool to do the prevention strategy.
    We know our colleague in State, Justice, Commerce is going to
    be looking at the same issue for NOAA and coastal plains, but
    you would have rivers and other aspects. So, we look forward to
    supporting you on that.
        Also in terms of the emergency shelter grants, we want to
    again work with you because we know that the emergency shelter
    grants, particularly working through faith-based groups like
    Catholic Charities or nonprofits, that we have really gotten
    out and met compelling human need.
        In the appropriations markup this afternoon, I support
    Senator Bond's effort to see that you have the emergency CDBG.
    It is going to raise a lot of hackles, but we have got to be
    able to respond. I do not want a Maine in Maryland.

                       y2k and counter-terrorism efforts

        This takes me then to the new issues. First, I am very
    concerned about the issue of Y2K and also about the issue
    around counter-terrorism. I will elaborate on those in my
    questions, but I think we have got to be right and clear on our
    response on Y2K as a building block to be ready for counter-
    terrorism response. I understand from my State-Justice hearing
    that Justice is responsible for crisis management. You are
    responsible for consequence management, but the consequence
    management could be the same. Therefore, we will be looking
    forward to hearing this.
        We want to compliment Senators Bennett and Dodd for their
    work on the Y2K, but now that we have done the analysis, I do
    not want to see States being in paralysis over Y2K. Sometimes
    we analyze, then we get paralyzed, and I do not want that. So,
    I am going to be asking you questions on Y2K because, quite
    frankly, I am very concerned about power outages, the failure
    of people to have access to money, food, medicine, and then
    panic occurring resulting in civil unrest.
        The other is I am concerned about pre-panic because the
    talk shows could take over and hype it. We are already seeing
    the concern about food, bottled water. Some people are buying
    gold. Our colleague, Senator Frist, talked about an elderly
    citizen who got so jazzed by a radio show, he took $30,000 out
    so that he could have it at home in the anticipation of New
    Years Eve only to be robbed. When I talk about our prevention
    strategy, part of it is preventing a breakdown of services to
    people, not only your services, but the basic services. But we
    also need to have our strategies so that we do not have panic
    and pre-panic.
        Then that, of course, will take us to the terrorism
    response. We will get into questions.

                      report on the national fire academy

        Then I want to just comment quickly about the Fire Academy.
    I read that report. First of all, I would like to compliment
    you on your leadership in commissioning that report. That Fire
    Academy is located in Maryland. It was really Senator Mathias,
    my predecessor, who was an appropriator, who helped do that.
        Now, I want that Fire Academy to be a world class Fire
    Academy that meets not only the needs of our Nation, but they
    want to come from around the world to learn best practices for
    really being able to respond. And those fire fighters are first
    responders.
        When I read that report that you had to have a report to
    tell them how to talk with each other, it bothered me. And then
    the fact that they had no relationship to the fire fighting
    community really escalated my concern. And last, but not at all
    least, they had no consciousness or awareness about these new
    threats to the security and stability of our country. I found
    it deeply and profoundly troubling. I would like to pursue that
    with you and hear your action plan so that we can get it right.
        So, that is kind of my framework of kind of how to proceed
    with you. Thank you again for your hard work. Obviously, you
    have got a plan here that wants to be a step ahead of the
    problem, whether it is helping the first responders be ready to
    respond or preventing the loss of life and property.
        Mr. Chairman, I am ready to go to questions, and thank you
    very much.
        Senator Bond. Thank you very much, Senator Mikulski. I
    thank you for your kind words about our being in agreement on
    so many issues. I assure you it is because I have learned many
    of these issues and the questions from you. That is why I
    appreciate so much your service and leadership on this
    committee.
        Well, Mr. Witt, you have now got a pretty good idea of our
    concerns. Maybe it is appropriate we turn to you and hear what
    you have to say. So, thank you for joining us.

                           statement of james l. witt

        Mr. Witt. Thank you and good morning, Mr. Chairman, and
    good morning, Senator Mikulski.
        I really do appreciate the opportunity to be here today at
    this subcommittee hearing to present our budget proposal for
    fiscal year 2000. I really, truly want to thank your staff for
    the work that they have done with us and the support that they
    and you have given us. It truly has made a difference for us.
        We are proud of our work. We are proud of the FEMA
    employees and what they have done, and they continue to work
    very hard and are very dedicated.
        My statement this morning is going to be very brief so that
    we can get to the questions.
        We have made improvements not only in the delivery of
    disaster services, but improvements in the management and
    accountability of FEMA's programs. This has made a huge
    difference for us and the States and local emergency
    management. I am particularly pleased to note that our
    Inspector General has completed the review of FEMA's financial
    statements, and has rendered an unqualified opinion on all of
    our financial statements, which we are very proud of. Much of
    the credit goes to Gary Johnson and his staff for what they
    have done. I thank them for that and they have done a great job
    and have worked very hard on these statements.
        Gary Johnson is here with me today, as you stated, Mr.
    Chairman, and our Deputy, Mike Walker, my partner in FEMA.
    Also, I want you to meet the Fire Chief from Farmington Hills,
    Michigan, Rich Marinucci, who will be working with us for the
    next several months. Rich, do you want to raise your hand? He
    is going to be working with us on the implementation plan based
    on the Blue Ribbon Panel report. Rich is very well respected
    across all fire services, and we are honored to have him
    helping us with this. He will be working with Carrye Brown, the
    U.S. Fire Administrator, and myself to have the very best fire
    service programs that we can have.
        Mr. Chairman, this budget is not a ``disaster budget,'' we
    hope. Instead it focuses on prevention for the future. As we go
    into the year 2000 and the 21st century, I think that is
    important to stress smarter government and more community
    responsibility. I think this budget is the blueprint for the
    future, including the effective and efficient use of new
    technologies. The three fundamental principles driving this
    budget are that prevention works, that we can work even smarter
    and more efficiently, and that the communities need to be
    empowered to take personal responsibility. Instead of just
    responding to disasters we can do more in the area of
    prevention, and that is what we want to do.

                               prepared statement

        So, Mr. Chairman, we will be happy to answer your
    questions.
        [The statement follows:]

                      Prepared Statement of James L. Witt

        Good Morning Mr. Chairman, Good Morning Senator Mikulski. I
    appreciate the opportunity to appear before the Subcommittee today to
    present our budget proposal for fiscal year 2000.
        I want to thank the Members of the Subcommittee for their support
    of FEMA's programs and for all the time that the Members and staff have
    provided in reviewing our programs.
        We are very proud of our work at FEMA--not only in our successful
    delivery of disaster services but also in the improved management and
    accountability that we have brought to FEMA's programs. I am
    particularly pleased to note that our Inspector General has just
    completed his review of FEMA's Financial Statements and rendered an
    unqualified opinion.
        Much of the credit for putting our financial house in order goes to
    Gary Johnson, my Chief Financial Officer, who is with me today. I'm
    also pleased to be accompanied by the rest of my senior staff from
    FEMA.
        One member of my staff who this Subcommittee hasn't met before is
    my new Deputy, Mike Walker. You may know Mike from his work as a Deputy
    Secretary of the Army and prior to that for his work in the Senate on
    Appropriations. We are very pleased to have Mike as a part of our team.
        Also joining us for the next several months is Chief Rich Marinucci
    from Farmington Hills, Michigan. Rich will be working with Carrye
    Brown, Administrator of the U.S. Fire Administration, to implement some
    of the changes recommended by our Blue Ribbon Panel.
        This is a strong and dedicated group and I am happy to have them
    working with me. It is a team that, with the support of the
    Administration and the Congress, has made America and Americans much
    safer. So much of what we have done in changing the face of emergency
    management could not have been accomplished without the help of
    Congress. In our visit today, I would like to share with the members of
    this subcommittee examples of how Congress has enabled FEMA to improve
    our programs and the manner in which we serve the public. I will also
    highlight ways in which we are asking for continued support from
    Congress to do more. I will be talking about just how far we have come,
    where I believe we need to be going, and how I propose that we get
    there.
        What I am placing before you today is not a disaster budget, but a
    prevention budget. The keys to saving lives and reducing the cost of
    disasters are prevention, smart government and community
    responsibility. We have to be willing to go after long-term savings
    that result in safer communities for years to come.
        I would not only like to demonstrate some of the successes that we
    have realized, but more importantly I would like to discuss our
    blueprint for the future. This blueprint, like all good building plans,
    has been shaped by the lessons we have learned and will be implemented
    using the most effective and efficient techniques and technologies
    available to us. The three pillars upon which we are building are the
    lessons that: prevention works; that we can work even smarter and more
    efficiently; and that communities need to be empowered to take personal
    responsibility.
        The fiscal year 2000 budget is built upon those three pillars. I
    would like to highlight some examples of how we have laid the
    foundation for these three principles already and I'd like to discuss
    how together with your help and this fiscal year 2000 budget, we will
    take FEMA and emergency management in this country to the next level.
    Instead of responding to disasters, we must prevent them instead of
    waiting to react, we must prepare NOW for the next flood, hurricane,
    fire or earthquake. We are shifting to proactive prevention.
        In this budget we are asking that the Administration and Congress
    invest new resources in our mission to buyout repetitive flood loss
    properties--as a matter of prevention; to invest in mapping
    modernization--that will help FEMA, the States, and local communities
    work smarter and more efficiently; and once again to invest in pre-
    disaster mitigation--which is an investment in prevention that supports
    personal responsibility empowered at the community level. These are
    investments that will save hundreds of lives and billions of dollars
    worth of property and personal belongings, as well as help us to
    further reduce disaster costs.
        FEMA's progress during this Administration has been built on the
    pillar of prevention. I'd like to share with you a few examples
    demonstrating that prevention works. Alabama experienced severe
    flooding in March 1990 when 6,000 people lost their homes and Statewide
    damage estimates totaled more than $100 million. In June 1994, Alabama
    was hit by Tropical Storm Alberto and again devastating floods left a
    trail of flooding destruction along the Pea and Choctawhatchee Rivers.
    Small towns along these waterways like Elba and Geneva were hit
    particularly hard.
        Following the 1994 floods, Geneva officials began an aggressive
    campaign to convince homeowners in the most flood prone area of their
    community to relocate outside of the floodplain area. The community
    applied for and received funding from FEMA to acquire 54 homes.
        At this time last year a heavy storm from the Gulf of Mexico moved
    inland across the United States. Torrential rains swept through the
    region and caused serious flooding in several Alabama counties. Of the
    54 homes identified for purchase through the FEMA grant, 30 had
    actually been acquired by March 1998. FEMA's benefit-cost analysis
    determined that for an upfront investment of $672,000 to acquire the
    properties, over $1.4 million in damages and losses were avoided,
    that's $2 saved for each $1 invested--that is the hallmark of
    mitigation.
        All of the acquired structures lay deep in the floodplain, and
    would have been flooded had they remained in the flood-risk zone. If
    these buildings had been merely replaced after the 1994 flood, many
    would have been severely damaged or destroyed in 1998.
        The program that funded this property acquisition was our Hazard
    Mitigation Grant Program. This is a program that delivers the bulk of
    mitigation assistance to communities following disasters so that they
    may better survive the next storm. We may not have had the resources to
    do this without the Volkmer Amendment of 1994 that increased the
    resources available for this purpose. Unfortunately, funding for this
    program is generated following a Presidentially disaster declaration--
    after something bad has already happened to a community.
        I want to expand a program that we already have to address the
    problem of properties suffering repetitive flood losses. For fiscal
    year 2000, we are requesting that an additional $12 million be
    appropriated to the Flood Mitigation Fund which Congress established
    through the Flood Insurance Reform Act of 1994 to accelerate the
    process of removing repetitive loss homes from our flood insurance
    rolls. This appropriation would give us a total of $32 million to make
    a real impact on this recurring problem. Mike Armstrong, our Associate
    Director for Mitigation, and Jo Ann Howard, our Insurance
    Administrator, are working hard to make this happen.
        As many of you know, the National Flood Insurance Program (NFIP)
    collects fees and policy premiums from homeowners with properties in
    floodplains and some homeowners with properties outside flood plains
    who want flood insurance protection. Each year the insurance fund pays
    out more than $700 million to policyholders who have suffered losses
    due to flooding. Of this $700 million paid out annually, $200 million
    of the payouts are to policyholders who have already suffered at least
    one other loss during the past 10 years. By targeting the repetitive
    loss properties first, we can save the insurance fund these unnecessary
    annual losses and, more importantly, we can move the individuals who
    are suffering the most out of harm's way.
        Up to $20 million collected in fees from policyholders in 2000 will
    be used to buy out or elevate properties or take other sound mitigation
    measures, in every State in the nation. In fiscal year 1999, I asked
    that we concentrate as much of the $20 million as possible to buy out
    or elevate properties that have suffered multiple losses. We plan to
    continue to target the $20 million to repetitive loss properties in
    fiscal year 2000. But, this $20 million is not enough to really get at
    the heart of the problem.
        We estimate that there are over 35,000 properties with more than
    one loss. Of this amount, about 8,000 have suffered four or more losses
    over the past ten years or at least two losses that totaled more than
    the value of the entire house. To start making a significant impact on
    the repetitive loss properties, we are requesting an appropriation to
    use in concert with the $20 million generated from the flood fund.
        To eliminate the 8,000 properties with four or more losses or two
    losses totaling more than the value of the house, it would cost nearly
    $300 million. Our fiscal year 2000 budget request includes $12 million
    that would allow us to get at the 270 worst properties. Buying out the
    270 properties would save over $2.6 million in the first year and a
    projected savings exceeding $27 million over the next 15 years. That's
    a $12 million investment resulting in a $27 million savings!
        In order to further protect against flood risks, we need to
    continue to ensure that our nation's dams are safe. The National
    Inventory of Dams classifies nearly one-third of the nation's 75,000
    dams as either ``High Hazard'' or ``Significant Hazard.'' This
    classification does not mean that nearly one-third of the dams are
    likely to give way in the near future. It does mean, however, that a
    problem with any one of these dams will result in loss of life or at
    the very least, cause a significant economic impact on the surrounding
    community. To help guard against problems at our nation's dams, our
    fiscal year 2000 request fully funds the dam safety program to the
    authorized level.
        Finally, in the area of prevention, our budget also includes a $1
    million request for a pilot program designed to help make our colleges
    and universities more disaster resistant. With so many billions worth
    of Federal funding going to higher education institutions for research,
    it is very important that we help these schools mitigate against future
    disasters in order to protect the Federal government's investment.
        The second pillar of our blueprint for the future supports our
    effort to get people out of harm's way by implementing methods to work
    smarter and more efficiently. One important way of doing this is
    through better flood maps.
        We are proposing this year an aggressive map modernization effort--
    bringing our flood maps up to date and digitizing them so they will be
    both more accurate and easily available to communities. We are asking
    for a $5 million appropriation in start up funds until we can generate
    a steady stream of funding for the program.
        That steady stream of funding, and our proposal to put a $15 fee on
    all mortgage transactions to produce that funding, are issues I suspect
    we might discuss a little bit today. I welcome that discussion because
    these maps are important to ensure that the future growth and
    development in our country is done based on the best information
    available.
        As many of you know, FEMA's flood maps are used for several
    different purposes. Some of the main users are mortgage lenders who use
    them when a house is purchased to determine whether or not the property
    is within a flood plain. If a property is likely to be flooded sometime
    in the future, the lenders require the homebuyers to purchase flood
    insurance. In addition to lenders, flood plain managers, States,
    communities, surveyors and insurance companies use the maps for
    different purposes.
        Currently, we spend about $50 million annually from the flood
    insurance fund to pay to update the flood maps. Unfortunately, at this
    funding level, we have fallen behind in producing new maps. Most of the
    $50 million is actually spent amending the old maps rather than
    creating entirely new maps. Nearly our entire map inventory is on paper
    or plastic panels. We would like to be able to digitize our maps so
    that they are easier to update and transport. The Technical Mapping
    Advisory Panel, a group of map experts from government and the private
    sector, recently endorsed our map modernization plan in its annual
    report.
        Figuring out how to pay for updated maps and who should pay for
    them are difficult questions. To update all of our maps, we estimate
    that it will cost nearly $900 million and take more than seven years to
    complete. The $50 million currently spent on updating maps comes from
    insurance premiums and fees collected from homeowners who purchase
    flood insurance. This does not seem fair for the policyholders as many
    people and businesses benefit from up-to-date maps, while only flood
    insurance policy holders are paying for them.
        Because last year's subcommittee report asked us to identify a
    creative way to find funding for updating maps, we came up with the
    idea of assessing a $15 fee on every federally backed mortgage
    transaction. Proceeds from the fee will go into a Map Modernization
    fund that will allow us to start updating and modernizing our map
    inventory. By charging the fee on mortgage transactions, we will not be
    putting an additional burden on the flood insurance policy holders.
        Also, and I want to emphasize this very strongly, I want these maps
    to become the community's maps, not just FEMA's maps. I have been
    working closely with our Associate Director for Mitigation, Mike
    Armstrong, to get funding out to communities to do this mapping
    themselves. It is time that communities contribute resources to produce
    better maps instead of spending money to fight the maps at the end of
    the process.
        Although the $15 fee will have some opposition, nearly everyone
    agrees that we need to update the maps. We look forward to working with
    you to identify the best solution.
        Aside from my desire for us to have better maps, the Agency has
    already made great strides in the area of working smarter and more
    efficiently. These efforts have already been demonstrated through
    several efforts to streamline the delivery of disaster assistance and
    by incorporating better business practices.
        Our program for assisting communities whose public infrastructure
    has been damaged during a disaster has been streamlined as a result of
    the recent business process re-engineering effort. Working with our
    customers in State and local emergency management we have simplified
    the method for getting aid to communities for the repair of their
    public roads, bridges, and other critical infrastructure so that they
    can begin to recover soon after a disaster strikes. Again, we
    appreciate the support of the Appropriations Committees and support of
    the Stafford Act authorizing committees.
        The final step in the grant delivery process would be further
    streamlined if FEMA were permitted by law to settle with applicants on
    the basis of estimates, as is accepted industry practice. This would
    speed closeout of disasters, improve project management and
    significantly economize the use of Federal and State resources. We will
    be pursuing this change in legislation this year.
        For the first time ever, in 1999 we published an administrative
    rule in the Federal Register that identifies criteria that must be
    considered when evaluating whether an incident should be declared a
    disaster. The criteria is tied to the CPI so that it adjusts annually.
    By implementing this rule, we are helping ensure that disaster
    declarations are consistently applied in every State.
        When I testified before this Subcommittee last year, I told you
    that we were going to emphasize closing out the books on older
    disasters as quickly as possible. By the end of fiscal year 1998, the
    Territorial Closeout Teams that were established under the leadership
    of our CFO, Gary Johnson, have reduced the number of open disasters by
    44 percent and reduced remaining costs by $1.7 billion. Our close-out
    efforts resulted in recoveries of $675 million in fiscal year 1998--
    funds that help us avoid having to replenish the Fund as quickly as we
    would have.
        In addition to new close-out procedures that will help recover
    disaster funds, we are attempting to simplify the manner in which funds
    are delivered to our State partners. When I was a State Emergency
    Manager, FEMA used to send funds to me under about thirteen different
    accounts. Each account had a different matching level and specific
    reporting requirements. It was an administrative nightmare. During my
    first five years at FEMA, we have been able to reduce the number of
    funding streams to seven. This year's budget request includes a
    proposal to consolidate the seven remaining funding streams that go to
    state and local emergency managers into a single funding stream.
        From my experience in emergency management at the State level, I
    know that this consolidation will help reduce administrative red tape
    for states and for FEMA. It is going to allow States to take more
    responsibility for putting resources against the risks that they assess
    to be the greatest threats.
        When I first came to FEMA in 1993, the agency's financial house was
    in disarray. OMB had designated our financial system as high risk, and
    the agency was in no position to produce the financial statements
    required by the Chief Financial Officers Act. In fact, the agency had
    never reconciled over $20 billion spent in the Disaster Relief Fund. We
    immediately set out to install an integrated financial system that
    would aid in reconciling the agency's books. We then established an
    intensive, three year effort to improve our financial reporting so that
    we could prepare, and audit financial statements for all the agency's
    activities. I am pleased to report to you today that we have met that
    schedule. For the first time, FEMA has prepared comprehensive financial
    statements for all of its programs, including the Disaster Relief Fund.
    And I am very proud to report that the Inspector General has rendered
    an unqualified opinion on those statements. Achieving this goal is not
    only important for our reporting to OMB and Congress, but it is
    critical for enabling the program managers to make sound decisions--
    based on solid financial data.
        The final pillar of our blueprint for the next century is that
    communities need to be involved in promoting personal responsibility.
    This can best be illustrated by Project Impact.
        Three years ago I came here asking for your help in starting pre-
    disaster mitigation--the work we could do with communities before
    disaster strikes. Today, we have 118 communities across all 50 states
    participating in Project Impact. This would not have been possible
    without the support of our Appropriation Committees.
        Many Members who were on this Subcommittee before have heard me say
    that Project Impact is not a traditional government program. Instead of
    the Federal Government giving large amounts of money to local
    communities, the small amount of money and technical assistance given
    to communities is used to leverage additional community and private
    sector involvement and support in many different forms. When community
    members take steps to mitigate the impacts of future disasters at the
    grass roots level, great success stories come about.
        I am especially pleased to report that the initial grants that the
    Federal Government has given to the 118 Project Impact communities
    resulted in the leveraging of nearly 700 corporate partners which have
    contributed volunteers, in-kind donations and funding to help their
    communities mitigate the impacts of future disasters.
        In addition to corporate partners, Project Impact communities rely
    upon individuals who live in the community to get involved. I wish all
    of you could have joined us at the Summit we had in December that
    brought Project Impact participants together from places like
    Tillamook, Oregon, Deerfield Beach, Florida, West Virginia and
    California. All of these people had shown leadership in their
    communities in addressing the risks they face.
        All of the Project Impact participants know that we can prevent
    disaster damage if we act now. After Hurricane Georges, a lot of people
    have asked me why that storm did not devastate the U.S. Virgin Islands
    and the Gulf States the way other storms have in the past. The answer
    is mitigation. The Virgin Islands adopted tougher codes and built back
    stronger and smarter. This last hurricane showed the wisdom of that
    work. That is exactly what Project Impact wants to do.
        One of my favorite examples of local citizens taking ownership of
    the pre-disaster mitigation process occurred in Tucker County, West
    Virginia. Tucker County was a community that had flooded repeatedly
    over the years. Each time the town flooded, the residents had to work
    together to piece their lives back together.
        After this pattern of disaster/recovery/disaster occurred several
    times, a local resident, Mrs. Katie Little, decided she was going to
    try to do something to make the situation better. Mrs. Little and a
    group of her friends started selling pies and cakes in order to raise
    enough money to build the Concerned Citizens Coalition to help minimize
    the flooding in her community of Tucker County, West Virginia. From
    their bake sales they raised over $50,000 which was used to leverage $2
    million from the State of West Virginia. This money, along with support
    from other Project Impact business partners in the community, allowed
    Tucker County, West Virginia to make their community more resistant to
    future flooding disasters by clearing debris and stabilizing eroding
    riverbanks.
        We are hearing stories like these in community after community as
    Project Impact continues to expand. Fully funded at the $30 million
    level, we will be able to expand the program to at least 50 more
    communities.
        The last few budget items that I would like to highlight,
    incorporate elements of all three pillars prevention, smarter
    government, and community based responsibility.
        FEMA's fiscal year 2000 budget requests almost $31 million to
    support counter-terrorism initiatives. This includes training for fire
    departments and State and local emergency managers who are likely to be
    the first responders in the event of a terrorist incident. These are
    the people we work with every day and they are going to be called upon
    in these situations.
        Although several agencies are involved in the government's anti-
    terrorism efforts, the agencies involved are coordinating closely
    together to ensure that our efforts are effective and efficient.
    Attorney General Janet Reno and I have visited personally about the
    responsibilities of our respective agencies on several occasions. This
    coordination is going to help our State and local partners to access
    the Federal resources that can help them respond in their communities.
        In fiscal year 1998, I commissioned a Blue Ribbon Panel of
    representatives from our nations fire service community to review the
    programs and facilities of the United States Fire Administration
    (USFA). The Panel provided me with a report that outlined
    recommendations for improving the operations of the USFA.
        FEMA's fiscal year 2000 budget request includes an increase of
    about $12 million to pay for some of the recommendations in the initial
    report. If approved, the funding would improve the USFA's data
    collection system so that the national fire problem can be better
    defined and addressed. The funding would allow the USFA to better focus
    its public education materials and firefighter training courses to meet
    the needs of the fire community, local citizens and all professions
    involved in fire prevention. Each of these activities give local fire
    departments better tools to respond to a local incident, whether it is
    a fire, a flood, or an EMS call.
        To implement the recommendations, we are pleased to have Chief Rich
    Marinucci of the Farmington Hills Michigan Fire Department and past
    president of the International Association of Fire Chiefs. He
    graciously accepted this challenge. Rich will be reviewing the
    recommendations made, meeting with members of the Panel and other
    constituents and working with our staff at the Fire Administration to
    improve operations.
        I also want to call your attention to a major funding increase for
    the Emergency Food and Shelter Program. We at FEMA are very fortunate
    to have been a part of this program for fifteen years. This program is
    a great way to work with local communities, especially the non-profit
    community that does the essential work with the working poor and
    elderly and the people in the roughest circumstances.
        The increase of $25 million brings the program up to $125 million.
    Our partners in this program the Salvation Army, Catholic Charities
    USA, the American Red Cross, the National Council of Churches, the
    Council of Jewish Federations and the United Way of America--have
    joined with us to be careful stewards of these funds. And it is really
    important to remember that the millions of extra meals and nights of
    shelter that come from this program are all delivered with an
    administrative expense share of just under 3 percent. That is a really
    good deal, not only for the federal government but also for the people
    who desperately need these services.
        Finally, I want to touch on the work we have been doing in relation
    to the Y2K problem. By the end of this month we will have hosted a
    meeting in each of our 10 regional office cities bringing in State and
    local officials to give them information, but mostly to listen and to
    hear where they think their needs are and to suggest what they should
    be looking at.
        Many of my staff with me today, including Mike Walker, Lacy Suiter
    and Kay Goss have been on the road with representatives of other
    Federal agencies, as well as with John Koskinen's task force, to take a
    reading on where the State and local emergency officials are and to
    arrange a plan for maintaining this channel of communication over the
    next nine months.
        We are taking this problem very seriously but we are also serious
    about striking the right balance in approaching a complicated issue. We
    will continue to keep this Committee informed on our work in this area.
        The ability to implement this blueprint for the next century and to
    continue this bold experiment of creating the finest emergency
    management system in the world we need to retain and attract good
    quality people.
        The fiscal year 2000 budget requests an increase of over $14
    million for salaries and expenses. Protecting our employees at FEMA is
    very important to me because I know what I've asked of the staff at
    FEMA and I know how they have responded. ``People helping people'' is
    not just a phrase but the way my staff approaches every day at work.
    They work smart and they work hard. I am very proud of them.
        Just moments ago, I described several ways in which the FEMA staff
    has worked to make the agency run more efficiently. The most remarkable
    thing to me is how they are able to accomplish so many improvements in
    the way day-to-day business is conducted while also being asked to
    absorb so many new responsibilities.
        For example, during the past two fiscal years, FEMA has received
    additional funding for anti-terrorism initiatives. However, each time
    funds were appropriated for anti-terrorism programs, corresponding S&E
    funding was not provided. Instead, staff had to absorb the anti-
    terrorism initiatives while also continuing to perform the agency's
    other functions at a high level. Similarly, although Project Impact
    funding was provided, we had to detail staff from other places in the
    agency to support the initiative.
        Finally, increased S&E funds will allow us to actually implement
    the reforms we want to see in the U.S. Fire Administration. The S&E
    increase will support more positions at the Fire Academy in Emmittsburg
    and will help USFA to discharge its increased responsibilities due to
    the threat of terrorism.
        I know how often the request for more S&E funds comes before you. I
    know how often I have asked!
        But I have asked because I have a tired and stretched work force
    that is always asked to do more; from frequent disasters around the
    country to new initiatives--whether it's a church arson program, pre-
    disaster mitigation or helping States and communities face the
    consequences of terrorism. I am especially grateful to the
    Administration for recognizing this and supporting this request for
    increased S&E funding for FEMA.
        I want to conclude by telling you that this budget is important to
    me and to FEMA, and it is especially important to the future of our
    communities across the nation.
        I have been privileged to work for the President, to be his
    representative in bringing some hope and help to towns and cities and
    counties and states that have been hit by disasters. But I have gone
    back to the same places too many times over the last six years. I have
    seen the same problems that could have been prevented with an ``ounce
    of prevention.''
        The last few years of terrible weather events--floods and
    hurricanes and El Nino and other natural events like the Northridge
    earthquake--are telling us that we have to take action to reduce their
    impact in the future.
        It seems that sifting through debris and looking for resources to
    rebuild are the constant parts of our current approach to disaster
    response and recovery. Unfortunately, that approach is short-changing
    ourselves, our families, our businesses, our communities, and the
    future for our children.
        We can and should be proud of how much we have accomplished in our
    work after disasters, but we really need to look forward. As I
    mentioned earlier, this is a budget that takes emergency management to
    this next level of proactive prevention. Through mitigation, improved
    mapping and additional training opportunities, FEMA will help prepare
    states, local communities and citizens to save lives, cut property and
    business losses, protect our environment, and make our communities
    safer and stronger for our children and their children. I hope you can
    provide us the support we need to look to that promising future.
    Together, FEMA and Congress are creating and will continue to create a
    true legacy of natural disaster protection.
        Thank you for the opportunity to appear before this Subcommittee
    and I am happy to answer any questions you may have.

                   [General Accounting Office, March 4, 1999]

     Disaster Assistance--Information on the Cost-Effectiveness of Hazard
                               Mitigatio Projects

                           (By Stanley J. Czerwinski)

        Mr. Chairman and Members of the Subcommittee: This statement for
    the record provides our preliminary views on how the Federal Emergency
    Management Agency (FEMA) ensures the cost-effectiveness of projects
    funded under the Hazard Mitigation Grant Program. We are conducting
    this work at the request of this Subcommittee and the Chairman of the
    Subcommittee on Oversight, Investigations, and Emergency Management,
    House Committee on Transportation and Infrastructure.
        For a number of years, the Congress has been concerned about the
    increasing costs of federal disaster assistance. One of FEMA's primary
    approaches for reducing these costs is to promote mitigation measures
    that will reduce future damage within communities--potentially
    decreasing future federal disaster expenditures. However, there are
    concerns that FEMA's mitigation funding is not targeted to cost-
    effective measures, as mandated by the Robert T. Stafford Disaster
    Relief and Emergency Assistance Act. Our statement is based on previous
    and ongoing work and provides (1) an overview of the increases in
    disaster assistance costs and FEMA's mitigation programs and (2) our
    preliminary views on the approaches FEMA uses to ensure that funding
    under the Hazard Mitigation Grant Program is targeted to cost-effective
    mitigation measures.
        In summary:
      --Federal disaster assistance costs billions of dollars annually. For
            disasters that occurred between 1989 and 1993, average annual
            obligations in FEMA's disaster relief fund totaled $1.6
            billion, in 1998 dollars, while average annual obligations over
            the past 5 years (1994 through 1998) have increased to $2.5
            billion annually in 1998 dollars (even with the exclusion of
            one of FEMA's costliest disasters--California's Northridge
            earthquake). The growth in disaster assistance costs in the
            1990s has been attributed to a number of factors, including a
            sequence of unusually large and costly disasters; an increase
            in the number of presidential disaster declarations; and a
            gradual expansion in eligibility for assistance. To reduce
            these costs, FEMA is using, among other things, hazard
            mitigation efforts. These efforts promote community involvement
            in mitigation measures by providing grants and training to
            state and local governments. FEMA's efforts include providing
            federal flood insurance, converting flood-prone properties to
            open space, mitigating damage to public facilities, reducing
            earthquake risks, and helping mitigate the loss of life and
            damage from fires.
      --Our ongoing review of FEMA's efforts to ensure the cost-effective
            use of federal dollars for hazard mitigation has focused on the
            Hazard Mitigation Grant Program--one of FEMA's primary sources
            of funding for implementing hazard mitigation measures within
            communities. FEMA uses benefit-cost analysis \1\--an approach
            recommended by the Office of Management and Budget--as its
            primary approach for ensuring that mitigation measures within
            the Hazard Mitigation Grant Program are cost-effective.
            However, FEMA also excludes certain types of Hazard Mitigation
            Grant Program projects from benefit-cost analysis--including
            projects that fund the removal of certain structures from
            floodways, research for new building codes, and planning
            efforts. FEMA officials stress a need for flexibility in
            assessing these projects, citing the difficulties of
            quantifying the benefits of some projects and the time needed
            to gather data to conduct a benefit-cost analysis. However,
            these exemptions limit the agency's ability to demonstrate that
            the funded mitigation measures are cost- effective.
            Additionally, according to our review of selected benefit-cost
            analyses in two FEMA regions, officials conducting these
            analyses were generally knowledgeable and had been trained in
            how to conduct the analyses. However, they did not always use
            the best available information in analyzing projects designed
            to mitigate future damage from flooding events. For example,
            the officials did not always use flood damage information
            available from past insurance claims.
    ---------------------------------------------------------------------------
        \1\ Benefit-cost analysis is used to determine how the anticipated
    dollar savings gained through implementing a project compare with its
    cost. In order to be considered cost-effective, a project must return
    more money over its life than it cost.
    ---------------------------------------------------------------------------
                                   background
        Following a disaster, at the request of a state governor, the
    President may issue a major disaster declaration for the affected
    areas, thus triggering a range of assistance from federal agencies. The
    costs of this disaster assistance have grown notably between the late
    1970s and 1990s. Between 1979 and 1988, FEMA's obligations in its
    disaster relief fund exceeded $500 million only in 1 year. In
    comparison, since 1989, the obligations in the fund have exceeded $1
    billion every year except for 1991. The increase in costs is also seen
    in the number of large, costly disasters. Prior to 1989, only Hurricane
    Agnes cost the fund in excess of $500 million, while 10 disasters have
    cost over $500 million since 1989. While FEMA has implemented a number
    of approaches to reduce the costs of disaster assistance--such as
    consolidating multiple disaster response and recovery functions at
    individual disaster sites to reduce administrative costs--the agency
    has made disaster mitigation a primary goal in its efforts to reduce
    the long-term costs of disasters.
        FEMA's September 1997 strategic plan, entitled ``Partnership for a
    Safer Future,'' states that the agency is concentrating its activities
    on reducing disaster costs through mitigation because ``no other
    approach is as effective over the long term.'' Mitigation activities
    are undertaken to reduce the losses from disasters or prevent such
    losses from occurring. The agency's hazard mitigation efforts include
    grants and training for state and local governments; funding for
    mitigating damage to public facilities; the purchase and conversion of
    flood-prone properties to open space; federal flood insurance; the
    development of land-use plans and zoning ordinances to discourage
    building in hazardous areas; and programs targeted at reducing the loss
    of life and property from earthquakes and fires.
        However, as we noted in previous testimony,\2\ quantifying the
    effects of mitigation efforts can be difficult. Specifically,
    determining the extent to which cost-effective mitigation projects will
    result in federal dollar savings is uncertain because the savings
    depend on the actual incidence of future disasters and the extent to
    which the federal government would bear the resulting losses.
    ---------------------------------------------------------------------------
        \2\ Disaster Assistance: Information on Federal Disaster Mitigation
    Efforts (GAO/T-RCED-98-67, Jan. 28, 1998).
    ---------------------------------------------------------------------------
        The Stafford Act requires that hazard mitigation measures under the
    Hazard Mitigation Grant Program be cost-effective and that they
    substantially reduce the risk of future damage, hardship, loss, or
    suffering. According to Office of Management and Budget (OMB)
    guidelines, contained in OMB Circular A-94, the use of benefit-cost
    analysis is the recommended approach for determining cost-
    effectiveness. FEMA's guidance for determining the cost-effectiveness
    of hazard mitigation projects \3\ states that ``a key criterion for
    mitigation projects to be eligible for funding is that they must be
    cost-effective'' and that ``benefit-cost analysis is used for all cost-
    effectiveness determinations.''
    ---------------------------------------------------------------------------
        \3\ How to Determine cost-Effectiveness of hazard Mitigation
    Projects, A New Process for Expediting Application Reviews, Interim
    Edition, Dec. 1996.
    ---------------------------------------------------------------------------
        Benefit-cost analysis is used to assess whether the expected costs
    of investing in a hazard mitigation project are justified because the
    project will help avoid damages expected from future disasters (the
    benefits). FEMA generally conducts the benefit-cost analysis for the
    projects that states submit for approval.\4\ By conducting a benefit-
    cost analysis, the analyst determines a benefit-cost ratio--the ratio
    of the expected benefits divided by the expected costs. If the expected
    benefits are greater than the expected costs, the ratio is greater than
    1.0 and the project is considered cost-effective. If the expected
    benefits are less than the expected costs, the ratio is less than 1.0
    and the project is considered not cost-effective. FEMA's guidance
    describes four main elements of a benefit-cost analysis:
    ---------------------------------------------------------------------------
        \4\ Three states (Florida, North Dakota, and Ohio) typically
    conduct the benefit-cost analysis for projects from their communities
    and submit a sheet summarizing the analysis for FEMA's review. These
    states have been given additional responsibilities as participants in a
    pilot program called the ``managing state concept.''
    ---------------------------------------------------------------------------
      --an estimate of damages and losses before mitigation,
      --an estimate of damages and losses after mitigation,
      --an estimate of the frequency and severity of the hazard causing the
            damages (such as the risk of flooding), and
      --economic factors used in the analysis (a project's expected life
            span, for example).
        After all of these elements are considered, along with a project's
    expected costs, a project's cost-effectiveness can be determined.
    However, other factors outside of the benefit-cost analysis can also
    influence whether a project is accepted for funding, such as the
    project's potential impact on environmental conditions.
                  growth in federal disaster assistance costs
        Federal disaster assistance costs have increased in the 1990s for
    several reasons, including several unusually large and costly
    disasters, increasing population and development in hazard-prone areas,
    increases in the federal share of disaster assistance costs in larger
    disasters, an upward trend in the annual number of presidential
    disaster declarations, and an increase in the types of facilities
    eligible for disaster assistance. Total obligations from FEMA's
    Disaster Relief Fund for the 10-year period prior to 1989 were $4
    billion; since 1989, they have totaled $25 billion.\5\
    ---------------------------------------------------------------------------
        \5\ Since these figures are expressed in nominal dollars, they do
    not reflect the effects of inflation over the time periods cited.
    ---------------------------------------------------------------------------
    Factors Underlying Increasing Costs
        The large disaster assistance costs in the 1990s have been
    attributed to a number of factors. Since 1989, the United States has
    experienced a series of unusually large and costly disasters, including
    Hurricane Hugo, Hurricane Andrew, the 1993 Midwest floods, and the
    Northridge earthquake. Hurricane Georges was added to this list in
    1998--FEMA is projecting that it might be the agency's second costliest
    disaster ever. The close occurrence of such costly disasters in the
    United States is unprecedented. Furthermore, increases in population
    and development, especially in hazard-prone areas, increase the
    potential losses associated with these disasters. For example, FEMA
    expects that by 2010 the number of people living in the most hurricane-
    prone counties (36 million in 1995) will double.
        For several of these large disasters, the federal government has
    increased its share of the disaster relief costs to provide additional
    assistance to the states. For example, while the federal share of
    funding is at least 75 percent for assistance to repair or replace
    disaster-damaged public and nonprofit facilities, the President used
    his authority to raise the federal share to 90 percent for the
    Northridge earthquake and to 100 percent for Hurricane Andrew.
        There has also been an upward trend in the annual number of
    presidential disaster declarations. From fiscal years 1989 through
    1993, the average number of major disaster declarations was 38 per
    year, while from fiscal years 1994 through 1998, the average number
    increased to 49.
        Additionally, over the years, the Congress has generally increased
    eligibility by expanding the categories of assistance and/or specified
    persons or organizations eligible to receive assistance. For example, a
    1988 law expanded the categories of private nonprofit organizations
    that are eligible for FEMA's public assistance program.
        According to a report by the Senate Bipartison Task Force on
    Funding Disaster Relief,\6\ federal budgeting procedures for disaster
    assistance may also have influenced the amounts appropriated for
    disaster assistance. This is because disaster relief appropriations
    have often been designated as ``emergency'' spending, thus excluding
    them from the strict budget disciplines that apply to other spending.
    Some views in the report suggested that the assistance provided is more
    generous than would be the case if it had to compete with other
    spending priorities.
    ---------------------------------------------------------------------------
        \6\ Federal Disaster Assistance, Document No. 104-4, U.S. Senate
    (Washington, D.C.: U.S. Government Printing Office, 1995).
    ---------------------------------------------------------------------------
                        fema's hazard mitigation efforts
        To reduce disaster assistance costs, one of FEMA's primary
    approaches has been to emphasize hazard mitigation through various
    incentives. Mitigation consists of taking measures to prevent future
    losses or to reduce the losses that might otherwise occur from
    disasters. For example, floodplain management and building standards
    required by the National Flood Insurance Program might reduce future
    costs from flooding. FEMA estimates that the building standards that
    apply to floodplain structures annually prevent more than $500 million
    in flood losses.
    A Number of Programs Provide for Hazard Mitigation Assistance
        FEMA funds or otherwise promotes hazard mitigation through a number
    of programs. As part of its National Flood Insurance Program, FEMA
    attempts to reduce future flood losses by providing federally backed
    flood insurance to communities that adopt and enforce floodplain
    management ordinances that help mitigate the effects of flooding upon
    new or existing construction. This program also funds a flood
    mitigation assistance program through the National Flood Mitigation
    Fund. In 1998, FEMA distributed over $14 million to states and
    communities to plan and implement measures to reduce future flood
    damage in homes and other properties that had experienced repeated
    losses from flooding. Eligible projects under this program include
    elevating structures, flood-proofing properties, and buying out and
    converting flood-prone properties to open spaces.
        FEMA also provides grants to states to prevent or reduce the risks
    of earthquakes by using mitigation measures such as the seismic
    retrofitting of buildings. The agency also conducts training, public
    education, and research programs in subjects related to fire protection
    technologies. The agency's efforts support the nation's fire service
    and emergency medical service communities through such services as the
    national fire incident reporting system, which collects and analyzes
    data in order to help mitigate the loss of life and damage from fires.
        In 1997, FEMA began Project Impact--an initiative based on the
    premise that consistently building safer and stronger buildings,
    strengthening existing infrastructures, enforcing building codes, and
    making proper preparations prior to a disaster would save lives, reduce
    property damage, and accelerate economic recovery. The initiative
    intended to build ``disaster-resistant communities'' through public-
    private partnerships, and it included a national awareness campaign,
    the designation of pilot communities showcasing the benefits of
    disaster mitigation, and an outreach effort to community and business
    leaders. Project Impact received an appropriation of $25 million in the
    fiscal year 1999 budget.
        Under section 406 of the Stafford Act, communities recovering from
    disasters can use federal funds to mitigate future damage to public
    facilities that have been damaged. For example, as a damaged building
    is rebuilt, seismic retrofitting is added to help reduce damages from
    future earthquakes. Mitigation measures funded under the section 404
    program--the Hazard Mitigation Grant Program--differ from the 406
    program in that they can be targeted to either damaged or undamaged
    facilities. For example, putting storm shutters on the windows of
    structures is expected to help mitigate wind and rain damage from
    future hurricanes. Our statement focuses on the measures funded under
    the Hazard Mitigation Grant Program.
    Hazard Mitigation Grant Program
        Under the Hazard Mitigation Grant Program, up to 15 percent of the
    total funds spent on a disaster may be spent specifically on hazard
    mitigation measures. Subject to certain dollar limits, the act
    generally allows the funding of up to 75 percent of the cost of hazard
    mitigation measures within communities that have been affected by a
    disaster \7\ (the states or local governments pay the remaining portion
    of the costs). In fiscal year 1998, FEMA approved and obligated over
    $415 million in Hazard Mitigation Grant Program grants. These grants
    can be used to protect either public or private property, including the
    acquisition and relocation of structures from hazard-prone areas. The
    Stafford Act establishes that the federal contribution is based on
    measures that ``the President has determined are cost-effective and
    which substantially reduce the risk of future damage, hardship, loss,
    or suffering in any area affected by a major disaster.'' The program
    funds a range of projects, including purchasing properties in flood-
    prone areas, adding shutters to windows to prevent future damage from
    hurricane winds and rains, or rebuilding culverts in drainage ditches
    to prevent future flooding damage.
    ---------------------------------------------------------------------------
        \7\ In an October 10, 1997 regulation, FEMA announced that for
    disasters declared after April 6, 1997, eligibility for program funding
    would be statewide rather than limited to the communities affected by
    the disaster. FEMA was attempting to give the states enhanced
    flexibility in using the funding for priority projects across the
    states and to expedite closing out the funding from older disasters.
    ---------------------------------------------------------------------------
        Historically, hazard mitigation has been considered primarily a
    responsibility of local and state governments as well as private
    citizens, since these entities often control the decisions affecting
    hazard mitigation. For example, building code enforcement and land-use
    planning are generally under local jurisdictions. As a result, FEMA
    works with state and local governments to instill a community-based
    approach to implementing disaster mitigation efforts. Section 409 of
    the Stafford Act plays a role in developing this approach because it
    helps to establish the requirement for a comprehensive state hazard
    mitigation plan that includes an evaluation of a state's vulnerability
    to natural hazards. Additionally, as a condition of receiving a Hazard
    Mitigation Grant Program grant, the state must prepare an
    administrative plan that establishes its procedures and priorities for
    identifying and selecting mitigation projects. FEMA, however, has final
    approval authority for funding these projects. FEMA guidance states
    that an ``ideal'' plan would include a statewide mitigation strategy
    and identify potential hazard mitigation projects that are consistent
    with the plan.
        We talked with FEMA staff responsible for approving these plans and
    reviewed plans from several states. In general, we found that state
    administrative plans exhibited a broad range of approaches for
    identifying and selecting mitigation projects. Additionally, a 1996
    study \8\ found that many of the 39 state plans reviewed were ``merely
    intended to qualify the state for post-disaster mitigation grants under
    section 404 of the Act.'' FEMA officials generally agreed with this
    conclusion. However, several officials noted that the agency has
    recently initiated changes to improve the states' planning efforts.
    ---------------------------------------------------------------------------
        \8\ Edward J. Kaiser and R. Matthew Goebel, Analysis of Content and
    Quality of State Hazard Mitigation Plans Under Section 409 of the
    Stafford Act, June 1996.
    ---------------------------------------------------------------------------
       fema does not always use benefit-cost analysis to determine cost-
          effectiveness and at times does not use best available data
        Our preliminary review found that FEMA's guidance recommends the
    use of benefit-cost analysis as the primary approach for determining a
    project's cost-effectiveness. However, the agency excludes certain
    categories of Hazard Mitigation Grant Program projects from this
    analysis. These categories include projects that fund the removal of
    certain structures from floodways, tornado-related measures, research
    for new building codes, and planning efforts. While FEMA has explained
    the rationales for these exemptions, certain factors, such as the lack
    of an analytical basis for an exemption on the acquisition of certain
    floodplain properties, are limiting the agency's ability to demonstrate
    that these mitigation measures are in fact cost-effective.
    Certain Types of Projects Exempted From Benefit-Cost Analysis
        The Stafford Act requires that Hazard Mitigation Grant Program
    projects be cost-effective. FEMA's guidance establishes that benefit-
    cost analysis is the preferred method for making this determination.
    However, since September 1996, FEMA has exempted the following four
    categories of Hazard Mitigation Grant Program projects from the use of
    benefit-cost analysis:
      --projects involving the purchases of substantially damaged
            structures in 100-year floodplains;
      --up to 5 percent of the Hazard Mitigation Grant Program funding for
            a variety of hazard mitigation measures, such as disaster
            warning systems or the application of new, unproven mitigation
            techniques;
      --hazard mitigation planning projects for older disasters; and
      --an additional 5 percent of the Hazard Mitigation Grant Program
            funding for tornado-related projects.
        FEMA's general rationale for the exemptions varies, although the
    agency's policy guidance establishes that two of the exemptions were
    made because some mitigation projects were often difficult to evaluate
    against ``traditional quantitative program cost-effectiveness and
    eligibility criteria.'' FEMA officials have explained that the benefits
    of some projects are difficult to quantify against known project costs
    and that the time involved in gathering the data on some mitigation
    projects can be excessive. For example, it is difficult to determine
    the benefits of establishing an educational program that uses fliers to
    inform the public about the risks of living in a floodplain because it
    is hard to predict the resulting changes in public behavior that might
    result from the fliers. However, without any measurement and subsequent
    comparison of a project's expected benefits with its expected costs, it
    is unclear what criteria the agency is using to determine cost-
    effectiveness.
    Exemption of Projects Involving the Purchase of Substantially Damaged
            Structures
        Through policy guidance established in September 1996, FEMA
    exempted projects that involved purchasing structures located in
    floodways and floodplains--if the cost of restoring the damaged
    structures equaled or exceeded 50 percent of the structures' market
    value and the structures were located in a 100-year floodplain. This
    particular exemption has come under criticism by FEMA's Inspector
    General. In a March 1998 report,\9\ the Inspector General questioned
    the exemption's lack of analytical data supporting the contention that
    acquisition projects involving substantially damaged properties in the
    100-year floodplain were cost-effective. While FEMA officials have
    begun to retroactively analyze some of the acquisition projects
    exempted under this policy, the agency is currently unable to provide
    the analytical data that would support exempting all substantially
    damaged structures in a 100-year floodplain. FEMA officials explained
    that they need to conduct a detailed and rigorous analysis of
    acquisition projects to support the policy. Without this analytical
    basis, it is difficult for FEMA to demonstrate that the exempted
    acquisition projects it is funding are cost-effective.
    ---------------------------------------------------------------------------
        \9\ Improvements Are Needed in the Hazard Mitigation Buyout
    Program, FEMA OIG, Inspection Report I-01-98, March 1998.
    ---------------------------------------------------------------------------
    Exemption of Up to 5 Percent of the Hazard Mitigation Grant Program
            Funding for Various Projects
        In September 1996, FEMA established another policy that exempted
    projects from benefit-cost analysis. Known as the ``5 percent Hazard
    Mitigation Grant Program initiatives,'' this policy allowed the states
    to use up to 5 percent of their Hazard Mitigation Grant Program project
    funding for a variety of hazard mitigation measures. According to
    FEMA's policy memo for this exemption, the evaluation of funding for
    certain mitigation measures, such as hazard warning systems or research
    for new building codes, required a large amount of time at the state
    and federal levels, although it was generally recognized that such
    measures reduced the potential losses from a future disaster. The
    policy was intended to provide the states with discretion in deciding
    which mitigation measures they wanted funded, as well as the
    responsibility for providing the rationale for the cost-effectiveness
    of the projects selected. FEMA officials explained that the intent of
    the policy was to spur creativity and avoid the time and expense
    involved with conducting a benefit-cost analysis.
        To be eligible, a project type had to be identified in the state's
    hazard mitigation plan and reduce or prevent future property damage,
    injury, or the loss of life. Instead of conducting a benefit-cost
    analysis, the states were instructed to include a narrative that
    identified the mitigation benefits and the reasonable expectation that
    future property damage, injury, or the loss of life would be reduced or
    prevented. In fact, FEMA's guidance instructs project applicants to use
    5-percent funding if the project was ``previously denied because of
    difficulty in measuring cost-effectiveness.'' While FEMA's guidance
    instructs the states to identify a project's benefits, it does not
    specifically suggest any comparison of the benefits with the project's
    costs or competing alternative projects. Without any measurement and
    subsequent comparison of a project's expected benefits with its
    expected costs, the criteria the agency is using to determine cost-
    effectiveness are unclear. Additionally, by using such a broad
    determination of a project's cost-effectiveness, it appears that almost
    any project could be determined as cost-effective.
    Exemption of Hazard Mitigation Planning Projects for Older Disasters
        About 1 year later, in October 1997, FEMA announced its third
    policy decision, when it exempted hazard mitigation planning projects
    associated with older disasters from benefit-cost analysis. FEMA
    decided that in the interest of expediting the closeout of disasters
    that occurred on or before June 10, 1993, the agency would make
    remaining program funds from these disasters available for hazard
    mitigation planning purposes.\10\ States were invited to submit Hazard
    Mitigation Grant Program applications for funding that would help them
    develop multi-hazard mitigation plans. The policy memo stated that
    ``funds provided for planning purposes shall be considered a cost-
    effective measure.''
    ---------------------------------------------------------------------------
        \10\ When the Hazard Mitigation Grant Program was established, it
    provided federal matching grants on a cost-share basis of up to 50
    percent of a project. Thus, FEMA refers to these mitigation projects as
    ``50/50 planning'' projects. With the 1993 amendments to the Stafford
    Act, the federal cost share was changed from up to 50 percent to up to
    75 percent.
    ---------------------------------------------------------------------------
    Exemption of Up To 5 Percent of the Hazard Mitigation Grant Program
            Funding for Tornado-Related Projects
        In August 1998, FEMA announced the fourth policy exempting certain
    projects from benefit-cost analysis. FEMA extended its 5-percent set-
    aside funding by another 5 percent to fund tornado-related projects.
    The agency noted an increase in tornado activity that it associated
    with the 1997-98 El Nino weather pattern and suggested that the need
    for additional funding for warning systems could not be accommodated
    through existing programs. In essence, the agency increased the 5-
    percent set-aside policy to a 10-percent set-aside policy, although the
    additional 5 percent of Hazard Mitigation Grant Program funding was
    limited to states that had received a presidential disaster declaration
    for tornadoes. In addition to including a narrative that identified the
    project's mitigation benefits and the expectation that future damage or
    loss of life or injury would be reduced or prevented, the states were
    required to develop a comprehensive plan for warning their citizens,
    including a public education component. The policy applied to all
    disasters with unobligated funds that were declared before fiscal year
    1998, as well as all fiscal year 1998 and future declarations in which
    tornadoes or high winds played a role. The policy remains in effect
    until FEMA adopts proposed regulatory changes stating that warning
    systems will only be funded from the original 5-percent set-aside. FEMA
    officials expect that the regulatory changes will be made final in mid-
    March 1999.
    Estimating the Number and Dollar Figure of Hazard Mitigation Grant
            Program Grants Exempted From Benefit-Cost Analysis
        We are working with FEMA to quantify the number and dollar amount
    of all of the Hazard Mitigation Grant Program measures exempted from
    benefit-cost analysis. However, for a number of reasons, FEMA is unable
    to readily provide us with this information for all of the exempted
    projects. For example, it is hindered in providing this information
    because there is no data field in the Hazard Mitigation Grant Program
    database that would allow the agency to specifically identify the
    projects that fall under the exemption for acquiring property that has
    been substantially damaged. Additionally, agency officials have
    expressed reservations about the accuracy of the data. For these
    reasons, our preliminary numbers are limited to the 55 hazard
    mitigation project files we examined for four states (Arkansas,
    Florida, Louisiana, and Texas) in FEMA regions 4 and 6.
        These 55 projects represented approximately $20 million in hazard
    mitigation grant funding, with Florida accounting for 36 projects, or
    $17.2 million of the amounts reviewed, while the other states accounted
    for the remaining 19 projects, or approximately $2.8 million in
    funding. Of the 55, 14 (25 percent), or over $8 million (42 percent) of
    the funding, were exempted from benefit-cost analysis. One-half of the
    exempted projects were property acquisitions, while the remaining
    exempted projects included funding for emergency satellite
    communications, all-weather radios, emergency alert systems, and a
    public awareness campaign. The 41 remaining projects subjected to
    benefit-cost analysis included wind retrofits (shutter projects),
    drainage improvements, seismic retrofits of buildings, and the
    installation of gas shut-off valves in structures.
    Some Benefit-Cost Analyses Conducted on Acquisition Projects Do Not Use
            the Best Available Data
        In the four states we reviewed, the officials conducting the
    benefit-cost analysis were generally knowledgeable about the process
    and had received training on how to use FEMA's computerized modules.
    However, we also found that the officials did not always use the best
    available data for estimating the benefits of projects involving the
    acquisition of property located in floodplains. These data help
    determine the extent of the expected benefits attributed to a project
    and significantly influence the accuracy and final outcome of the
    benefit-cost analysis.
        For example, in determining flood hazard data--which establishes
    the probability and severity of a flood event--FEMA's guidance suggests
    using the flood insurance rate maps available through the National
    Flood Insurance Program.\11\ These maps establish the number of times a
    flood is expected to occur in a given area (the frequency of future
    flooding) and the level of the flooding (its severity). The quality of
    this information can significantly influence the benefit-cost analysis'
    outcome because overestimating the frequency or severity of a flood can
    inflate the estimated benefits attributed to an acquisition project. We
    found little evidence that information from flood rate maps was used in
    the benefit-cost analyses we reviewed. Therefore, we are in the process
    of reviewing several of the analyses to determine how the use of
    information from the flood rate maps would have affected the analyses'
    outcomes.
    ---------------------------------------------------------------------------
        \11\ The flood hazard data needed is actually found in flood
    insurance reports which accompany the flood insurance rate maps.
    ---------------------------------------------------------------------------
        We also found that the officials conducting the benefit-cost
    analysis may not always use the best available data on damage claims
    from past flooding. The quality of this information has a significant
    influence on the outcome of the benefit-cost analysis because
    overestimating the extent of the damage from a previous flood event can
    inflate the estimated benefits attributed to an acquisition project.
    FEMA officials told us that information on flood claims available from
    the National Flood Insurance Program was not always used, suggesting
    that they simply used information supplied by project applicants. We
    also found that the officials conducting the analysis do not always
    validate the damage claims information submitted by the applicants. As
    a result, the benefit-cost analysis may rely on testimonial evidence
    from the applicant--the individual most likely to benefit from the
    acquisition project. We are now working with FEMA to determine if the
    agency can easily provide damage claims information from the National
    Flood Insurance Program to the officials conducting the benefit-cost
    analysis.
        We provided a draft of this statement to FEMA to verify its factual
    content and modified the statement where appropriate. Our review was
    initiated in December 1998, and it is continuing in accordance with
    generally accepted government audit standards.
                              related gao products
        Disaster Assistance: Information on Federal Costs and Approaches
    for Reducing Them (GAO/T-RCED-98-139, Mar. 26, 1998).
        Disaster Assistance: Information on Federal Disaster Mitigation
    Efforts (GAO/T-RCED-98-67, Jan. 28, 1998).
        Disaster Assistance: Information on Expenditures and Proposals to
    Improve Effectiveness and Reduce Future Costs (GAO/T-RCED-95-140, Mar.
    16, 1995).
        GAO Work on Disaster Assistance (GAO/RCED-94-293R, Aug. 31, 1994).

                               budget priorities

        Senator Bond. All right. Well, thank you, Mr. Witt.
        FEMA has requested $83 million in increased expenditures, a
    10-percent increase. An increase has also been requested for
    additional staff, the emergency food and shelter program, a new
    repetitive loss initiative, fire program enhancements, and the
    list goes on.
        Given the fact that the budgetary caps will likely prevent
    us from funding all these increases, would you give me your
    highest priorities: one, two, three? What areas are the most
    needy in terms of increases?
        Mr. Witt. Well, of course, the Y2K effort is so important
    and also the anti-terrorism program is very important.
        Senator Bond. You picked that up I think from our
    discussion. [Laughter.]
        Mr. Witt. They are priorities for us too, Mr. Chairman.
        The Pre-disaster Mitigation Fund, and the flood map
    modernization fund are absolutely critical. We are requesting
    increases for the Fire Prevention and Training activity, and
    the Emergency Food and Shelter program which does so much good,
    and the National Flood Mitigation fund. And the Salaries and
    Expenses are a priority, and I think the budget reflects that.
        Senator Bond. Well, I appreciate that listing, but would
    you give us for the record your one, two, three priorities,
    recognizing, of course, that by the time this new fiscal year
    begins, we will be in the middle of the Y2K problem and the
    advance planning stage will be over. I would like to have them
    listed in terms of the additions. What's one, what's two,
    what's three?
        Mr. Witt. Salaries and Expenses are number one. There is no
    doubt about that. The Pre-disaster Mitigation Fund and the
    National Flood Mitigation Fund have to be considered as well.
    Of course, you said three, but the fire prevention and training
    is absolutely one of the top priorities too. So, those are the
    four that reflect my priorities.

                       disaster 5-year historical average

        Senator Bond. May I ask why FEMA is once again requesting
    $2.5 billion off budget? Is it not true that the 5-year
    historical average, which used to be $1.6 billion, now even
    excluding Northridge it is $2.6 billion. Is that not a pretty
    good estimate even though we do not know the specific
    disasters?
        Mr. Witt. We have found that the average is running pretty
    close to that. Of course, it depends on the events of a
    particular year. We wished that we did not have them, but you
    are absolutely correct. This year could be a very active year--
    we hope not--in hurricanes and flooding.
        Senator Bond. The weather man I listen to on television
    this morning said with La Nina, it is going to be a super
    hurricane season. It should not be a surprise if we have some
    disasters.
        Mr. Witt. True. Dr. Gray's projections, I believe, include
    19 named storms this year.

                              unmet disaster needs

        Senator Bond. You know in the past several years, as I
    mentioned earlier, we have appropriated hundreds of millions of
    dollars to HUD for so-called unmet needs, and even though there
    is no authorized HUD program, we tried to address the need for
    standards with appropriation language, ensuring that HUD works
    with FEMA in allocating the funds.
        Could you tell me how HUD has consulted with FEMA in
    allocating the fiscal year 1998 supplemental needs and whether
    this consultation has been effective and whether it allowed the
    prioritization of needs for the most effective allocation? How
    would you have done it differently if you had been in complete
    charge of that?
        Mr. Witt. Those funds are very, very important in that
    unmet need area, and I think you have seen this many, many
    times, particularly when we have done the long-term recovery
    reports showing those unmet needs.
        What we have tried to do is to work with the States and
    local communities to gather the accurate information in unmet
    needs in each disaster, then forward that information to HUD so
    they can use it to make their decisions on how to meet those
    unmet needs, based on the priorities that we felt needed to be
    addressed first.
        Senator Bond. Did HUD actually follow your recommendations?
    Were the HUD expenditures expenditures recommended by FEMA? You
    and I know the answer to that, do we not? [Laughter.]
        You can submit for the record any analysis showing where
    HUD actually funded needs that FEMA identified.
        Mr. Witt. Thank you, Mr. Chairman.
        Senator Bond. I am from Missouri, and you better show me
    because I have a high degree of skepticism on that one.
        Let me turn now to the ranking member for some questions,
    and we will go back and forth as long as we can enjoy it.

                            mortgage transaction fee

        Senator Mikulski. Thank you very much, Mr. Chairman.
        Before I get into really the meat of Project Impact and Y2K
    and all of those things, I want to raise an issue that I think
    could get prickly as we move along, and that is on page 5 of
    your written testimony, you talk about a $15 fee on all
    mortgage transactions to produce the funding for the maps.
        Well, I woke up on Sunday morning to read the Baltimore
    Sun, and the headline in the real estate section said this: A
    new tax on homeowners in FEMA's budget. I tell you the cream in
    my coffee curdled when I read that--[Laughter--] because I knew
    every real estate agent was reading it, et cetera.
        Now, Mr. Witt, I think we do have to find a way to fund
    this. The chairman and I have not had a chance to talk about
    this, but I would just like to put a bright light around it to
    talk about the $15 mortgage transaction.
        Did you want to say something?
        Mr. Witt. Senator Mikulski, when we made a proposal to OMB
    on how we could fund the map modernization program----
        Senator Mikulski. Well, I think you need to go back to
    OMB----
        Mr. Witt. I agree, we should look at all options.
        Senator Mikulski [continuing]. And say that you have to
    come up with other solutions.
        Mr. Witt. I think the point of it is--and the chairman and
    I talked about this in our meeting--that we need to show the
    significance and the importance of this mapping program, and we
    have to address this problem. The chairman advised me and
    several others advised me that this proposal probably will not
    fly, and I understand that. But we have to address this
    problem, and this is a starting point to talk about how we can
    do that.
        Senator Mikulski. Well, there are those who do view it as a
    tax, and I do not think you want this thing to go to the
    Finance Committee or the Ways and Means Committee.
        Mr. Witt. We do not want a tax.

                                 flood mapping

        Senator Mikulski. But I would like to just give a comment
    here. I do not want to spend all my time on the maps. We put
    money into NASA for both Mission to Planet Earth and something
    called LANDSAT. My question later on will be, but not now--I am
    going to get to some other things--is what is it that NASA can
    tell you and could they help you do the maps in a way that
    would lower cost, et cetera? They have pictures that go back
    years and years and years of this planet. We are funding
    Mission to Planet Earth. They love to show me those lovely
    little satellite pictures that are red, green and blue, and if
    it is blue, it is this, and if it is green, it is that, and so
    on. And I love looking at it, but I wonder if it could be
    transferable in that way.
        Mr. Witt. Yes, ma'am. Dan Golden and I have talked several
    times. My staff has met with the NASA staff. We are working on
    signing an MOU with NASA now to use the satellite technology as
    much as possible to update maps.
        Senator Mikulski. Well, I think that is good, and when we
    meet with Dr. Goldin, we can actually thank him for his
    cooperation. We do not say that is the only step to your
    mapping.
        Mr. Witt. Oh, no, but it is one way.
        Senator Mikulski. Yes, because essentially with LANDSAT, we
    have got so many pictures over so many years that have been
    catalogued in such a confusing way that we now have a data
    mortuary. I would like to see if we could not pull it out and
    maybe find their DNA and get it back into business. [Laughter.]

                             consequence management

        Now, let us go to Y2K. Mr. Director, could you tell us,
    number one, what is consequence management? Do you have
    responsibility for consequence management, and what are your
    plans in terms of consequence management? Because Tip O'Neill
    once said all politics is local, but all response and
    preparedness and prevention is also local. Could you share
    where you are?
        Mr. Witt. Sure. Consequence management is the
    responsibility to plan, train and equip State and local
    governments to deal with public health and safety in response
    to incidents. What we are doing now for Y2K is another portion
    of consequence management. As you said earlier, the Y2K
    initiative and the anti-terrorism program do have a connection
    to our all-hazard planning.
        The 10 regional meetings that we have scheduled working
    with the other Federal agencies and our counterparts in the
    regions--we have had four of these meetings with the State
    directors of emergency management, with State fire marshals,
    and several other local officials--have gone extremely well,
    and have provided us a world of information.
        Mike Walker, our Deputy Director, has had the lead on the
    Y2K and has been to every single one of these meetings and will
    be at the other six meetings and the follow-up meetings that we
    are planning to have with each of the States and local
    governments. So, Mike, do you want to expand on it just a
    little bit?
        Senator Mikulski. Mr. Walker, first of all, welcome. We
    have known you in other roles.
        Mr. Walker. Thank you.

                           state preparedness for y2k

        Senator Mikulski. But my question to you, sir, is are we
    ready in the 50 States, and is FEMA helping the 50 States get
    ready or is it very uneven?
        Mr. Walker. Well, FEMA is working very closely with all 50
    States on Y2K, as we do on all hazards. As we have these 10
    regional meetings around the country, not only are all 50 State
    emergency managers coming, but a number of local emergency
    managers are coming also.
        Quite frankly, I want to take this opportunity to also
    commend the work of the Senate special committee. They did an
    excellent job. They have indicated an assessment of the Y2K
    issue that we agree with--Y2K will not pose major disruptions,
    awareness is growing and progress is being made. We do have
    concerns which we share in the small business sector and in
    many small towns and small counties. The biggest difficulty
    that we have is drilling the message down to the smallest
    community where awareness is only now beginning. James Lee has
    made it very clear that that is going to be our highest
    priority to work with the States to foster awareness and the
    need to fix any problems before the end of the year.
        Senator Mikulski. Every State has a Governor and
    essentially the Governor is the commander-in-chief of that
    State. Have you asked every State to have a Y2K designee?
        Mr. Walker. Yes, and they do. Every State has a Y2K
    coordinator who is separate from the emergency manager.
        Senator Mikulski. Have you furnished to the States
    essentially a Y2K readiness checklist? Because again rural
    States have different needs, et cetera.
        Mr. Walker. Oh, absolutely, we have. We provided a guide to
    State and local emergency managers and we are in the process of
    putting together some other materials which will be available
    right down to the very smallest unit of government.
        It is a complex problem. There are 200,000 water districts
    in this country and 87,000 units of local government, and it is
    hard to get the message out. Congress can be of great benefit
    too through your newsletters and in putting the word out to
    local folks.
        Senator Mikulski. But is not the point of accountability a
    Governor who would then assemble the local jurisdictions and so
    on?
        Mr. Walker. That is correct.
        Senator Mikulski. Do you anticipate a breakdown in services
    and the need to be concerned about any civil disturbances?
        Mr. Walker. No. Based on current assessments, the sky is
    not falling. We are telling people in our regional meetings
    there is no need to hoard. There is no need to take money out
    of banks. There is no need to head for the hills.
        This is much more than a technology problem. It is a
    leadership issue. It is a matter of taking responsibility, and
    there is still time to do that in these communities.
        Senator Mikulski. Well, I think when we say there is
    nothing to worry about, then I think that there is a sense of
    complacency. Later on next week I will be asking these same
    questions of my own Governor Glendening when he comes to
    present this.
        Now, let me tell you why I am so hot on Y2K. Because it is
    an anticipated event and can be planned for in an organized,
    systematic way. This then says if we do not have it together
    for Y2K, we certainly do not have it together for counter-
    terrorism.
        Senator Bond. Senator, may I just interject just two quick
    Y2K questions?
        Senator Mikulski. Why do you not go right ahead?
        Senator Bond. No. I will come back to that.
        Senator Mikulski. I think we are on the same wavelength.
        Senator Bond. Will FEMA have all of its own mission-
    critical systems corrected and tested by March 1 of this year?
        Mr. Walker. March 31.
        Mr. Witt. March 31, yes.

                            disaster relief for y2k

        Senator Bond. What will be the Federal policy with respect
    to disaster declarations stemming from any possible Y2K related
    emergencies? In what circumstances would disaster relief be
    granted if there is some kind of failure as a result of the Y2K
    problem?
        Mr. Witt. That was the very same question I asked Mr.
    Suiter, the Associate Director for Response and Recovery. They
    drafted a one-page guidance on what it would take to trigger a
    Federal declaration which we shared with your staff, and we
    will be continuing to finalize that to make clear that we have
    it down to a very, very tight compliance in order to make a
    declaration like that.
        Senator Bond. I think it is clear--and we have had staff
    discussions--if somebody says, oh, well, we have got a disaster
    because our computers came up 00 and they thought it was 1900,
    that is not a disaster. That is not an unforeseen disaster.
        Mr. Witt. No, it is not.
        Senator Bond. I think the message ought to get out that if
    somebody says, oh, my gosh, my computers do not work, that is
    not grounds for bringing in the Federal resources. We do not
    plan to pay for failure to plan for a completely predictable
    and understandable contingency that everybody ought to know is
    going to arise.
        Mr. Witt. I think that is important too, Mr. Chairman,
    because I think Mike Walker and Lacy Suiter have shared the
    information directly with the participants in the regional
    meetings, that if you have a problem with your computer system,
    we are not going to give disaster declarations to fix computer
    problems because we do not want communities waiting to get
    their computers fixed or systems fixed under a Federal
    declaration.
        Senator Bond. Your warnings about flood insurance in the
    media have been very good. You might consider even making Y2K
    warnings.
        Let me return to Senator Mikulski to go back and take on
    the next questions.

                         informing the public about y2k

        Senator Mikulski. Just a couple of other points again about
    Y2K. I gather we could go all morning just on that. But I must
    really impress upon you, sir, and ask you to impress upon the
    interagency groups and also your locals that you are working
    with, people are starting to get scared, but there is also
    public information being given out.
        In my last utility bill from the Baltimore Gas and Electric
    Company, they said they anticipate that they will be ready to
    deliver electrical services in Maryland, and that presumes
    everything else is working. They then did say if you are
    concerned, have at your home what you would have for an ice
    storm. As you recall, a couple years ago we had very severe ice
    storms and parts of our States had ice storms even in recent
    weeks. Our cousins in Virginia went almost a whole week in
    certain parts of it. So, they gave you guiding principles and a
    checklist of what to do. It was just like any utility
    communication. It was a bit boring, but it was very factual and
    you had that. But it was also reassuring because if you were
    hearing this ozone type stuff on the talk show, you knew what
    to do.
        The second is I got a mailing from the Washington
    Cathedral, and it was not about a prayer breakfast or a women's
    religious weekend. It was about them convening a regional
    workshop on the nonprofit response to Y2K and if you were a
    citizen, what you needed to do to get ready for it. People are
    getting ready on their own, which I thought was great
    Washington Cathedral was going to do that, but that is the
    Cathedral.
        So, we cannot be processing ourselves to death here. We
    have to get out the public information, make sure that we have
    our infrastructure lined up with our Governors, and really have
    this. Otherwise, this is going to get away. And it is really
    going to get away from you. So, we have a wonderfully
    responsible private sector, the utilities; the nonprofit
    sector, like the Washington Cathedral. And then we have the
    talk shows that the aliens are going to land or in every dam in
    America the locks will fail and so on. So, we have doomsday,
    Armageddon, and I do not want the American people to be caught
    because we were processing and having regional meetings and the
    coordinators felt very good and felt everything was under
    control because the infrastructure might work, but there might
    be panic whether the infrastructure works or not. It is the
    pre-panic that we need to start to manage now. I am not saying
    the panic is here, but it will be here unless there is some
    type of organized effort about that.

                           the national fire academy

        Then we can go to terrorism, if I could. Actually I am
    going to have the chairman ask his questions on terrorism and I
    will come back because anything we respond to goes to our first
    responders. Our first responders are the fire fighters,
    volunteer and professional, and I happen to believe the
    volunteers train very hard to be professional. And then we have
    the emergency technicians that are usually part of fire
    fighting units as well as then moving into ER rooms and so on.
        This thing with the Fire Academy really bothered me. It
    bothered me tremendously about the report. I would like to
    compliment you on your leadership in terms of pulling that out.
        Could you tell us what your intentions are to make the Fire
    Academy fit for duty? We welcome your new personnel.
        Mr. Chairman, I just want to show you. They have to revisit
    their mission statements. The Fire Academy needs to be an
    active partner and proactive in disaster relief and terrorism.
    There is this whole other question which is that the Fire
    Academy is not involved with the professional organizations
    around the country. This is not good news. This is not good
    news.
        So, do you want to tell us how you will address these
    management and other defects?
        Mr. Witt. Senator Mikulski, the concerns that are reflected
    in the report are shared by Administrator Brown, the fire
    services, and myself. That is why I asked the national fire
    associations to appoint a person to convene a panel to look at
    what we are doing in fire services on a national level, look at
    our programs, look at our delivery of the programs, look at how
    we are managing these programs, look at what we needed to
    change to make sure that we have the best fire service
    possible, the best trained fire fighters in America, the newest
    technologies, the latest research; everything that is going to
    save lives and protect property. That is what we asked them to
    do. And they came up with a very good report.
        Now it is our responsibility to take that report and those
    comments, and implement a plan over the next 2 years to put in
    place, as you said earlier, the very best academy that we can
    have for this Nation. And that is what we want to do. I think
    we can do that. That is what Rich is going to be working on,
    and I am very excited about this. The fire services are excited
    about it. As we go through this, we will be happy to report to
    you what we are doing and how we are doing it.
        In August we will be meeting with all the national fire
    associations, and I have suggested we have the meeting at
    Emmitsburg at the Fire Academy where we will have opportunity
    to interact with Administrator Brown and the fire staff up
    there. Hopefully, Rich will have an implementation plan to
    share with them and go through it at that time.
        Senator Mikulski. In the executive summary, it says the
    Fire Academy's fire program must be first and foremost
    adequately funded. We cannot fund something that is
    hemorrhaging the way this is.
        Second, beyond money, however, lies the crisis of faith and
    confidence which money will not fix, which goes to the
    leadership issues.
        Now, a 2-year program, meaning a step-by-step program from
    a fiscal standpoint, is very good, but Mr. Witt, is there a
    sense of urgency not only within headquarters, but out at the
    Fire Academy about really moving on some of the leadership and
    communication issues that are not about money but it is about
    getting your act together and getting it pretty quick?
        Mr. Witt. Absolutely.

                   urgency for addressing fire academy issues

        Senator Mikulski. In other words, I want a response to the
    report as quick as the fire fighters in Baltimore respond to a
    911 call.
        Mr. Witt. What we will try to do for you is to share with
    you a report that we are working on now that says what we can
    do right now without funds to make a difference.
        Senator Mikulski. Is there a sense of urgency?
        Mr. Witt. I think so. There is an urgency that we need to
    start now to be ready to go into the 21st century.
        Senator Mikulski. Do you have a sense of urgency?
        Mr. Witt. Yes, I do.
        Senator Mikulski. Does the leadership at the Fire Academy
    have a sense of urgency?
        Mr. Witt. Yes, they do.
        Senator Mikulski. And this is not about spring hazing. Were
    they as mortified by this as they should be?
        Mr. Witt. They were very concerned and they are very
    encouraged by this because it really focuses on what we need to
    do for the future. So, I think they are very excited about the
    possibility that we truly can be the best up there. So, they
    are very encouraged by this.
        But there is a sense of urgency that we need to be better
    and we can do better and we are going to do better.
        Senator Mikulski. Let me turn it back to you, Mr. Chairman.

                       allocation of anti-terrorism funds

        Senator Bond. Thank you, Senator Mikulski.
        On the general theme of anti-terrorism, you are requesting
    $30.8 million for anti-terrorism, which is an increase of $13
    million. $8 million would go to States. Much of the rest would
    go to FEMA personnel in regions and headquarters.
        Can you give me an idea how you would allocate the funds
    and why the increase is needed?
        Mr. Witt. Sure. Gary, do you want to----
        Mr. Johnson. Mr. Chairman, are you interested in allocating
    the salary and expense dollars or all of the dollars in that
    program?
        Senator Bond. What are you going to do with the money? What
    mission is going to be accomplished if we give you $30.8
    million? I do not need to know who is being hired to do what,
    but what is going to be the outcome? What do we get for it?
        You can follow up in detail for the record, but I just want
    to know what is $30.8 million going to get us?
        Mr. Walker. The primary thing, Mr. Chairman, is $21 million
    of that goes right into the hands of the States and then the
    State fire people. So, $21 million, as opposed to $12 million
    last year, is going out there for planning and exercises on the
    State level.
        Mr. Witt. And I think it is important to note that in last
    year's budget, FEMA had a small role and less responsibility in
    comparison to what we have now and how the program has been set
    up with the Department of Justice and Janet Reno. I think now
    the program is more targeted than it was last year. I think
    setting up the office in Justice gives a one-stop shop that
    people can call. They did not know who to call before. They did
    not know where to go. We had too many players in it without a
    true focus. By working very closely with John Hamre at DOD and
    Janet Reno, we do have a focus on it now. We do have a good
    plan now, and I think it is going to truly make a difference.

                     interagency coordination on terrorism

        Senator Bond. You anticipated my next question because the
    GAO report of April 23, 1998 said the United States is spending
    billions of dollars annually to combat terrorism without
    assurance that Federal funds are focused on the right programs
    or in the right amounts. Then in October, GAO said there had
    been inadequate coordination and focus for training, equipment,
    and response, and the GAO says, ``Some local officials viewed
    the growing number of WMD consequence management training
    programs, including the domestic preparedness program, the
    Department of Justice, FEMA, EMI courses, National Fire Academy
    courses, the National Guard's National Interagency Counter-Drug
    Institute course as evidence of a fragmented and possibly
    wasteful Federal approach towards combatting terrorism.''
        I know you say there has been a coordination office set up
    in DOJ. What is actually happening? How are we getting a handle
    on these? Because we are going to be dealing with this at the
    full committee appropriations level, as Senator Stevens has
    said.
        Mr. Witt. I met and talked about this with Janet Reno, John
    Hamre, and Mike Walker, when Mike was at DOD. I was concerned
    because I did not think we were getting down to the grassroots,
    first-responder level and truly getting these people trained
    and truly getting them the types of equipment they would need
    to detect a chemical/biological agent if there was an event. I
    expressed my concerns. I was very vocal about this.
        State and local emergency management and the fire services
    are going to be on that front line. They have got to be able to
    respond immediately. They will not have 12 or 15 hours to
    respond.
        I was not bashful about this. I said ``we do not need to
    reinvent the wheel.'' We have got the wheel. We need to put a
    tight ring around that wheel. Janet Reno agreed with me, and
    that is what we have been trying to do and I think we have. She
    has worked closely with us to make this happen.
        While I feel better about it, I am not as comfortable as I
    would like to be. I think by working the training process with
    the States and the fire services at the State and local level,
    I will gain a higher comfort level. We are targeting cities
    with populations of 100,000 or above.

           coordination with state and local governments on terrorism

        Senator Bond. Well, I tell you, pardon my skepticism, but
    creating another office is not necessarily reassuring to me
    that we have solved the problem.
        Have you got people out of each other's hair? Have you got
    agencies that are trying to reinvent the wheel that have not
    been in the wheel business before? Because it is obvious to me
    that FEMA works with local communities. The National Guard is
    in every community already. You will have to show me a lot to
    convince me that between what FEMA does and the National Guard
    does, there is not a heck of a lot of room where we need to
    have more Federal employees, no matter how brilliant and how
    informed they are, trying to work with local communities. Have
    you gotten the other people out of the field where you and,
    say, the National Guard have primary expertise?
        Mr. Witt. I think the coordination with State and local
    governments is much better than it was, would you agree, Mike?
        Mr. Walker. Director Witt has made it clear, Mr. Chairman,
    that if the Congress--and the Congress has not yet approved the
    NDPO, the National Domestic Preparedness Office, in the
    Department of Justice--if the Congress does approve the office,
    from FEMA's standpoint as part of the partnership, we will
    insist that the focus be on State and local government and
    first responders. That is going to be what we do in our daily
    work with the NDPO.
        Senator Bond. Well, I think that is important. Frankly,
    there is legislation that we passed that sends the Department
    of Defense out to 120 cities. I suppose I voted for it. I do
    not recall it. [Laughter.]
        But when you look at it, you think, does that make a lot of
    sense?
        Mr. Walker. Mr. Chairman, I managed that program when I was
    at DOD. So far, 30,000 first responders have been trained.
    There are 5 million first responders in this country. We have
    only begun to scratch the surface. That is why it is important
    that we look at how to deal with the rest of the Nation and
    keep that focus on the State and local level responders who are
    going to be there on the front line.
        Senator Bond. Is the DOD the right agency to be training,
    or should FEMA be using its existing relationships, the other
    emergency responders, the National Guard? In the first couple
    of years as Governor, I spent more time with the National Guard
    than I did with my family because I was viewed as the master of
    disaster because we had everything from projected prison riots
    to floods to tornadoes, and when it comes to responding, the
    Guard is the one that is going to be there, along with the
    emergency personnel and local law enforcement officials.
        Mr. Walker. You are exactly right. DOD did not ask for the
    mission. We tried to give it away as soon as we got it. The law
    required DOD to have it for 3 years. It is a domestic mission.
    It is not an international mission. This is the last year for
    DOD and it will transfer to the new NDPO in the next fiscal
    year.
        Senator Bond. Thank you.
        Senator Mikulski.

                         training for first responders

        Senator Mikulski. In our hearing at the State, Justice,
    Commerce--and Senator Gregg has held four hearings on
    terrorism--he was very complimentary of the coordination and of
    the cooperation of Director Freeh of the FBI and our Attorney
    General. They have good coordination with our Secretary of
    State and other national technical means agencies for gathering
    information.
        But I share the same concerns that Senator Bond has, that
    we now are building up a lot of money and we have a lot of
    coordinators of the coordinators. I am not talking about the
    interagency group where very senior and dedicated people are
    trying to work through this, but as we move down those
    coordinators of the coordinators, even between the White House
    and here, it is who is Mr. Turf and who is Mr. Big Guy. We
    cannot fool around like this.
        The other thing is I think that there is a lack of clarity
    between what is DOD and the role of the Guard or, yes, yes, the
    military and. And then the second is our coordination with HHS
    and the Centers for Disease Control. I will not go through all
    of this because it does go to, I think, a full hearing with my
    colleagues on the other subcommittees that have probed into
    this. But Senator Frist, even on the authorizing Committee of
    Health, Education, and Labor is going to hold a hearing on
    bioterrorism. Everybody is holding a hearing.
        Now, why are we holding hearings? Because I think deep down
    inside of the U.S. Senate we do not know what the plan is and
    we do not know if everybody has got their act together. So, we
    are all trying to take bites of this to make sure that on our
    watch we have fulfilled our responsibility. But I think if we
    have concern, then there is a reason to be concerned.
        Now, I do not want to give countenance so somebody says,
    oh, they do not have their act together, be ready to go. I
    believe the infrastructure we have in place and brave people
    will. But I really do think we really do need a presentation of
    this and a real sense of clarity because I have yellow flashing
    lights about the others.
        In Maryland, they are using Baltimore as a test site. DOD
    is in there with their 120 cities. But quite frankly,
    Washington, DC, is a very high risk area, and guess what
    counties will be first hit? Montgomery and Prince Georges with
    both the panic or whatever the nature of, say, a chemical or
    whatever it could be. Now, they have got training grants from
    the Department of Justice, but you see, somebody says, oh,
    well, it is Baltimore. It is a big city. Well, yes, it is.
    Well, it is my hometown. I want us to be like prime time.
        As I said, I will be discussing this with Governor
    Glendening. The Maryland plan does have a medical strike force.
    In other words, there are elements here that give me
    consolation, but I am really concerned.
        This takes me to one other thing about being concerned. You
    are all training the first responders, and yet I have a report
    here from the Fire Academy that says it is out to lunch on
    training first responders. Who is training the first
    responders? Is it the Fire Academy?
        Mr. Witt. The Fire Academy is doing a lot of anti-terrorism
    training, but also the State fire training academies are as
    well and the State offices of emergency services are too.

                role of fire academy in anti-terrorism training

        Senator Mikulski. Who is training the State fire training
    academies?
        Mr. Witt. They are coming to Emmitsburg and taking
    training.
        Senator Mikulski. But, sir, in your own Blue Ribbon report
    it said that Emmitsburg did not have any sense of being
    proactive or even reactive on training terrorism.
        Mr. Witt. Yes.
        Senator Mikulski. I am going by the report.
        Mr. Witt. I understand that. The academy has worked very
    closely with DOD and Justice in developing those training
    programs that they are using now as well.
        Senator Mikulski. Why would the report say they do not know
    how to do it?
        Mr. Witt. I do not know why that report said that, but they
    are. They have done a lot of work in developing those training
    programs. There needs to be more of the in-depth training at
    the academy, there is no doubt.
        Senator Mikulski. I am just going to this, and this is why
    I have a worry about the whole thing. Recommendation number 21:
    The U.S. Fire Academy needs to be an active partner and have a
    proactive role in the national disaster and terrorism response.
    Then you tell me they are training them and then there is this
    recommendation. So, can you see why I do not get it?
        Mr. Witt. Sure, I do.
        Senator Mikulski. So, how can I get it?
        Mr. Witt. Carrye, would you like to----
        Ms. Brown. I would like to respond.
        Senator Mikulski. Would you identify yourself and use the
    microphone?
        Senator Bond. Would you come up to the microphone and
    identify yourself for the record please?
        Ms. Brown. I am Fire Administrator Carrye Brown, and part
    of my responsibility, along with Dr. Onieal and the rest of my
    senior staff, is the National Fire Academy, as well as our
    other fire related, technology based programs.
        But before this whole issue came up, we had a stakeholders
    meeting to look at the role of the Fire Academy in anti-
    terrorism. That was way back in 1996. So, before this became a
    hot issue on Capitol Hill, we had experts from Israel, from
    Ireland. We had our top level experts here in the United
    States. And they set out a plan for the National Fire Academy
    to develop curricula based on anti-terrorism issues. And we
    started with very little money, seed money, because as you
    know, we have been level-funded over the last 4 years, to
    develop the curricula that DOJ has taken and sent out around
    the country. So, we were ahead of this.
        So, in other words, I respectfully disagree with that
    conclusion that was reached in the Blue Ribbon Panel report. My
    outstanding staff at both sides of the house, both the Academy
    and our technology based side of the house, got ahead of the
    issue, and we were ready to develop the curricula for anti-
    terrorism before we got additional seed anti-terrorism money.
        Senator Mikulski. Madam Administrator, as you know, this is
    not about hazing you or finger-pointing.
        Ms. Brown. I know.
        Senator Mikulski. I am going by the reports. That is what
    we have.
        Now, my question to you, presuming the curriculum has been
    developed, is the curriculum being implemented?
        Ms. Brown. It is being implemented. In fact, we have helped
    to train about 34,000 trainers. We have leveraged that by
    giving curriculum to DOJ, and they have utilized it as well and
    helped to print materials and send it out to others. What we
    did was train the trainers so that they, in turn, could go back
    to the States and train others.
        We have used, too, something that Director Witt said, our
    existing training systems. We did not try to replicate anything
    that was already out there. We have the State training systems
    and they are excellent in all 50 States. So, that is how we did
    a great deal of it, but we also trained more than 34,000 on
    campus.
        Senator Mikulski. Thank you.
        Ms. Brown. You are welcome.
        Mr. Walker. Senator Mikulski, if I could add, when I was at
    the Department of Defense, I unfortunately found myself in
    Oklahoma City after the Murrah Federal Building bombing, and
    when I talked to the local fire department there, I found out
    that just the year or so before the incident that they had been
    at Emmitsburg for training, and they credited that training for
    how well they responded. The fire department of Oklahoma City
    under enormous pressure, and in a difficult situation, did a
    magnificent job. I was not at FEMA then, but they said that the
    training they received at Emmitsburg helped them do that.
        Senator Mikulski. Well, I appreciate that, but you can
    understand our questions based on the material which then goes
    to the full hearing. Based on the response of the
    Administrator, I think we need a response to the Blue Ribbon
    commission about, number one, where it is agreed upon and the
    highest priorities and then to be able to move.
        Rather than go into all the questions on terrorism, I think
    we need to go to the full committee, Mr. Chairman. I have taken
    a lot of time here.

                      cost savings in the disaster program

        Senator Bond. Well, I think it is very important. I am
    getting ready to, I think, submit most of the remainder of my
    questions for the record.
        But I want to discuss some of the things that we have
    mentioned before about getting a handle on the disaster relief
    program. I have congratulated you on the things you have done
    to improve the program like the disaster close-out teams. There
    is still much to do, such as defining the circumstances that
    allow State insurance commissioners to declare the insurance is
    or is not reasonable.
        What actions do you plan for publishing the final rule
    requiring 80 percent coverage of replacement value? What about
    the State insurance commissioners? What additional actions do
    you see to reduce costs in the disaster relief program? And
    what are the cost savings that you have achieved as a result of
    actions you have taken to date?
        Mr. Witt. Mr. Chairman, in every single State where we have
    done the mitigation it has been shown, even in repeated floods
    and other disasters, that prevention has saved money. For
    example, Hurricane Georges went through the Virgin Islands,
    however, there was very minimal damage because of the
    mitigation work that we had done following Hurricane Marilyn.
    Then when Georges hit Puerto Rico, it showed very clearly that
    Puerto Rico had not done as much mitigation or prevention.
        The insurance component is important. We hope in April to
    be ready to come forward with a published rule after working
    with the States and the insurance commissioners and the Public
    Risk Managers Association. We have a meeting coming up with
    those State insurance commissioners.
        [Clerk's note.--In subsequent conversations regarding the
    public buildings insurance rule, FEMA officials indicated that
    that publication of a draft rule is now scheduled for June due
    to a desire for additional meetings with stakeholders.]
        I feel pretty strongly that we will be able to come forward
    with that rule. It is a difficult issue to deal with, but we
    are tackling this and I think it should be addressed.
        Reengineering the public assistance program is one
    improvement that is now being implemented that is going to
    allow us to save administrative costs and save disaster costs
    because we are going to be able to respond and close out
    disasters much faster. The close-out teams that you referred to
    and that you all helped us put in place--and we appreciate
    that--are going to be able to consolidate from the three teams
    down to two teams by the end of this year because they have
    accomplished so much.
        Senator Bond. You have made that much progress in closing
    out.
        Mr. Witt. Yes, sir. That in itself has really made a huge
    difference.
        I think each thing that we are doing, even the flood
    mapping modernization plan, will help save disaster costs. Even
    if we can start addressing the repetitive flood losses, that
    will not only save funds in the Flood Insurance Program, but it
    is going to save disaster dollars. Even though claims are paid
    from the flood insurance program, there is still a need for the
    temporary housing program as part of the disaster response. So,
    all of those things will help save us money in the disaster
    program.
        Senator Bond. Did you say when the 80 percent replacement
    value would be published? Is that the one in April?
        Mr. Witt. We are hoping to publish in April.

                               disaster criteria

        Senator Bond. The disaster criteria. FEMA proposed the rule
    describing the factors and we need these criteria to be
    established and on the record. The Stafford Act says that
    Federal assistance is to be provided following an event which
    overwhelms State and local capability to respond, but it has
    not been formally defined.
        I am concerned the proposed rule does not go far enough.
    For example, the $1 per capita threshold has been in use for
    the past several years. No adjustment for inflation. It does
    not reflect a State's economic health or ability to raise
    public revenues. Why not?
        Mr. Witt. Well, I think it is a step in the right direction
    to work with the States in coming to a single disaster
    declaration criteria with an annual adjustment on the $1 per
    capita based on CPI and also putting in a minimum of $1
    million. $1 per capita for even the State of Arkansas, which is
    2\1/2\ million people or almost 3 million, would require at
    least a $3 million disaster in order to qualify. For
    California, over a $30 million disaster would have to happen
    before we could even look at declaring a Federal disaster.
        And by adjusting the per capita threshold each year, plus
    the cost share adjustments that we are making moves us in the
    right direction and with the support of the States. I think it
    is a good step.
        Senator Bond. Do you think there will be fewer disaster
    declarations as a result of that? Will it cut down on the
    number?
        Mr. Witt. Very possibly, yes, sir.
        Senator Bond. How does FEMA determine the amount of
    insurance coverage that should have been in force as required
    by law and regulation at the time of disaster? I do not believe
    that you currently have such information, and how will you get
    it before issuing a final rule?
        Mr. Witt. We are working on that now, and we will be happy
    to provide it to you, Mr. Chairman, as soon as we get it
    compiled.

                            stafford act amendments

        Senator Bond. Very briefly, on the proposed Stafford Act
    legislation, I gather that has been reported out of OMB now. I
    am advised by staff I was incorrect.
        Mr. Witt. Yes.
        Senator Bond. Can you give us a preview just of the key
    items, how much money they would save, and why you dropped out
    some of the red hot and ready items in the July 1997 package,
    such as the requirements that private nonprofits first seek SBA
    loans?
        Mr. Witt. Basically what we are trying to do with the
    insurance on public buildings covers the private nonprofits, as
    well as public structures, which I think will help make a
    difference.
        The amendments that we are going forward with hopefully
    will be incorporated into those introduced by the House and
    Senate as well. I do not have the legislation with me.
        Senator Bond. What kind of cost savings do you expect?
        Mr. Witt. I do not have the total, Senator.
        Senator Bond. Well, let me give you a little heads up. Last
    year, to be quite honest about it, we moved forward with some
    things that would spend some more money in hazard mitigation
    and do some things that were very good. When I asked my
    colleagues who were supporting the legislation where the
    savings were, they said, well, we are spending more money. And
    I said, as you and I would say in Arkansas and Missouri, that
    dog will not hunt.
        For me to remove my objection to any reforms in this area,
    I want to see savings, and I will be happy and join with you in
    supporting a bill that makes demonstrable savings. Just
    spending more money is not going to get it. So, we look forward
    to working together. I know we have got a lot of people who are
    interested in it, but my bottom line is how much savings are
    you going to show us.
        Mr. Witt. It is ours as well, Mr. Chairman. I think with
    your support and the committee's support that we have come a
    long way. It is not saying that we do not have further to go.
        Senator Bond. Yes.
        Mr. Witt. But we are working very hard on it.
        Senator Bond. I am just telling you what I am looking for.
        Senator Mikulski, I turn to you for the wrap-up and the
    exit question or questions, as described by some of our friends
    in the talk show business.

                        professional emergency managers

        Senator Mikulski. Thank you, Mr. Chairman. Just a comment
    and then a question.
        In 1988 when I became the chair of the subcommittee, the
    Cold War was drawing to a close. I wanted to bring down the
    fire wall between our response to the American people and a
    civil defense function because it had been so eaten up. Now it
    is so ironic that the two are melding because we are now
    threatened by weapons of mass destruction, perhaps nuclear, but
    more likely other types of disruption and security threat.
        That takes me to not putting walls back, but I think one of
    the things that I strive with in working with you, sir, was I
    believe that emergency management is a profession. It is a
    profession like being in the military. It is like being a
    physician and so on.
        One of the concerns that I had in looking at States was
    some had professional administrators like you in Arkansas and
    others were, quite frankly, patronage driven. There was always
    Louie who had helped in the campaign. Let us give him
    something. Now we are not going to go back to putting up a
    wall, but I never wanted to see local administrators patronage
    driven and really to honor the whole concept that this is a
    profession.
        Could you tell us, as my concluding question, because it is
    part of the institutionalization of our reforms, what you want
    to do to professionalize this and, therefore, it can be
    acknowledged both in service and in benefits, et cetera?
        Mr. Witt. Senator Mikulski and Mr. Chairman, since 1993 we
    have worked with State and local emergency responders to become
    more professional in what we do, and to be able to respond to
    do a better job. We have assessed their capabilities and have
    identified the weaknesses. We have tried to address those, but
    now is the time to move forward for the future. We have sat
    down with NEMA.
        Senator Mikulski. Can you say what NEMA is?
        Mr. Witt. NEMA is the National Emergency Management
    Association.
        I can say that NEMA and the local emergency management
    associations are far better now than they were 6 years ago.
        Senator Mikulski. Absolutely.
        Mr. Witt. And they have worked very hard. I am very proud
    of them, but we need to go a step further. We need to
    professionalize emergency management similar to fire services.
        The National Emergency Management Association's executive
    board, the State directors, and I sat down. We talked about
    what we needed to do in the future. We agreed that we need
    national standards for emergency management at the State and
    local level.
        We are working now to implement national standards for
    State and local emergency managers based on the National Fire
    Protection Association standard 1600. So, I think it is going
    in the right direction. We are working with them now and have
    already drafted standards to implement. This will help to
    professionalize this area.
        We have worked with universities. We have several
    universities that now are offering college credit courses in
    the emergency management profession leading to a college
    degree. So, I think we are almost there, but we have one more
    component to be addressed.
        Senator Mikulski. Well, we look forward to the advice of
    the professional association because they gave us a lot of
    guidance, as did the national organizations of fire fighters
    during our reform process. So, we look forward to this. We want
    to have professionals. We do not want to have bureaucracies. We
    like the idea of training at a collegiate level. We also think
    these are tremendous opportunities through a community college
    level, particularly as people are retraining and recycling
    themselves.
        Mr. Witt. I agree.
        Senator Mikulski. Thank you very much. I look forward to
    working with you on a prevention budget.
        Mr. Witt. Thank you.

                         Additional committee questions

        Senator Bond. Thank you very much, Senator Mikulski. Thank
    you, Director Witt. We do have a number of questions we have
    asked you about, and we will be submitting more for the record.
    We appreciate working with you and look forward to meeting the
    challenge ahead of us.
        Mr. Witt. Thank you, Mr. Chairman.
        [The following questions were not asked at the hearing, but
    were submitted to the Agency for response subsequent to the
    hearing:]

                      Questions Submitted by Senator Bond

                                   priorities
        Question. FEMA has requested $83 million in increased expenditures
    over fiscal year 1999, a 10 percent increase. Increases have been
    requested for additional staff, the emergency food and shelter program,
    a new repetitive loss initiative, fire program enhancements, and the
    list goes on. Given that the budgetary caps likely will prevent us from
    funding all of these increases, please provide a specific ranking of
    priorities.
        Answer. The increases requested in 2000 related to salaries and
    expenses reflect my first priority. It is absolutely necessary that
    FEMA have an adequate and well trained workforce, capable of delivering
    all of our programs in the most efficient and effective manner
    possible. The establishment of the Pre-Disaster Mitigation Fund and the
    request targeting repetitive loss structures under the Flood Mitigation
    Fund are both investments in the future of this nation that will save
    money and help prevent our citizens from becoming disaster victims.
    Therefore, I would place them among our top budget priorities. Finally,
    the enhancement for Fire Prevention and Training will allow FEMA to
    address many of the recommendations made by the Blue Ribbon panel,
    which was convened to review our fire programs.
                           hud ``unmet needs'' funds
        Question. FEMA asked each State with a declared disaster last year
    to submit a list of its unmet needs in an effort to work with HUD to
    allocate emergency CDBG funds. The list totals $2.3 billion. How would
    you characterize the lists sent in to FEMA--are they ``wish lists'' for
    the everything the State wants that may be connected to a disaster, or
    have they been analyzed and prioritized, and have cost-benefit studies
    been conducted? If FEMA were provided with funding for ``unmet needs''
    how will FEMA's process differ from how HUD allocated funds.
        Answer. It is our experience that most States do prioritize the
    unmet needs lists that they forward to FEMA. Often the lists are the
    product of the State's own unmet needs task force or hazard mitigation
    team that reviews requests from residents and local communities and
    distributes available State and Federal assistance. Because the unmet
    needs lists include early proposals, it is unlikely that the State has
    conducted benefit-cost analyses on them. Generally, detailed analyses
    such as these are done for the top priority projects once the State is
    certain how much funding is available.
        If FEMA had the responsibility for allocating unmet needs funding,
    our actions would build upon the processes used in supplying data to
    HUD. Our first priority would be to work closely with our customers at
    the State level to devise an equitable distribution. We would actively
    seek the input of State emergency management and community development
    agency officials regarding how to prioritize the needs reported. FEMA
    has well established relationships with its State partners and has a
    high degree of trust in their ability to identify key disaster needs.
                               disaster criteria
        Question. In January FEMA proposed a rule describing the factors it
    considers when evaluating a governor's request for a major disaster
    declaration. Criteria are needed to depoliticize the declaration
    process, and to clarify what constitutes a federal disaster. Under the
    Stafford Act, federal assistance is to be provided following an event
    which overwhelms state and local capability to respond. But this has
    never been formally defined prior to this rulemaking.
        I'm concerned the proposed rule does not go far enough. For
    example, the $1 per capita threshold has been in use for the past
    several years, with no adjustment for inflation, and does not reflect a
    state's economic health or ability to raise public revenues. Why?
        There are problems in other areas, such as how FEMA will determine
    insurance coverage that ``should have been in force as required by law
    and regulation at the time of the disaster.'' FEMA currently does not
    have such information. How will FEMA determine insurance coverage that
    should have been in place? Will FEMA consider these and other concerns
    before issuing a final rule?
        Answer. The National Emergency Management Association and the
    National Governor's Association have strongly objected to
    implementation of any criteria in regulation that would limit the
    flexibility of the President or the governors in meeting disaster
    needs. The evaluation factors that FEMA proposes would ensure that
    requests for disaster assistance are evaluated fairly and consistently
    while preserving Presidential discretion, and allow consideration of
    the unique circumstances of each request.
        In preparing the proposed rule, FEMA held extensive discussions
    with its State partners and local government organizations to determine
    the best means of identifying State capability, and ensuring that
    proposed declaration criteria encourage insurance and hazard
    mitigation. We found that there was no agreement on a simple and
    equitable method to measure State capability. In the interest of
    clarity, simplicity and practicality, we chose to continue the use of a
    per capita indicator as a means of gauging the relative means of a
    State's ability to handle a disaster--but would adjust this indicator
    annually based on the Consumer Price Index. Even this simple shift in
    approach met with resistance--a number of large population States
    objected to the use of the $1 per capita indicator, while some small
    population states objected to the minimum $1 million threshold proposed
    under the Public Assistance Program.
        With respect to insurance, FEMA proposes to consider the amount of
    insurance that should have been in force at the time of the disaster.
    Under the Stafford Act we already have an insurance provision that
    requires the applicant to obtain and maintain insurance for public
    buildings unless the Insurance Commissioner determines that the
    insurance is not reasonably available. FEMA requires flood insurance on
    all buildings in identified flood hazard areas as a condition of
    receiving disaster assistance. Under Section 406 of the Stafford Act,
    FEMA actually reduces the disaster assistance by the amount of flood
    insurance that could have been purchased, if the damaged facility is
    located in a special flood hazard area that has been identified for
    more than one year. FEMA tracks insurance purchase requirements and
    could determine, for any given disaster, which applicants were required
    to purchase insurance. Under a separate initiative FEMA is now in the
    process of preparing a proposed rule that would strengthen and clarify
    these insurance purchase requirements.
        Question. FEMA recently submitted to the Congress legislation
    amending the Stafford Act.
        What are the key items in that legislative proposal that deal
    specifically with improving the disaster relief program?
        Answer. Pre-Disaster Mitigation.--Our legislative proposal creates
    a new Section 203 in the Stafford Act that authorizes the Director to
    establish a program for States, local governments, and other entities
    for carrying out pre-disaster mitigation activities that exhibit long-
    term, cost-effective benefits and substantially reduce the risk of
    future damage from major disasters. This provision would give an
    explicit statutory authorization and mandate for FEMA's pre-disaster
    mitigation program.
        Hazard Mitigation Contributions.--We ask that the Congress amend
    section 404(a) of the Stafford Act by changing maximum post-disaster
    hazard mitigation contributions from 15 percent to 20 percent of
    aggregate amount of grants, applicable to all major disasters declared
    after the date of enactment of the new legislation. This provision
    would provide increased funding and emphasis on programs to reduce
    future damages from natural disasters when the window of opportunity,
    usually following a disaster event, is open.
        Insurance.--Our proposal would authorize the President to require
    by regulation that States, communities or other applicants protect
    property through adequate mitigation measures if the State's insurance
    commissioner certifies that insurance is not reasonably available.
    Under current law an applicant need not take any further action to
    insure or mitigate the property against future damage if the State
    insurance commissioner certifies that insurance is not reasonably
    available. When insurance is unavailable, risks are frequently quite
    high. This provision would authorize the President to require further
    action to reduce future potential damage to the affected property.
        Management Costs.--The legislation would define management costs
    and direct the President to establish management cost reimbursement
    rates, subject to periodic review for grantees and subgrantees
    receiving assistance under the Stafford Act. The purpose of this
    provision is to simplify payment of management costs to States and
    local governments, and to reduce the potential for duplication of
    payments for administrative and other indirect costs under the current
    system.
        Repair, Restoration, or Replacement of Public Facilities.--We also
    proposed to amend and reorganize Section 406, which provides authority
    to the President to make contributions to a State, local government, or
    person for the repair, restoration, or replacement of public facilities
    or private nonprofit facilities. The legislation would amend Section
    206 to authorize reduction in the current minimum Federal share of
    disaster assistance for facilities that had previously received
    significant disaster assistance on multiple occasions. This provision
    would have particular applicability to facilities, such as roads, for
    which insurance is not generally available.
        The amendment would principally support FEMA's reengineering of the
    Public Assistance Program by allowing FEMA to provide assistance based
    on estimates of repair costs. The President could determine actual cost
    to be eligible for assistance notwithstanding the prior estimate where
    the actual cost is above 120 percent or below 80 percent of the
    estimated cost.
        Consolidation of Housing and Individual and Family Grant (IFG)
    Programs.--We further propose to combine the Housing and Individual and
    Family Grant (IFG) Programs. As amended, this section would establish
    the type of assistance available for housing, repairs, and
    construction, and would cap total assistance per individual or
    household under the combined program at $25,000 per major disaster. In
    general, applicants would apply insurance proceeds or apply for an SBA
    disaster loan before applying for assistance under this provision. It
    would authorize the President to assist some individuals by repairing
    their homes or allowing them to rent alternate housing accommodations
    without applying for an SBA loan, and by providing financial assistance
    for medical, dental, funeral, personal property, and transportation
    expenses.
        Consolidating the two programs would result in improved services
    for victims of disasters. By working with only one program instead of
    two, eligible victims would receive faster processing and face fewer
    administrative burdens during their time of crisis.
        Question. How much money would be saved annually in the disaster
    relief fund if this legislation were enacted?
        Answer. CBO estimated the Stafford Act amendments in H.R. 707 would
    result in a $2 billion increase in outlays between 1999 and 2004. Of
    this estimate, CBO projects that ``most of the estimated increase in
    outlays--$1.3 billion of the five-year total--would result from
    provisions that would accelerate spending from FEMA's disaster relief
    fund, but would not change total spending over the long term.''
        Additionally, it is important to note that CBO's estimates do not
    take into account the savings to be achieved through pre-disaster and
    post disaster mitigation efforts. It has been estimated that for every
    $1 spent on mitigation, $2 are saved.
        We have not yet completed our analysis of annual savings in the
    Disaster Relief Fund from this legislation. We are working to refine
    the projected savings. When completed, we will forward this information
    to the Subcommittee.
        Question. Why does the legislation not include all of the proposals
    submitted in the July, 1997 package of amendments, such as the
    requirement that private nonprofits first seek SBA loans? Does FEMA
    continue to support the July 1997 proposal, or has the agency reversed
    its position on any of these items?
        Answer. We decided early in the drafting stage to propose a
    streamlined version containing those features that we considered
    essential to mitigate damages and reduce the costs of disaster
    assistance. We eliminated certain provisions such as the requirement
    that private nonprofits first seek SBA loans because these provisions
    had failed to find significant sponsorship or other support in the last
    Congress. We were concerned that the opposition generated by these
    provisions might unnecessarily delay, if not prevent, passage of these
    amendments. We continue to support our July, 1997 proposal and have not
    reversed our position on any of the items in that proposal. We have
    merely modified our proposal for the pragmatic reasons stated above.
                                   y2k issues
        Question. According to a November FEMA survey of state emergency
    management agencies, states are generally not aware of the status of
    emergency preparedness and progress towards compliance at the local
    level. According to the FEMA survey, ``the issue cited most often as a
    problem was the limited to total lack of specific Y2K funding and
    availability of technical resources and staffing necessary to assess,
    test, and validate systems and fixes.'' The survey also found that most
    states have no plans to assist or provide funding for local authorities
    to resolve Y2K issues.
        What are the resource requirements for ensuring the emergency
    services sector is prepared?
        Answer. FEMA does not have a role in repairing the billions of
    bytes of publicly and privately held computer code infected by the Y2K
    computer problem. However, FEMA can respond to the physical
    consequences of Y2K disruptions if they constitute a threat to lives,
    property, public health and safety pursuant to a Presidential
    ``Emergency Declaration.'' More importantly, with respect to the Y2K
    phenomenon, FEMA has embarked on an extensive ``outreach'' initiative
    that has direct and indirect benefits to State and local emergency
    management and emergency service agencies. The FEMA Y2K effort includes
    the development of contingency and consequence management planning
    guidance, training for State and local emergency managers, exercise
    support, consumer preparedness materials, senior leadership seminars,
    regional workshops, Emergency Education Network broadcasts, and a
    clearinghouse to exchange information and best practices.
        Question. Will any funds be made available from the remaining
    emergency funds, and if so, when?
        Answer. FEMA is finalizing budget requests for the remainder of
    fiscal year (FY) 1999 and 2000 to complete ongoing Y2K contingency
    planning activities and to have in place the operational capability at
    the Federal and State levels to monitor and, if necessary, respond to
    emergencies during the year 2000 rollover period. The budget requests
    will be submitted to the Office of Management and Budget before the end
    of May.
        Question. Is there adequate time remaining to identify and resolve
    Y2K problems at the local level?
        Answer. Given the wide disparity of readiness in emergency services
    systems at the county and municipal level, FEMA is increasing its
    outreach activities to these local organizations. Through our regional
    offices, FEMA is working with State and local emergency management and
    constituent organizations, as well as others, to broaden and accelerate
    Y2K emergency preparedness at the local level. Even though every system
    will not necessarily be fixed before January 1, 2000, it is not too
    late to begin fixes and develop contingency and consequence management
    planning.
                                 anti-terrorism
        Question. FEMA is requesting $30.8 million for anti-terrorism
    activities, an increase of $13 million over the current year. GAO has
    raised concerns in reports and testimony in the last year about the
    federal government's counterterrorism efforts. GAO cited the need to
    develop risk assessments to target resources effectively and set
    priorities. (See GAO/T-NSIAD-98-164). How has this concern been
    addressed? Please discuss how other concerns and recommendations cited
    in this report have been addressed, as they relate to FEMA's role in
    counterterrorism. Can you give us your assessment of the level of
    readiness at the state and local level for a possible terrorist attack?
    The Missouri National Guard has one of the 10 full Rapid Assessment and
    Initial Detection (RAID) teams. How does the National Guard tie into
    the planning, training, and exercise activities for possible terrorism
    attacks?
        Answer. Regarding risk assessments, Section 1404 of Public Law 105-
    261 provides that

            ``The Attorney General, in consultation with the Director of
            the Federal Bureau of Investigation and representatives of
            appropriate Federal, State, and local agencies, shall develop
            and test methodologies for assessing the threat and risk of
            terrorist employment of weapons of mass destruction against
            cities and other local areas. The results of the tests may be
            used to determine the training and equipment requirements under
            the program developed under section 1402 [the Nunn-Lugar-
            Domenici Domestic Preparedness Program]. The methodologies
            required by this subsection shall be developed using cities or
            local areas selected by the Attorney General, acting in
            consultation with the Director of the Federal Bureau of
            Investigation and appropriate representatives of Federal,
            State, and local agencies.''

        The other concerns cited in GAO's testimony are the need to improve
    coordination, develop overall priorities and strategy, and measure
    results. FEMA is supporting the Attorney General's National Domestic
    Preparedness Office (NDPO). In accordance with Presidential Decision
    Directive 62, FEMA also participates in the National Security Council's
    Weapons of Mass Destruction Preparedness, Consequence Management, and
    Protection Group (WMDP) and certain subgroups. Through the NDPO, FEMA
    expects to work with other departments and agencies to develop an
    interagency strategy that builds on the Attorney General's Five-Year
    Counterterrorism and Technology Crime Plan and includes performance
    measures. At the same time, FEMA will continue working to refine and
    enhance the Capability Assessment for Readiness (CAR).
        Readiness at the State and local levels varies from one
    jurisdiction to another, and it varies in terms of particular
    components of readiness: plans, training, equipment, exercises and
    evaluation. In the pilot State CAR report, States indicated that plans
    and equipment for weapons of mass destruction terrorism were areas in
    need of improvement. FEMA's request calls for additional funding for
    State and local planning; the Department of Justice is providing
    additional funding for State and local equipment.
        As a State asset, the National Guard ties into terrorism
    preparedness activities as a State's Governor sees fit. Certainly the
    National Guard is a resource not to be overlooked. It provides valuable
    support in all kinds of disasters--for example, in the areas of
    transportation and security. On a national level, the National Guard
    Bureau is completing a study mandated by Congress last year to
    determine how it can support terrorism preparedness within the existing
    framework of Federal, State, and local department and agency
    authorities and responsibilities. First responders have stressed that
    expansion of National Guard activities in terrorism preparedness should
    complement--rather than duplicate--existing systems for emergency
    preparedness and response, and that attention to National Guard
    resource requests not detract from resource needs of local responders.
    FEMA recognizes this as a legitimate concern, and the draft National
    Guard study indicates awareness of this concern. FEMA training courses
    are available to the National Guard; more than one-third of the
    curriculum for RAID teams consists of National Fire Academy courses.
                       flood map modernization initiative
        Question. In his fiscal year 2000 budget, President Clinton
    requested authority to assess a $15 transaction fee on all new
    mortgages and refinancings. Revenue from this transaction fee, totaling
    nearly $312 million over 5 years, will be used to update and improve
    the floodplain mapping system developed by FEMA. Among other things,
    these floodplain maps help FEMA determine which properties are eligible
    to participate in the National Flood Insurance Program. These
    floodplain maps have been found to be inaccurate around the edges. Why
    has FEMA allowed these maps to deteriorate to such a point where in
    some cases the maps indicate that properties are within a floodplain
    when in fact they are outside of the floodplain, and vice versa? FEMA
    has identified a $900 million requirement to update and modernize its
    flood maps. Why do we have such a large backlog of outdated maps in
    this program? Why are new funds needed to improve these maps, instead
    of a reallocation of FEMA's current funding to update the system?
        This proposed $15 transaction fee will apply to all new mortgage
    originations and refinancings, regardless of whether the property is in
    a floodplain or not. What is FEMA's rationale to impose a tax on home
    ownership on properties that are not in the floodplain? How will such
    homeowners benefit from improved floodplain maps?
        Can you explain the rationale for this fee and describe how you
    have consulted with the mortgage banking industry? If the fee is not
    enacted, what other ideas do you have to address this very large
    requirement? What are the ramifications of not addressing this need?
        FEMA's proposal would generate about $58 million next year for
    flood mapping activities. Under your proposal, how many years would it
    take to completely address the need to update and modernize the maps?
        Why is there such a large backlog, and why are new funds needed?
        Answer. The deterioration in the map inventory results from
    resource levels that have been inadequate to keep the map inventory up-
    to-date. The maps require updating as a result of man-made or natural
    changes and/or because newer data and/or improved study methods have
    become available. Also, many maps show flood-prone areas that were
    analyzed using only approximate methods of analysis which are not
    adequate for sound floodplain management. At present, FEMA is
    authorized to spend for mapping only the money generated by the Federal
    Policy Fee and through the sale of map products and services. FEMA
    could reconsider some of its current activities, and reduce services
    provided to rechannel additional funding to map modernization efforts.
    However, even with authority to do so, reallocating some of FEMA's
    current funding for map modernization would result in significant cuts
    in other service areas.
        Question. What is FEMA's rationale for assessing a fee on
    properties that are not in the floodplain? How will homeowners of such
    property benefit from improved floodplain maps?
        Answer. There is already a mortgage transaction fee that applies to
    all properties, whether or not they are located in the floodplain. Each
    mortgage transaction requires a flood map determination by the lender.
    Currently, a fee of about $25 is charged to the borrower for this
    determination. The fee goes to the lender and/or the contractor
    employed by the lender to provide the determination based on FEMA's
    maps; despite this, the NFIP gets no portion of this revenue. It is
    expected that the cost of the flood map determination reviews will
    decrease as a result of map modernization because digital flood maps
    will decrease the business costs of performing the reviews.
    Consequently, the overall increase in the cost of a mortgage from the
    proposed flood map mortgage transaction fee should be less than $15.
        A mortgage transaction fee is equitable because it is tied to real
    property. Each of the approximately 11 million mortgages transacted
    each year and every building permit issued by a community requires the
    use of the maps. The maps are used during the mortgage transaction
    process by lenders, flood map determination firms, property owners,
    insurance companies and agents, and real estate professionals. All
    homeowners will benefit from improved floodplain maps because new homes
    will be elevated above the flood elevation or built to avoid the
    hazards altogether. More accurate flood maps will also mean that there
    will be fewer instances where Letters of Map Amendment, which require
    property surveys at the expense of the property owner, are required to
    remove properties that are inadvertently shown in flood hazard areas.
        Question. Has FEMA consulted with the mortgage banking industry?
        Answer. The mortgage banking industry, through its representation
    on the Council, supports map modernization. We have had some
    interaction with the industry regarding the fee and will continue to
    work with the banking industry.
        Question. If the fee is not enacted, what other ideas does FEMA
    have to address this requirement?
        Answer. FEMA has considered the following funding options for map
    modernization:
        Increase Federal Policy Fee.--One option is to increase the $30
    Federal Policy Fee. High fees required to recover the whole cost would
    be a disincentive to new policyholders and would leave the burden of
    flood mapping primarily on policyholders. However, the use of fees to
    cover some of the long-term maintenance costs may be appropriate.
        Increase Fees on Sales of Map Products and Data.--Prices for
    products and data sets could be increased to cover some of the costs of
    the mapping program. Currently, the prices cover only the direct cost
    of map printing and distribution. Some increase in price appears to
    have justification and might be acceptable to customers. However, even
    a large price increase would only result in minimal additional revenue,
    and would be unpredictable as a principal source of funding for this
    initiative. Also, significantly increasing prices for map products,
    such as digital files, would likely result in few customers purchasing
    them from FEMA at the higher price and then duplicating and selling the
    information to multiple other users at a lower price to recoup their
    costs.
        Increase Flood Insurance Rates.--Another option would increase the
    cost of flood insurance to cover the incremental cost of map
    modernization. However, this option leaves the burden of paying for
    flood maps on only a small portion of the beneficiaries (approximately
    4 million policyholders), and any increase will discourage the purchase
    of new policies.
        Annual Discretionary Appropriations.--Annual appropriations could
    be requested each year to cover the map modernization costs from 2000
    through 2006. Long-term maintenance costs in 2007 and beyond would be
    covered by fee increases.
        Long-Term Borrowing from NFIF.--The up-front costs of the program
    could be financed by borrowing from the NFIF. The debt would be repaid
    with interest through reduced losses and fees paid by program
    participants. However, fees of some type would be needed to pay back
    the debt plus interest.
        Non-Federal Cost Sharing.--State and local governments could
    provide some portion of the costs based upon the value of floodplain
    mapping to other State and local government activities. It would be
    difficult to obtain significant funding from the relatively few States
    and communities with adequate resources. Further, it would be a
    significant challenge to coordinate the funding levels appropriate for
    each entity. In addition, the States would view this as an unfunded
    mandate. This option would provide only a portion of the required
    funds.
        Question. What are the ramifications of not addressing this need?
        Answer. Many of the proposed new mapping products and processes
    will gradually be implemented even if full funding for map
    modernization is not made available. However, the effect of these new
    products and processes will take longer to be realized, meaning it will
    take much longer than the planned 7-year period to upgrade the 100,000-
    map panel inventory for nearly 19,000 communities.
        The failure to conduct the needed flood data updates and convert
    the mapping inventory to a digital format would severely limit the
    potential of a modernized mapping program to dramatically reduce the
    loss of property. We project that the map modernization will result in
    approximately $26 billion less property damage to new residential and
    non-residential structures over a 50-year period than will result under
    the current rate of remapping. If implementation of the plan is delayed
    one year, we estimate that the long-term benefits to be achieved will
    be reduced by approximately $1.5 billion; a significant portion of
    these lost benefits will likely result in increased Disaster Relief
    funding. Each year of delay in implementing the plan will add
    approximately $19 million to the total cost for the plan.
        Question. Under the proposal, how many years would it take to
    address completely the need to update and modernize the maps?
        Answer. As planned, map modernization will take 7 years. However,
    the proposed mortgage transaction fee represents only approximately
    one-half of what is needed for map modernization. Thus, with the
    proposed fee but no other increased funding, map modernization will
    take 14 to 16 years.
                            repetitive loss proposal
        Question. FEMA proposes $12 million to buyout, relocate, or elevate
    properties that have had multiple claims to the Flood Insurance Fund,
    in thousands of cases exceeding the home's value. While this may be a
    prudent policy, it should be accompanied by administrative reforms to
    this program which seek more accountability on the part of
    policyholders.
        Can you describe what plans you have to make administrative changes
    to the program, and the specific time frame, and whether you believe
    that the repetitive loss program should go forward only with such
    administrative changes?
        Answer. FEMA, along with Members of Congress, is concerned about
    the cost to the taxpayers for natural disasters. We are especially
    concerned about the individuals who suffer repetitive losses in these
    disasters. To address theses concerns, FEMA is interested in
    implementing improvements to the National Flood Insurance Program
    (NFIP) to protect residents of communities, not penalize them.
        FEMA is in the process now of looking at the NFIP's statutory and
    regulatory authority to facilitate a repetitive loss initiative using a
    common-sense approach, which will help homeowners and business owners
    reduce their flood risks, and reduce the costs to taxpayers, while
    improving the stability of the NFIP by eliminating reoccurring losses.
    FEMA looks forward to working closely with the Congress in considering
    the proposals for this initiative.
        FEMA will be targeting those properties that have suffered 4 or
    more losses and those that have 2 or more losses where cumulative
    payments exceed the property value. FEMA will provide a list of the
    target properties to each State. We will work with State and local
    governments to develop grant applications that address the flood
    problems facing those high-risk structures. Grants will be provided
    through States to communities for elevation, acquisition, or relocation
    projects.
        FEMA intends to administer the program in partnership with the
    State through the Flood Mitigation Assistance (FMA) program, using a
    75/25 cost-share. In this way, FEMA will build upon the experience
    gained in working with communities in previous mitigation projects.
    Hazard Mitigation Grant Program (HMGP) funds for flood disasters may
    also be used to mitigate repetitive loss properties. The $12 million
    appropriation will be exclusively targeted at high repetitive loss
    properties. Most of the high repetitive loss properties are older
    structures, built prior to the implementation of the NFIP, and their
    insurance rates are lower than actuarial rates would be. FEMA is
    working to enable individuals to protect themselves by providing
    alternatives through voluntary buy-outs and elevation or floodproofing
    of their homes.
        If an insured property owner refuses FEMA's offer to take action to
    make the structure less flood prone, FEMA believes it is reasonable
    public policy to then only provide insurance at a full-risk premium.
    The Agency is preparing to be able to carry out this policy in fiscal
    year 2000.
        FEMA believes that this administrative change should be part of the
    overall repetitive loss strategy. However, since the vast majority of
    property owners targeted in these first mitigation efforts are expected
    to want to take mitigation action, the repetitive loss program should
    go forward with or without such an initial change.
        Question. How many projects would FEMA be able to target with these
    funds? How much money is needed to address all of the high-risk,
    repetitive loss properties?
        Answer. FEMA has estimated that the average cost to mitigate a
    structure (combining and averaging costs for acquisition and elevation)
    is $57,500. At a cost share of 75/25, the Federal share would be
    $43,125 per structure. This would allow us to mitigate approximately
    270 of the highest risk repetitive loss structures.
        FEMA estimates that mitigating these structures would result in an
    annual reduction of insurance payments of $9,600 per structure, for an
    overall annual savings of $2.6 million per year for the $12 million
    initial investment. This one time appropriation would pay for itself
    within about seven years, by significantly reducing insurance claims on
    high repetitive loss properties.
        An estimated $360 million would be required to mitigate losses to
    the 8,300 buildings that FEMA has targeted in addition to current
    programs.
        Question. What requirements will there be for participants in the
    program?
        Answer. FEMA believes that those who choose to locate in hazardous
    areas should bear the risk involved with that decision. Most repetitive
    loss property owners are paying flood insurance premiums at less than
    full-risk rates as is allowed for Pre-FIRM properties. Thus, our
    strategy would be to renew the flood insurance only at full-risk
    premiums if a property owner declines an offer of mitigation
    assistance. In addition, the statutory authorities that limit disaster
    assistance where flood insurance has not been maintained should be
    fully utilized.
        Question. Will funds be used solely for repetitive loss properties
    which are insured under the NFIP, or will the additional 41,000 non-
    insured properties which are repeatedly flooded also be targeted?
        Answer. The $12 million appropriation will be primarily targeted at
    insured high repetitive loss properties. The properties that at one
    time were insured repetitive loss properties, but that are no longer
    insured, have dropped insurance for a variety of reasons, not the least
    of which may be that mitigation actions have already resolved the
    problems. FEMA believes that the requested funds should be primarily
    targeted at currently insured problem properties as a priority.
        Those properties that are still at risk, but not insured, remain
    eligible for assistance through other mitigation programs including the
    Stafford Act Hazard Mitigation Grant Program (HMGP).
        Question. FEMA estimates that $200 million is lost, on average each
    year, in the NFIP owing to repetitive loss properties. What is the
    average annual cost estimate in the disaster relief fund associated
    with repetitive loss properties (both insured and uninsured)?
        Answer. At this time, we do not know what the disaster relief costs
    are associated with repetitive loss properties. Insurance claims
    payments (and not disaster assistance or SBA loans) cover the costs
    related to insured repetitive loss properties. There are costs to the
    Disaster Relief Fund associated with response services and recovery
    assistance, however, they are difficult to isolate.
        Some of the disaster-related considerations are as follows:
      --Rental assistance may be required to temporarily house occupants of
            some buildings while they are being repaired. The average
            rental assistance provided by FEMA is under $3,000.
      --There may be some costs associated with unmet needs, paid for by
            FEMA and SBA grants, particularly for those who did not
            purchase insurance coverage for the value of their home
            contents.
      --Costs for Public Assistance to repair the infrastructure that
            services buildings in repetitively flooded areas are incurred.
      --Emergency response services are required for frequently impacted
            properties.
      --Also, in the aftermath of an event, specialized recovery services
            produce added expenses (including possible additional costs
            associated with increased demand on building departments for
            permitting; cleanup of environmental contaminants and household
            wastes; etc.).
        It should be noted, however, that many of the repetitive losses do
    not occur during declared disasters. For these losses, no disaster
    assistance would be provided, however they continue to produce added
    costs for local communities and property owners.
        Question. Is FEMA targeting repetitive loss properties within
    existing mitigation programs and initiatives? Please explain.
        Answer. Existing mitigation programs and initiatives are inter-
    related with the Agency's repetitive loss strategy. For example:
      --In September 1998, FEMA issued a policy memorandum challenging
            States to address repetitive loss buildings by focusing HMGP
            funding to activities that serve to mitigate damages to these
            structures.
      --In fiscal year 1999, the Flood Mitigation Assistance program
            guidance requires States to evaluate projects in order of
            priority depending on how well they address repetitive loss.
            The first priority is reducing the number of NFIP-insured
            structures with 4 or more losses; the second is to reduce the
            number of insured structures with 2 or more losses where
            cumulative payments have exceeded the property value; the third
            priority is to reduce the number of insured structures that
            have sustained substantial damage; and the fourth is to pursue
            other FMA eligible activities.
      --Project Impact communities are also focusing their attention on the
            issue of repetitive loss, and many have implemented programs to
            reduce their flood risk.
                                 project impact
        Question. FEMA claims that the federal investment in the initial 7
    pilot Project Impact communities has leveraged $24 million in non-
    federal resources. Please provide a specific, detailed analysis of how
    you arrived at this figure.
        Answer. FEMA solicited information from each of the pilot
    communities in order to determine what non-FEMA funds were leveraged
    against the initial FEMA investment. This information included total
    contributions received by each pilot community, to include ``in-kind''
    contributions, and what benefits were received from the leveraged
    contributions. The communities were also asked to submit information on
    how the leveraged funds were utilized.
        Examples of some of the pilot community contribution highlights
    received are provided, as follows:
        The City of Oakland, CA, has received in-kind contributions from
    over 50 corporations, utilities, private non-profit partners and local
    and State government partners.
        The City of Pascagoula, MS, has committed more than $200,000 in
    fiscal year 1999 for drainage improvements, to include a $96,000
    citywide project to clean and reshape drainage channels to improve
    flows.
        Lowes, State Farm, and Wal-Mart donated over 100 smoke detectors
    that were installed in the homes of elderly and low income families by
    ROTC cadets and Boy Scouts during ``Spring Break'' in 1998.
        Allegany County, MD, is matching funds with the Natural Resources
    Conservation Service to restore stream channels.
        The State of Maryland is funding implementation of new Allegany
    County building codes.
        The New Hanover County, NC, School Board passed a bond issue of
    $2,753,000 to accomplish retrofitting of individual school buildings
    pursuant to a mitigation engineering study.
        The City of Seattle leveraged numerous non-Federal partners
    including: Seafirst and Washington Mutual Banks which reduced charges
    and profits and marketed loan packages for mitigation; Puget Sound
    Energy which provided technical assistance products to contractors and
    homeowners; and, the University of Washington which provided technical
    assistance products to contractors and homeowners.
        The State of North Carolina selected New Hanover/Wilmington as a
    ``pilot community'' in the State's Local Hazard Mitigation Planning
    Initiative and provided $73,000 to assist the development of a multi-
    hazard mitigation plan.
        Solutia, Inc. is donating ``Keep Safe'' windows valued at an
    estimated $25,000 for a school in New Hanover County, NC. It is also
    donating storm resistant windows for the Deerfield Beach, FL, Chamber
    of Commerce, valued at $25,000.
        Fannie Mae and FEMA have established a partnership to offer special
    loans for residential homeowners that will be dedicated solely to
    protecting America's homes from hurricanes, floods, earthquakes and
    other natural disasters. The loan program will fund construction
    projects such as replacing roofing with fire-resistant materials,
    waterproofing the exterior walls of a home, and reinforcing the
    foundation of a home.
        The State of Florida designated Deerfield Beach/Broward County as a
    Florida Showcase Community. This is an initiative for the development
    of disaster resistant, sustainable communities, similar to and
    supportive of Project Impact. At least $240,000 has been pledged by the
    State.
        A more detailed report is being prepared pursuant to a request of
    our Inspector General.
        Question. What are the lessons learned to date in this program?
    Have program deficiencies been identified and corrected?
        Answer. The single biggest lesson we learned is that for a
    community to become disaster resistant it must include as broad a
    community base as possible, and find ways to keep it a dynamic issue
    for its citizens. However, to help facilitate a community-based
    initiative, there has been a cultural shift for the FEMA organization.
    Our staff have had to rethink the Federal role relative to an
    initiative that is not a traditional grant program. We need to continue
    to expand our skill base to cover new challenges such as community
    facilitation, encouraging peer mentoring between communities, and
    motivating all sectors of society to accept responsibility for becoming
    disaster resistant. We need to refine the administrative mechanisms for
    coordinating Federal participation with locally driven decisions which
    may include non-traditional applications like revolving funds for
    retrofitting structures. And we need to do even more to integrate our
    efforts with other community-based initiatives at the Federal and state
    level, which would complement Project Impact. We are addressing all of
    these areas, but they are issues which require institutional change and
    additional staff resources.
        Question. What are the outyear plans for this program? How many
    Project Impact communities should there be in each state?
        Answer. FEMA plans to leverage Federal resources in already-named
    communities, encourage more established communities to mentor newer
    ones, and help improve State capability to promote disaster resistant
    communities.
        Also, FEMA will work to incorporate risk reduction into the purview
    of many disciplines. For instance, urban planners do not typically
    factor natural hazards risk reduction strategies into community
    development. School boards do not call for curriculum on becoming
    disaster resistant as part of environmental studies programs. Civic
    organizations do not think of mitigation activities as community
    service. The economic development community does not factor overcoming
    vulnerability to natural disaster as part of their growth strategies.
    We see considerable effort in partnerships and education activities as
    a vital component to maintaining momentum and expanding participation.
        Rather than a fixed number, the amount of Project Impact
    communities in each State will be driven by risks, local initiative,
    and the need for Federal support for pre-disaster mitigation.
        Question. How will you assess the effectiveness in the long-term of
    the Project Impact grants?
        Answer. FEMA has found that mitigation is most effective when
    designed and implemented at the local level. Unfortunately, in the past
    the greatest incentive for a community to implement mitigation has
    typically been after a disaster. Therefore, the Project Impact
    initiative was designed not only to help communities address current
    natural hazard risks but to encourage the community to incorporate
    natural hazard loss reduction as a continuing part of the community
    culture so that it becomes a sustainable activity. To assess the
    effectiveness of this strategy, FEMA is implementing an evaluation
    process that will establish a baseline on the number of structures and
    infrastructure at risk as well as the current level of mitigation
    activity in the community at the time it begins the Project Impact
    process. For five years the community's progress will then be evaluated
    annually to determine the reduction in the number of structures and the
    extent to which infrastructure is at risk, increases in mitigation
    education and training activities in communities, and activities to
    foster proactive business and/or government actions. The data collected
    will be used to formulate changes as well as to demonstrate the success
    of strategy implementation.
        Question. How does Project Impact relate to the Institute for
    Business and Home Safety's Showcase Community Program? Why doesn't FEMA
    adopt the IBHS's eligibility criteria and program structure that guides
    the Showcase Community Program?
        Answer. We have worked with the Institute for Business and Home
    Safety both at the community level and at the National level. IBHS is
    involved directly in some of the Project Impact communities. Director
    Witt has held several meetings with IBHS staff to explore areas of
    cooperation. At the last meeting he requested IBHS solicit support from
    the insurance industry to provide policy incentives for those persons
    mitigating their structures and to solicit financial support for public
    education measures.
        With respect to the eligibility criteria, we are happy to report
    that IBHS has adopted many of the Project Impact principles and
    features within their Showcase community program.
        Question. Do projects funded under the Project Impact initiative
    undergo any type of analysis to determine if they are cost-effective?
    If so, please describe the approach. If not, how does the agency know
    that this funding is targeted to the projects that provide the greatest
    amount of future cost savings?
        Answer. The Project Impact grant is intended not only to address
    immediate community mitigation needs but also as a means for leveraging
    funding and resources from other partners, and an incentive for
    becoming proactive about emergency management. Therefore, community
    Project Impact leaders have been given some discretion on how the funds
    will be used. Specifically, this discretion allows the grant to be used
    for training, education, and initiative administration activities, as
    well as mitigation actions which lend themselves to cost-benefit
    analysis. When successfully implemented, all of these activities can
    increase capability and the general public's knowledge of mitigation. A
    well-informed community can lead to important zoning and/or bond issues
    that provide tremendous loss reduction benefits.
        Nonetheless, evaluation methods have been developed. For more
    traditional projects such as structural retrofits and buy-outs a cost-
    effective analysis will be done. In addition, Project Impact
    communities will be evaluated each year for the number of these types
    of projects implemented through their Project Impact effort. For the
    more non-traditional projects as described above, data pertaining to
    these elements will be collected annually to evaluate the effectiveness
    of these options in the overall Project Impact effort.
                        hazard mitigation grant program
        Question.. Under the HMGP program, 15 percent of the total disaster
    relief assistance spent on a disaster is made available for a state's
    mitigation programs. GAO has found that about 20--25 percent of HMGP
    grants that it looked at are not subject to benefit-cost analysis, so
    we cannot be confident that funds are going to those projects which
    will provide the most protection against future disaster losses. Can
    you explain the rationale for exempting such a large percentage of
    projects for benefit-cost analysis?
        Answer. The 20-25 percent figure mentioned in the question came
    from recent Congressional testimony submitted by GAO. The report gives
    a correct explanation of FEMA policy in this area, although the sample
    taken is not necessarily representative of the entire HMGP process.
        Benefit-cost analysis, while useful in many situations, cannot
    always be applied easily to many projects. The nature and types of
    hazards, the fact that the return on investment will not be entirely
    realized until the next disaster, and the necessity of avoiding
    piecemeal approaches in applying mitigation approaches all justify
    variance from a singular usage of benefit-cost analysis.
        Question. GAO mentions in its testimony that FEMA exempted four
    categories of mitigation projects within the Hazard Mitigation Grant
    Program from benefit-cost analysis. How does the Agency determine cost-
    effectiveness without using benefit-cost analysis? Is any qualitative
    effort made to compare project costs with benefits?
        Answer. The four categories mentioned in the GAO report refer to
    the following: (1) tornado warning systems; (2) mitigation planning;
    (3) FEMA's ``5 percent'' initiative; and (4) substantially damaged
    structures in a regulatory floodway or floodplain. To address the
    Stafford Act cost effectiveness requirement, projects in the first
    three categories must be supported by narrative analysis included with
    an HMGP application. The fourth category of projects is expected to
    yield a high level of benefits because the criteria for such projects
    ensure they protect structures at extremely high risk. A more detailed
    discussion of each category is provided:
        Tornado Warning Systems.--Rigorous economic analysis of warning
    systems is problematic for two reasons. First, it is notoriously
    difficult to determine the probability of tornadoes--even the best
    estimates have considerable statistical uncertainty. Second, it is also
    hard to predict whether people will take action when they are warned,
    and how effective their actions will be in preventing injuries or
    damage.
        Given that warning systems reach large geographic areas and give
    large numbers of people the time and opportunity to protect themselves,
    a reasonable argument is made that these are among the most cost-
    effective measures FEMA funds. The Agency requires warning systems to
    be part of an overall risk reduction plan, thereby enhancing their
    effectiveness. Risk reduction plans must have public education
    components, designated shelters, and strategies for encouraging the
    construction of safe rooms in new buildings.
        Mitigation Planning.--Planning is relatively inexpensive, and has
    broad, long-term positive results. It is somewhat analogous to building
    codes, in that if mitigation planning influences the way people behave,
    e.g., how buildings are constructed or where people go in a tornado,
    there is a general improvement in life and property safety. Here again,
    benefits are very difficult to quantify. Yet the best use of mitigation
    funds in other areas is compromised without effective planning. Local
    governments are particularly effective in applying these dollars in a
    way which maximizes the effectiveness of the 404 grant. When the
    relatively low costs of such projects are balanced against this, it is
    valid to conclude that the intent of cost effectiveness requirements is
    met.
        The ``5 percent Initiative''.--The ``5 percent Initiative'' relates
    to a FEMA policy providing States with discretionary use of up to 5
    percent of the HMGP funds available after disasters. The underlying
    premise for this policy is that since State and local authorities are
    in the best position to understand local mitigation needs, some leeway
    in project selection is desirable. Projects typically funded under this
    exemption include warning systems, planning, public education and
    mitigation technologies still under development. Very often, the issue
    of cost effectiveness prevents such projects from being seriously
    considered because analysis is problematic.
        Substantially Damaged Structures in a Regulatory Floodway or
    Floodplain.--FEMA requires that participating communities in the
    National Flood Insurance Program enforce a substantial damage
    provision. This provision requires individual owners to elevate or
    relocate structures substantially damaged (more than 50 percent of pre-
    event value) during disaster events. This has proven to be the most
    cost-effective way of minimizing or eliminating flood damage. FEMA's
    policy regarding the acquisition of substantially damaged structures is
    based on 30 years of experience in the National Flood Insurance Program
    that mitigating structures meeting the two criteria proves cost
    effective. In fact, the Agency is undertaking a management audit of the
    policy and expects to have results within two months, which we will
    share with GAO and the committee.
        Question. Based on GAO's testimony, FEMA is limited in its ability
    to demonstrate that funding under its Hazard Mitigation Grant Program
    is targeted to cost-effective projects because the agency categorically
    excludes certain types of projects from benefit-cost analysis,
    including certain property acquisitions. The committee's fiscal year
    1999 report (Senate Report 105-216) directed FEMA to ensure that all
    property acquisition projects it funded met stringent benefit-cost
    requirements. During fiscal year 1998, FEMA obligated $415 million
    under HMGP and a sizable amount might have been obligated without going
    through a benefit cost analysis. First, how much of the $415 million
    was obligated for property acquisitions? Second, how much of the $415
    million was obligated for relocating properties? Third, how much of the
    $415 million was obligated for elevating properties? Fourth, how much
    of the $415 million was obligated for ``50/50 planning'' projects and
    for what planning purposes were funds obligated?
        Answer. FEMA made significant progress in obligating HMGP funds in
    fiscal year 1998. Of the $415 million obligated in fiscal year 1998,
    acquisition projects accounted for nearly $81 million, relocations
    accounted for $3.2 million, elevations accounted for nearly $11.5
    million, and ``50/50 planning'' projects accounted for approximately
    $1.6 million. The planning projects were for local flood mitigation,
    watershed management, and local multi-hazard mitigation plans, and
    State mitigation plan updates. The ``50/50 planning'' projects were
    part of a limited opportunity for States to utilize funding from
    disasters prior to June 1993 that had a 50/50 cost-share towards
    planning efforts.
        Question. GAO has also raised concerns with respect to the states
    hazard mitigation plans, required by Section 409 of the Stafford Act.
    GAO found that state administrative plans often lack specific
    information such as the identification of individual mitigation
    projects. Are you concerned that this requirement is treated as a
    ``boilerplate'' exercise? Shouldn't 409 plans be a serious guidepost
    for an effective, prioritized allocation of HMGP dollars?
        Answer. In the last year, FEMA has targeted the issue of effective
    State mitigation (409) planning as a top priority, creating a new
    Planning Branch in the FEMA organization and developing new guidance
    for States. As a result of this effort, State 409 plans are becoming
    increasingly sophisticated as they realize the value of developing a
    framework featuring strategies for selecting post-disaster mitigation
    projects and initiatives in the pre-disaster timeframe. FEMA's
    Mitigation Directorate has produced guidance documents, courses, and
    workshops that provide strategies and tools to assist States in
    establishing mitigation policies and priorities that make 409 planning
    an ongoing activity, rather than waiting until after a disaster
    declaration.
        With improved 409 planning, the post-disaster identification and
    prioritization of specific mitigation projects will take place more
    rapidly. This also results in projects that have been more carefully
    and thoughtfully selected and designed. While there is clearly room for
    States to improve their planning activities, the best State 409 plans
    are bringing about an effective, prioritized allocation of HMGP
    dollars.
        Question. FEMA has made disaster mitigation a primary goal in its
    efforts to reduce the long-term costs of disasters. In previous
    testimony to this committee, FEMA noted that, ``every dollar we spend
    in the area of pre-disaster mitigation can save $2 in future taxpayer
    dollars'', and that savings were ``well documented''. Would you provide
    this committee with copies of studies or other evidence or analysis
    that supports this statement?
        Answer. This figure, originally cited in 1995 to describe the
    benefits FEMA expected to accrue from the flood prone property buyouts
    after the 1993 Midwest floods, was an average of the expected savings
    FEMA estimated for projects approved under the Hazard Mitigation Grant
    Program (HMGP). A study conducted by Iowa's Emergency Management
    Division demonstrated significant benefits associated with mitigation
    measures taken after the 1993 floods in Iowa. Specifically, the study
    reported, ``55 projects have been funded for a total investment of
    $47,372,324.94. The long term benefit of this investment in avoided
    future damages is anticipated to be $101,440,205.42 (page 2 of The
    Benefit of Hazard Mitigation Projects in Iowa).''
        Since all HMGP projects must be cost-effective, an analysis of the
    expected savings versus the cost of a potential project is completed
    for all projects approved. Generally, this analysis estimates the
    expected savings in the form of reduced damages over the life of the
    project, given the frequency and severity of the hazard at that
    location. FEMA has greatly improved its capability to conduct such
    reviews in the last few years through the development of benefit-cost
    analysis software and training.
        FEMA recently updated that analysis to include more recent project
    approvals. This analysis shows an overall ratio of 2.54. This simply
    means that the expected savings from a $1 HMGP investment are $2.54
    over the life of an ``average'' mitigation project. This reflects a
    sampling of 1,334 HMGP projects approved between February 1990 and
    September 1998. We still recommend use of the more conservative
    estimate of 2 to 1, however, to characterize the expected savings.
        We are finalizing the report that reflects this analysis, and will
    make it available as soon as it is completed.
        Question. In response to this committee's previous request for
    quantifying the extent to which mitigation reduces future disaster
    relief costs, you responded that you planned to ``initiate a study of
    the cost effectiveness of a broad spectrum of mitigation measures (such
    as the implementation of new building codes and acquisition/relocation
    projects) before the end of fiscal year 1998''. What is the status of
    that study and what other evaluations are ongoing or planned to
    determine the cost savings achieved through disaster mitigation
    efforts, such as the Hazard Mitigation Grant Program and Project
    Impact?
        Answer. FEMA has undertaken several studies and actions designed to
    capture or demonstrate the cost-effectiveness of mitigation measures.
    They include the following:
        NAS Study of the Costs of Disasters: FEMA funded a multi-year
    effort with the National Academy of Sciences (NAS) to categorize the
    direct and indirect costs of natural disasters in order to provide a
    better accounting of the losses that could be avoided through
    mitigation actions. This study is nearly complete, and should be
    available soon.
        FEMA has completed two volumes on the ``Costs and Benefits of
    Natural Hazards Mitigation,'' which outline the benefits of a wide
    variety of mitigation measures in different geographic regions, and
    under different circumstances. A third volume is currently under
    development as well, and should be available this summer.
        The Mitigation Directorate recently completed a study of mitigation
    efforts in four communities in Alabama and Georgia, and two other
    studies are underway. The Alabama/Georgia study shows the economic
    results of mitigation projects in the communities, using rigorous
    economic and engineering analysis. In all four communities, the results
    were positive--the projects generated more long-term economic benefits
    than they cost initially. While this does not represent a nationally
    representative sample, it does provide strong evidence of the cost-
    effectiveness of mitigation measures in reducing flood risks.
        We continue our efforts to examine the Hazard Mitigation Grant
    Program (HMGP) project database to learn the extent to which mitigation
    projects produce savings. As noted in the answer above, this has
    demonstrated a benefit cost ratio of 2.54 to 1.
        We are conducting an in-depth review of how the substantial damage
    cost-effectiveness policy is applied. The former study is intended to
    be a general look at the economic benefits of funding a variety of
    mitigation projects nationwide. The study is about half-complete, but
    the initial results are very positive. The substantial damage policy
    study is discussed in the question below.
        Question. In responding to questions for the fiscal year 1999 VA/
    HUD Appropriations hearing before the House (p. 103), FEMA cited an
    example of elimination of flood risk for high-risk properties.
    According to the example, FEMA conducted a survey that identified about
    560 homes along Minnesota's Red River that, ``had significant or
    substantial damage (the damage was categorized as greater than 40
    percent).'' FEMA funded 555 of them for acquisition under HMGP at a
    total FEMA cost of about $17.2 million. What were the benefit-cost
    results for these properties? Answer. The purpose of the survey
    mentioned above was to identify properties at high risk for future
    flooding that might be good candidates for the State's property
    acquisition program. Under FEMA policy, a detailed benefit-cost
    analysis was not conducted on these properties because they were
    substantially damaged. Currently, we are completing a study of 370 of
    these properties to verify the benefit-cost ratios for acquiring them.
    Question. (13g): FEMA is in the process of conducting studies to
    establish a valid basis for property acquisitions--possibly the most
    costly of the four exemptions discussed in GAO's testimony. A year has
    passed and millions of dollars have been obligated since concerns were
    raised about the lack of analytical data supporting the decision for
    this exemption. When will that evidence be provided, and why has the
    exemption continued for the last year, without having the proof that
    these projects are indeed cost-effective measures? How are you assuring
    that these projects are cost effective?
        Answer. FEMA has started the study, which is expected to take
    another two months to complete. The study, which is designed to test
    the presumption that structures meeting the criteria will be cost-
    effective, has the following elements:
      --It will initially focus on six communities in three States.
      --Hundreds of structures acquired in the six communities will be
            subjected to rigorous benefit-cost analysis.
      --The study will be carefully controlled so that results will be
            useful in estimating benefits nationwide for sites similar to
            those in the study
        FEMA believes this policy is sound because it targets structures at
    the highest risk and that would be required to be elevated or relocated
    under NFIP standards. Each structure included must meet specific
    criteria that indicate it is at high risk and would be cost effective
    to purchase.
        It is very significant and important to note that acquisition of
    substantially damaged structures not only removes a building from a
    hazardous area, but it reduces the expenses associated with disaster
    relief efforts. Such projects also provide an environmental and social
    dividend in communities through the creation of open space and
    unobstructed floodplain areas.
                           fire program improvements
        Question. FEMA is requesting $45 million for fire prevention and
    training, an increase of $13 million over current spending levels. This
    is largely in response to a recent Blue Ribbon Panel Review of the fire
    program. The panel identified significant problems in terms of
    leadership, resource management, and communication. Does FEMA plan to
    implement each of the panel's recommendations? Please provide a
    description of FEMA's plans for each recommendation. Will the funding
    FEMA has requested be sufficient to meet the panel's recommendations?
    What are the highest priorities?
        Answer. The development of USFA's fiscal year 2000 budget request
    began in fiscal year 1998, prior to the establishment of the Blue
    Ribbon Panel. The Blue Ribbon Panel was established to review the USFA
    programs and provide recommendations on improvement, and rendered its
    report on October 1, 1998, after submission of the initial fiscal year
    2000 budget request.
        In response to the 34 recommendations made in the Blue Ribbon Panel
    Report, several changes have already been made. Many of the requested
    budget enhancements for the USFA for fiscal year 2000 are similar to
    recommendations made by the Blue Ribbon Panel. Although the budget
    request does not address every increase the Panel recommended, the
    following requested increases reflect several of USFA's main program
    areas (the numbers in parentheses represent the corresponding
    recommendation number from the Blue Ribbon Panel report):
      --Data Collection.--$1,881,668,and 2 positions to expand and increase
            fire incident reporting through NFIRS, focusing on data
            accuracy and timeliness (recommendation 7);
      --Public Education and Awareness.--$1,631,666 and 2 positions to
            expand and increase outreach efforts with special emphasis on
            community hazard assessment and mitigation strategies in
            support of Project Impact and groups at greatest risk from fire
            (#11 and 12);
      --Research and Development.--$1,631,666 and 2 positions to conduct
            research that addresses the Nation's fire problem to support a
            basis for training and public education efforts (#8, 9 and 10);
      --Training.--$4,204,000 and 5 positions to expand and increase
            delivery of all training programs at all levels and increase
            development of training materials and curriculum (#14 and 15);
      --$1,272,000 and 3 positions to update course materials and provide
            additional deliveries in Counter-Terrorism (#21); and,
      --$3,859,000 for capital improvements and to renovate and expand a
            building to house the simulation lab and the Integrated
            Emergency Management Course classrooms. The capital
            improvements include such things as roof replacement, road
            repair, equipment and furniture replacement, space utilization
            renovations on the NETC campus in support of student and user
            needs. The increase also will support funding for travel
            (training related, pilot deliveries, site visits, committee
            meetings, etc.), employee training and other staff expenses
            such as a portion of the utility expense and supplies.
        FEMA has already made several other changes to implement the
    report's recommendations. While some of these changes have been quickly
    implemented, others are in the process of being implemented. These
    include (the numbers in parentheses represent the corresponding
    recommendation number from the Blue Ribbon Panel report):
      --Chief Marinucci, who has over 21 years of fire protection service,
            8 years of which were gained as an elected official of the
            International Association of Fire chiefs, and most recently as
            President of the International Association of Fire Chiefs, has
            been appointed as a senior advisor to the Agency. He will
            develop a plan to be implemented by FEMA to provide the
            appropriate leadership, management structure, program and
            training activities, and funding and staff resources to put
            USFA on a more pro-active course to address the new and
            challenging issues facing the fire protection community in the
            21st Century.
          Chief Marinucci will be involved in a USFA and NFA management
            review, the development of a plan for the future of USFA's
            major programs, and USFA funding and resource management plans
            and plans to assure closer integration of fire issues into
            FEMA's ongoing strategic planning process. (recommendations 1,
            3, 4 and 5)
      --Increasing the U.S. Fire Administrator's advocacy role, such as
            participation in Presidentially declared disasters (#32);
      --Recommissioning America Burning (#34);
      --Calling an annual meeting with the fire service organizations; the
            first of which is to occur on August 2nd and 3rd in Emmitsburg,
            Maryland (#29); and,
      --Signing a Memorandum of Understanding on Project Impact with the
            major fire service leaders.
                          consolidated grants proposal
        Question. FEMA proposes $142 million for a new consolidated
    emergency management grant program for states. This represents an
    increase of about $12 million over current spending for such
    activities, $8 million of which is devoted to anti-terrorism
    activities. The consolidation is intended to streamline administrative
    procedures and provide greater flexibility to states in the use of
    these funds. It would allow states to target funds to their highest
    priority areas based on where the greatest risks are. FEMA has already
    consolidated several state grant programs, and several years ago
    launched a performance partnership grant. What's new here? How does
    this relate to the performance partnership concept? What is the status
    of performance partnerships?
        Performance partnerships are intended to provide flexibility to the
    states, in exchange for increased accountability. Has FEMA developed
    performance measures for the states that clearly demonstrate
    accountability?
        Please describe how FEMA has integrated risk information into the
    Performance Partnership process and how FEMA has assisted state and
    local governments in conducting hazard identification and risk
    assessment?
        An internal task force recently was formed to determine how this
    new program will work. Why is FEMA creating this Task Force only now--
    wasn't this recommended in a 1994 OIG audit report? When will the task
    force make recommendations?
        Answer. The Emergency Management Performance Grants (EMPG) will
    replace the current cooperative agreement (CA) mechanism through which
    our non-disaster funds to State emergency management agencies are
    provided. In 2000, FEMA will continue the existing Performance
    Partnership Agreements (PPAs). The EMPG, when fully implemented in
    2001, will be a performance partnership grant based on State readiness
    and capabilities. It will continue to provide greater flexibility to
    States and allow them to target funds (with the exception of Terrorism)
    to their highest priority areas. Under the PPA/CA, States have had
    limited flexibility with the funds they received because each funding
    source retained unique requirements. Also, the past structure of FEMA's
    budget for these funds precluded flexibility because of the need to
    retain inherent reporting requirements.
        The PPA approach has been successful; it has produced a new way of
    conducting business between FEMA and our State partners. It marked the
    end of paternalism in the FEMA/State relationships. While it did not
    result in an overnight partnership of mutually agreed upon priorities
    and strategies for achieving objectives, it has moved the relationships
    a long way toward that goal. Under the PPA/CA, States could combine
    hazard-specific programs in order to develop multi-hazard strategies.
    Because some mitigation techniques can result in increased risk of
    other hazards, hazard mitigation has benefited significantly from these
    multi-hazard strategies.
        Under the EMPG, this concept is developed further to allow States
    to combine funds, strategically plan, and measure performance. (Funds
    provided through the EMPG that are derived from Terrorism must be spent
    on terrorism-related activities.) As we implement the EMPG, we expect
    there will be far more recognition and accommodation of the unique
    approaches States are taking to strategic planning. Enhanced
    accountability will result as State organizations are allowed the
    flexibility to incorporate their own approaches and criteria into
    performance agreements. FEMA will hold the States accountable for
    meeting performance goals set jointly.
        The increased flexibility provided to the States through the EMPG
    is intended to enhance the professionalism of State and local emergency
    managers and build a decentralized capability for State and local
    preparedness and response. States will be evaluated annually, and FEMA
    will develop remedial or corrective actions to address critical
    weaknesses. In exchange for flexibility, FEMA will require
    accountability from the State and will achieve this by:
        Partnering with the States:
      --The task force is working with State representatives to develop
            program goals and objectives that will serve as the basis for
            program guidance to ensure the EMPG best meets the needs of
            FEMA and the States.
        Negotiating with the States:
      --As part of our partnership with the States, each EMPG will be
            individually negotiated to determine funding priorities and
            performance measures.
      --State-developed workplans will have to achieve FEMA, as well as
            State, objectives.
      --Workplans will have to describe goals and objectives, results and
            benefits expected, and quantifiable projections of the program
            and accomplishments to be achieved and the performance measures
            to be used.
        Requiring quarterly reporting:
      --FEMA will require quarterly financial and performance progress
            reports.
      --Technical assistance and monitoring will be provided throughout the
            year to ensure success of the EMPG.
      --States will be required to submit final financial and performance
            reports that link back to the workplans and performance
            measures that were negotiated.
        A 1994 OIG audit report was issued on FEMA's Comprehensive
    Cooperative Agreements (CCAs), the predecessor to the PPA. Among the
    recommendations in that report were:
      --Assess hazards and risks;
      --Develop integrated emergency management objectives and performance
            standards;
      --Increase States' flexibility by consolidating emergency management
            programs;
      --Move from a hazard-specific to a functional program structure; and
      --Assess States' capabilities to respond to disasters by conducting
            and evaluating exercises and monitoring actual disaster
            response.
        A task force was formed to implement changes to the CCA for 1995.
    Subsequently, in 1996, the CCA was eliminated and replaced with the
    PPA/CA. Many of the OIG's recommendations were incorporated into the
    PPA/CA process, including consolidation of certain programs;
    decentralization of non-disaster programs to Regions; and devolvement
    of day-to-day grant management to States. FEMA Regions have spent a
    substantial amount of time working with States to develop performance
    measures, which are incorporated into the PPAs. FEMA has also been
    developing systems for risk assessment and capability assessment.
        A recently issued follow-up to the initial OIG report (I-01-99,
    March 23, 1999) supports our efforts to further consolidate PPA/CA
    funding streams and recommends the Chief Financial Officer continue to
    explore such consolidation. In addition, the report recommends that
    FEMA, in coordination with States, develop performance measures that
    work towards the Federal goal of improving State emergency management
    programs and that clearly demonstrate accountability by showing how
    FEMA funding has improved the States' emergency management capability.
    We believe the EMPG process will do this.
        The EMPG Task Force will continue the process begun four years ago.
    The Task Force is working with State representatives to work through
    the issues related to implementing the consolidated grant, such as
    formulating guidance and developing baselines for performance
    measurement and methodologies for assessing overall State capability
    and mitigation needs. Recommendations for a framework to address
    accountability issues should be completed by early Summer.
                        national flood insurance program
        Question. The National Flood Insurance Program's outstanding
    borrowing has decreased from $917 million in June of 1997 to $722
    million in December 1998. What is driving the decrease in the program's
    borrowing and do you expect this trend to continue? What is your plan
    for repaying the current borrowing?
        Answer. Since levels of flooding are the critical determinant in
    repaying the current borrowing, it is not possible to determine with
    certainty when the repayment will be complete. Through simulation
    modeling, FEMA has made some estimates of the probability of repaying
    current borrowing over the next five year period. Based on premium
    income alone, FEMA has a 16 to 27 percent probability of completely
    repaying the amount borrowed from the Treasury at some point within the
    next five fiscal years.
        FEMA has submitted a report to Congress that outlines various
    alternative strategies for repaying the borrowing. It includes a direct
    appropriation as one possible option that Congress might consider.
    Based on premium income and an appropriation or forgiveness of $400
    million out of the current $800 million in outstanding debt, FEMA has a
    41 to 50 percent probability of complete repayment at some point within
    the next five fiscal years.
                            funding for puerto rico
        Question. According to a recent news article in the San Juan Star
    (2/19/99), FEMA will be awarding Puerto Rico $190 million to build
    homes. Is this true? Under what authority is FEMA awarding funds for
    the building of homes? Please explain what the ``New Safe Home
    Program'' is.
        Answer. We understand the Government of Puerto Rico is in the
    process of developing a grant application for approximately $190
    million in federal funding under FEMA's Hazard Mitigation Grant Program
    (HMGP). This project has not yet been formally submitted to FEMA. FEMA
    will be assisting Puerto Rico over the next several months to develop a
    grant project suitable for funding under the HMGP.
        Based on our understanding, the ``New Safe Home'' program that
    Puerto Rico plans to propose is intended to provide funding to ensure
    that residents whose homes were destroyed during Hurricane Georges are
    re-housed in safe, disaster-resistant housing. The proposal is likely
    to request HMGP funding to go toward the mitigation elements of this
    larger re-development project. ``New Safe Home'' houses will be located
    outside of flood hazard areas and will be designed to withstand both
    wind and seismic loads. They will also be built in full compliance with
    the 1997 UBC building code recently adopted by the Government of Puerto
    Rico.
                                     ______

                      Questions Submitted by Senator Burns

        Question. We know that FEMA has been using the National Imaging and
    Mapping Agency (NIMA) to provide data from national systems for
    emergency response and assessment. In your newly proposed effort to do
    detailed mapping of flood risk areas, have you investigated using any
    mapping tools developed by NIMA or the National Reconnaissance Office
    to assist in converting your data to a useful mapping format?
        Answer. FEMA closely cooperates with NIMA. The laser terrain
    standard that has been drafted and is currently going through final
    review was coordinated with NIMA. Data developed under this performance
    based standard will meet the draft Digital Terrain Elevation Data
    (DTED) standard used by NIMA, and will be easily converted from Digital
    Elevation Model (DEM) format to DTED format using standard Geographic
    Information System (GIS) programs and tools. We are also keeping NIMA
    informed of our technology applications and are assured by our NIMA
    partners that they are keeping us abreast of their technology
    improvements.
                     state and local assistance (sla) funds
        Question. This program was designed to be a 50/50 match between the
    federal government and the states. There have been serious shortfalls
    in SLA funding and this problem only seems to be getting worse. What is
    your proposal in order to keep your promise and provide adequate
    funding, at the 50 percent level, for local emergency management
    agencies? Montana is doing what it can to fund the shortfall, but we're
    having a tough time.
        Answer. State and Local Assistance (SLA) has been one of several
    programs delivered under the auspices of FEMA's Performance Partnership
    Agreements (PPAs) that provide financial assistance to State and local
    governments. SLA has been provided in the past both with 100 percent
    Federal funding, and with a 50 percent Federal/50 percent State cost
    share. In accordance with Congressional direction in the Conference
    Report on the 1996 appropriation and the House Report on the 1997
    appropriation, FEMA notified States that 1999 would be the last year
    100 percent Federal funds would be provided through the SLA program.
        In 2000, funds previously provided to State emergency management
    agencies under the PPA/CA will be provided through an Emergency
    Management Performance Grant (EMPG). Rather than receiving several
    separate annual funding allocations as is presently the case under the
    PPA/CA, each State will receive one aggregated allocation under the
    EMPG. The annual allocation will be derived from the programs
    contributing dollars to the grant. A composite cost share for the grant
    will be calculated based on the cost share policies of the programs
    contributing funding as well. The total EMPG request of $142 million
    assumes funds equal to the 1999 SLA-50 and SLA-100 levels ($105
    million). Moreover, an additional $10 million is requested for the EMPG
    that is attributed to the former SLA funding stream.
        Question. What are your specific plans for improvements for
    Bioterrorism/Biowarfare precautions and response? Is additional funding
    needed in this area?
        Answer. FEMA is working with the Federal Response Plan (FRP)
    agencies to develop Time Phased Force Packages for different weapons of
    mass destruction (WMD) scenarios, one of which is the use of a
    biological agent. Time Phased Force Packages identify what resources
    are needed for a given scenario and in what order and timeframe they
    need to be deployed for maximum effectiveness.
        FEMA does not offer courses specific to bioterrorism. Some
    terrorism-related courses developed by FEMA's National Fire Academy and
    Emergency Management Institute (EMI) do include information on
    biological agents and associated precautions. As these courses are
    revised and new ones are developed, FEMA will include where appropriate
    information on new technologies and techniques--for example, in the
    area of chemical and biological agent detection. This also holds true
    for the first responder Job Aid for terrorism response that FEMA's
    National Fire Academy plans to issue this year. Training provided by
    the EMI addresses various terrorism preparedness and general emergency
    management issues applicable to all types of disasters including
    bioterrorism. If the U.S. were unfortunate enough to suffer a
    bioterrorism event, it could result in a public health emergency of
    major proportions. Standard EMI emergency planning courses, for
    example, would be very pertinent in helping local officials know how to
    plan for such an event.
        FEMA stands by its request for fiscal year 2000. Before identifying
    any gaps that FEMA can and should fill in this area in the outyears,
    FEMA will consider work being done by the U.S. Army Soldier and
    Biological Chemical Command in its Biological Warfare Improved Response
    Process (in which FEMA participates), by the Department of Health and
    Human Services in its initiatives for chemical and biological terrorism
    preparedness, and by the Department of Justice in its conduct of a
    congressionally mandated needs assessment.
                                     ______

                     Questions Submitted by Senator Stevens

        Question. Thank you for convening the interagency task force to
    address the fish disaster in Western Alaska. It led to the relief
    package that is helping Eskimos and others survive the winter.
        The Corps of Engineers built the Moose Creek dam upstream from
    North Pole, Alaska. It resulted in downstream flooding of about 50
    homes. The Fairbanks North Star Borough is rezoning the area to
    prohibit new construction, but the remaining homeowners are literally
    down the creek without a paddle. The local government believes
    modification of some of the homes will prevent future flooding, and is
    seeking funding to begin the work. Would you be willing to take a look
    at this issue and let me know if there are any programs at FEMA that
    could help us correct this problem, so we can prevent future flooding?
        Answer. FEMA will be pleased to look into how Mitigation programs,
    particularly the Hazard Mitigation Grant and Flood Mitigation
    Assistance Programs, may be used to help address this flooding problem.
    In addition, we will work with the State of Alaska and the local
    government to see if there are other sources of available funding to
    help resolve this problem.
        As you know, FEMA has been actively involved in dealing with this
    problem for many years. The Chena Lakes Flood Control Project consists
    of the Moose Creek Dam and floodway on the Chena River, a levee system
    along the Tanana River, and an interior drainage network between the
    Chena and Tanana Rivers. The project was built to protect people and
    property in and around Fairbanks from the flooding of the Chena and
    Tanana Rivers. The purpose of the Flood Control Project is to restrict
    flows on the Chena River through Fairbanks to 12,000 cubic feet per
    second. This is accomplished by closing the gates at the Chena River
    and impounding floodwaters behind the embankment that was constructed
    between the Chena and Tanana Rivers. When the impounded water exceeds
    the elevation of the floodway sill at the Tanana River, water flows
    over the sill into the Tanana River. During extended periods of
    impoundment behind the embankment, water enters the porous medium below
    the embankment and flows through the ground, thereby increasing the
    ground-water elevation downslope of the embankment. The elevated
    ground-water level sometimes causes flooding in basements and crawl
    spaces and has disrupted well and septic tanks.
        Since 1992, investigations have been underway to find a feasible
    solution to mitigate the groundwater flooding problem resulting from
    impounding water behind the embankment for extended periods. All major
    structural solutions investigated have been found to be cost-
    prohibitive. The suggested solution proposed in a February, 1997, FEMA
    Report entitled, ``Evaluation of Ground-Water Flooding Problems and
    Mitigation Alternatives for the North Pole Area of Alaska,'' is a
    combination of the following non-structural and site specific
    mitigation measures:
      --Implementation of land-use regulations such as were recently
            adopted by the Fairbanks North Star Borough, to restrict
            building and construction practices that increase the flood
            problem;
      --Extension of flood insurance for ground-water flooding to all
            residents in the affected area;
      --Development of a Geographic Information System (GIS) to determine
            structures at risk and to assist community officials in future
            land-use planning; and
      --Implementation of site-specific mitigation measures. Site specific
            mitigation measures to affected structures could include
            floodproofing; relocation to higher ground; demolition and
            replacement; and creating open space (such as parkland.)
        Question. The University of Alaska has informed me of a proposal in
    your fiscal year 2000 budget request called Disaster Resistant
    Universities, and the need for a federal matching fund to protect the
    nation's research investment. Can you describe this program, and your
    idea for a federal fund for universities?
        Answer. By proposing a Disaster Resistant Universities initiative,
    FEMA is responding to the concerns expressed by several university
    Presidents that their institutions are at risk of serious damage from
    natural disasters. We believe this initiative will protect the nation's
    investment in university research and education, preserve the economic
    engine of communities when they most desperately need it--after
    disasters--and reduce future Federal disaster assistance costs.
        We will take the core ideas of Project Impact--public/private
    partnerships, local control, and investments focused on ``the bottom
    line''--and apply them to universities. In forming the program, we are
    also creating a partnership among the White House Office of Science and
    Technology Policy, Federal research agencies and the Department of
    Education. Their involvement, as well as the input of the Congress, is
    critical to ensuring that the investments we protect reflect the
    nation's research and education priorities.
        Currently, FEMA is investing in two initial efforts that are
    critical to making this project a reality. The first is a study by
    several professors at the University of California, Berkeley on the
    economic connections among universities, their surrounding region,
    State and nation, and how disasters at universities affect these areas.
    Secondly, a team of university leaders from various States, including
    Alaska, Missouri, West Virginia, Florida, and New York, will contribute
    to the development of methods that all universities can use to
    successfully assess and lessen their risks using a combination of
    public and private resources. The work of these university leaders over
    the next six months will result in a precisely defined Disaster
    Resistant Universities program.
        The idea for a federal matching fund to do the mitigation work on
    campuses was first proposed by universities last year. We believe that
    the appropriation of such funds will achieve long-term savings,
    particularly at universities, where the human and economic costs of
    disaster recovery are very high as compared to the costs of pre-
    disaster mitigation. Because the purpose of this fund is to protect the
    large Federal investment in research and education, the cost of this
    research investment protection fund could be tied to the amount the
    federal government spends annually on research at universities. A
    figure that has been discussed--$75 million--represents only one half
    of one percent of this yearly investment. Federal resources alone
    cannot solve the problem, but should be used to leverage the support of
    other university stakeholders. Thus I have made it clear that
    universities would have to match any grant from this fund with State or
    private money. This should not be difficult; Project Impact has shown
    us that Federal resources in this area will generate mitigation
    investments well beyond ``match'' requirements.
        There are several criteria envisioned for participation in the DRU
    program. A university would be eligible if they conduct substantial
    Federal research, if their students receive large amounts of financial
    aid, and if the campus lies in an area likely to see a natural
    disaster. Additionally, universities receiving funds would have to
    demonstrate a commitment to mitigation in partnership with the private
    sector, have conducted risk analyses, and have completed disaster
    response plans. The specific criteria for awards from this fund will be
    determined in consultation with the Congress and Federal research
    agencies in order to ensure that Federal technical and financial
    support is distributed broadly, in terms of geography, need, and type
    of institution.
        While the Federal and State governments and private sector have the
    greatest stake in preserving their investments in higher education, the
    creation of a Disaster Resistant Universities program is ultimately the
    responsibility of the universities at risk of natural disasters. To
    make this program a success, leaders of these institutions will have to
    assess the hazards facing their campuses, work with their neighbors to
    mitigate those hazards, inform the Congress of the value of such a
    program, and, most importantly, forge public-private partnerships with
    corporations and community groups.
        Question. There are many sectors of society that are worthy
    recipients of federal funds for this purpose. Why should we protect
    universities over elementary schools, hospitals, or city halls?
        Answer. There are many institutions, including those you mentioned,
    in need of assistance. In fact, in 118 communities throughout the
    country, FEMA's Project Impact is helping schools, hospitals, and city
    halls, as well as homes, farms and churches, become disaster resistant.
        This proposal responds specifically to the universities' request
    for Federal leadership because of their critical role in society, the
    taxpayer's tremendous investment in them, and the high cost of
    repairing campus facilities after a disaster. Universities are
    important not only because they educate our future leaders, but also
    because their research leads to innovations and industries which drive
    our economy and enhance our quality of life. Additionally, universities
    are frequently the largest employer and most significant cultural and
    recreational resource in their regions.
        There is substantial Federal commitment to universities; this year
    it will be over $65 billion for research and financial aid. If we look
    at just three universities for which natural disasters are a
    significant concern, the University of Alaska, West Virginia
    University, and Washington University in St. Louis, we see that last
    year the Federal research and financial aid investments totaled over
    $330 million. When natural disasters hit universities, they are very
    costly to rebuild. For example, in the last five years, FEMA has spent
    hundreds of millions of dollars at Cal State Northridge, Colorado State
    University, University of North Dakota and Syracuse University, among
    others. In proposing this initiative, we hope to reduce these human and
    economic costs at institutions that are critical to the communities
    that surround them.
                                     ______

                    Questions Submitted by Senator Mikulski

             anti-terrorism initiatives/weapons of mass destruction
        Question. How effective is the government's inter-agency effort
    working in planning to prevent and respond to terrorist attacks? What
    is your assessment of the working relationship between the agencies? Is
    there a ``one stop shop'' that state and local governments can go to
    for answers regarding preparedness training and resources for Weapons
    of Mass Destruction attack?
        Answer. FEMA is the lead agency for Federal consequence management
    response. The interagency Federal response planning community has
    established a strong, productive, and lasting working relationship. The
    community has worked diligently to ensure the appropriate consequence
    management response plans and related guidance documents are published.
    For example, the Terrorism Incident Annex to the Federal Response Plan
    (FRP), numerous special events plans like the Operational Supplement to
    the FRP for the North Atlantic Treaty Organization's 50th Anniversary
    Summit, and the Time Phased Force Packages (under development) are
    documents that have been worked through the FRP community. FRP-related
    working groups such as the Catastrophic Disaster Response Group, the
    Emergency Support Functions Leaders Group, and the ad hoc Interagency
    Steering Group for the development of the Time Phased Force Packages,
    as well as the Contingency Planning and Exercises Subgroup established
    under authority of Presidential Decision Directive 62, all have been
    directly involved in development and coordination of these documents.
        Similar levels of cooperation have existed among departments and
    agencies involved in terrorism preparedness programs. In the
    Interagency Work Group on Domestic and International Counterterrorism
    Exercises, the Contingency Planning and Exercises Subgroup, and the
    Multi-Agency Task Force on Nunn-Lugar-Domenici Exercises, FEMA and the
    other consequence management agencies work together with the Federal
    Bureau of Investigation and the U.S. Army Soldiers and Biological
    Chemical Command (SBCCOM) to design, plan, conduct, and evaluate a wide
    variety of emergency response exercises. FEMA also has actively
    supported training efforts of the Departments of Defense and Justice.
        The National Domestic Preparedness Office, proposed by the Attorney
    General, is poised to become a ``one stop shop'' for State and local
    governments to obtain information on preparedness programs and
    resources relating to terrorism involving weapons of mass destruction.
        Question. What is the status of FEMA's work in training local
    communities? How many cities/localities have received training? Who is
    being trained--first responders, local trainers? What type of training
    has been provided?
        Answer. FEMA has worked closely with the Departments of Defense and
    Justice in their training efforts. In addition, FEMA offers a limited
    program of its own terrorism-related training such as the Emergency
    Management Institute's (EMI) Integrated Emergency Management Course
    (IEMC): Consequences of Terrorism, Emergency Response to a Terrorist or
    Criminal Event, and Senior Officials' Workshop on Terrorism and the
    National Fire Academy's Emergency Response to Terrorism curriculum.
        To date over 32,000 fire and emergency response personnel--trainers
    and end users--have received the National Fire Academy's (NFA)
    Emergency Response to Terrorism training through FEMA and State
    channels; the same material has been offered through the Department of
    Justice's training program. Additional NFA Emergency Response to
    Terrorism courses in incident management and in tactical considerations
    for company officers, emergency medical services personnel, and
    hazardous materials responders are being made available this year.
        The IEMC: Consequences of Terrorism course has been delivered 16
    times since it was created in 1997: five times for specific communities
    and 11 times for audiences comprised of emergency officials from a
    cross section of communities. The training audiences for EMI's
    terrorism-related training includes a broad range of emergency
    responder and other public officials who have emergency management
    responsibilities. The Senior Officials' Workshop on Terrorism, for
    example, which EMI developed in conjunction with the Department of
    Defense and an interagency team, is specifically intended to train
    mayors and their cabinets regarding special considerations for planning
    to deal with terrorist events involving weapons of mass destruction.
        FEMA terrorism-related courses are primarily classroom-based
    training, although the culminating event of the IEMC: Consequences of
    Terrorism course is a major tabletop exercise, and the other courses
    include exercises and some hands-on activities. FEMA has a distance
    learning capability through its satellite-based Emergency Education
    Network (EENET), and makes some of its terrorism-related course
    materials available on the internet.
        Question. What type of follow-up does FEMA do with localities after
    they have been trained? Is any work done to ensure that the plan is one
    that is operational and not just a paper plan stuck in an office
    cabinet?
        Answer. FEMA's National Fire Academy is in the process of obtaining
    long-term feedback from students (and their supervisors) who have taken
    the Emergency Response to Terrorism: Incident Management course. The
    National Fire Academy also receives feedback on its courses through its
    Training Resource and Data Exchange (TRADE) network.
        FEMA is requesting additional funding in fiscal year 2000 for its
    exercise-based courses. Courses such as the Integrated Emergency
    Management Course (IEMC) with a terrorism scenario allow key officials
    from a community to come together, simulate response using the
    community's plans, and identify gaps in their plans and procedures.
    FEMA is working with the Department of Justice to make this course
    available at its Ft. McClellan facility. Communities that participate
    in FEMA's IEMC are required to submit a report after one year
    indicating how they have applied the lessons they learned as a result
    of their participation in this training event.
        FEMA is providing funding to States for State and local terrorism
    consequence management planning and for exercises to test those plans.
    Exercises allow emergency responders at all levels of government, as
    well as the private and volunteer sectors, to test policies, plans, and
    procedures. In recent years, FEMA, other Federal departments and
    agencies, and State and local governments have participated in a wide
    variety of terrorism-related exercises including ILL WIND, ELLIPSE
    ALPHA/GAUGED STRENGTH, KEYSTONE 2-98, ROCK `N' ROLL, and WESTWIND 99.
        Question. What is your assessment of local governments' and first
    responders' preparedness to respond to terrorist attacks? What was the
    latest assessment of local and state capabilities to respond to a
    terrorist attack? What types of criteria were used to measure
    preparedness?
        Answer. The level of preparedness varies across the country, and
    its varies among the aspects of preparedness (planning, training,
    equipment, exercises/evaluation). Certain local jurisdictions'
    terrorism preparedness has benefited from increased Federal attention
    such as that provided by the Department of Defense's Nunn-Lugar-
    Domenici Domestic Preparedness Program, the Department of Justice's
    training and equipment initiatives, the Department of Health and Human
    Services' Metropolitan Medical Response System initiative, and the
    interagency and intergovernmental planning involved in preparing for
    certain special events. Others are able to apply lessons learned from
    other technological hazard programs, such as FEMA's Chemical Stockpile
    Emergency Preparedness Program (CSEPP) and the Radiological Emergency
    Preparedness (REP) program. However, if the pilot State Capability
    Assessment for Readiness (CAR) report can be used as an indicator of
    local capability, planning and equipment for weapons of mass
    destruction terrorism are areas in need of improvement. After-action
    reports from some of the tabletop exercises conducted under the Nunn-
    Lugar-Domenici Domestic Preparedness Program provide support for this
    conclusion.
        FEMA's latest capability assessment was the pilot State CAR report
    of December 1997. The CAR asked States to assess:
      --Equipment for nuclear, biological, and chemical (NBC) terrorism
            (e.g., development of HAZMAT teams with sufficient equipment to
            respond to an NBC incident, availability of pharmaceuticals);
      --NBC terrorism plans (e.g., coordination with Federal agencies,
            coordination with private sector hospitals);
      --NBC terrorism training (e.g., training HAZMAT and EMS responders to
            recognize NBC incidents and respond safely).
        FEMA is revising the CAR instrument to provide more detailed
    information.
        Question. What is your assessment of the ``unmet needs'' at the
    local level in terms of preparedness? What is FEMA's role in helping
    localities and states meet those unmet needs?
        Answer. Since the level of preparedness varies around the country,
    so do ``unmet needs.'' Assessments indicate that, in general, planning
    and equipment are two areas in need of improvement. In addition, FEMA
    is working with States to ensure that local jurisdictions not included
    in Defense and Justice initiatives are able to obtain terrorism-related
    training.
        While the Department of Justice is providing substantial funding
    for equipment, FEMA's role under Presidential Decision Directive 39 is
    to ensure that State--and by extension, local--plans and capabilities
    for terrorism consequence management are adequate and tested. To that
    end, FEMA is providing funds to the States for State and local planning
    and exercises. As noted above, FEMA is also working with States--State
    fire training centers and State (emergency management) training
    officers--and providing grants to ensure that terrorism-related
    training is available to emergency managers and responders in the
    ``balance of the nation.''
        Question. Are there any knowledge or equipment gaps for responding
    to terrorist attacks at the state and local level that haven't been
    filled? If so, which agencies are working to fill them? What is FEMA's
    role?
        Answer. There are an estimated 1.3 million paid and volunteer fire
    service members in the United States. To date, over 32,000 individuals
    have taken the National Fire Academy's Emergency Response to Terrorism
    training through FEMA and State channels, and approximately 15,000
    individuals have received Nunn-Lugar-Domenici Domestic Preparedness
    Program training. Even allowing for other training efforts, this leaves
    a substantial gap. FEMA is supporting the training efforts of the
    Departments of Defense and Justice, in addition to FEMA's own training
    efforts. FEMA's focus in training is to make training available to
    States and local jurisdictions not addressed by the Defense and Justice
    initiatives. Further, FEMA is working with the Attorney General's
    National Domestic Preparedness Office to improve dissemination of
    information.
        According to the State Capability Assessment for Readiness (CAR)
    report, planning and equipment for response to weapons of mass
    destruction (WMD) terrorism are areas in need of improvement. FEMA is
    providing funds to States for State and local planning (and for
    exercises to test those plans), while the Department of Justice is
    providing funding for responder equipment. FEMA has contributed to the
    National Domestic Preparedness Office's development of a Standardized
    Equipment List.
        Question. How effective is the training that FEMA is providing if
    localities and states don't have the equipment they need?
        Answer. Response to a suspected incident of nuclear, biological, or
    chemical terrorist incident may require specialized equipment. Proper
    and skilled use of equipment does require hands-on training with that
    equipment.
        Much of the training FEMA provides is designed for officials at the
    policy and executive levels, and for planners. Corresponding equipment
    requirements for these individuals are minimal. Yet training for these
    individuals may be effective if it helps senior officials and emergency
    planners understand the potential scope and consequences of a terrorist
    incident involving weapons of mass destruction (WMD) and identify gaps
    in plans and procedures. Thorough emergency planning that includes the
    risk of terrorism is prudent practice. This planning does not require
    specialized equipment, although the actual response may.
        Even for responders, training may be effective if it teaches a
    first responder to recognize when he or she does not have the means to
    deal with an incident safely, or when exotic equipment and ``victim''
    decontamination are unnecessary or even counterproductive.
        Question. How far will the budget requested by FEMA for fiscal year
    2000 allow FEMA to go in providing training to the 157 largest cities
    and localities?
        Answer. None of the request is intended for training the 157
    largest cities and localities. Programs at the Departments of Defense
    and Justice provide for training of these localities. FEMA will provide
    assistance to States for training; by working with and through States,
    FEMA intends to help training reach the ``balance of the nation''--
    communities not otherwise served by the Defense and Justice training
    programs.
        Question. What is being done to capitalize on the unique
    capabilities of agencies such as the CDC to assist with response
    planning and preparedness training? How involved is CDC with FEMA's
    training to states and localities to ensure that local public health
    officials can identify biological and chemical agents? Is attention
    being given to the need to prepare for agents (microbes and bacteria)
    that may be developing immunity to the current standard ways of
    treating them?
        Under the Federal Response Plan structure, the Department of Health
    and Human Services (HHS) is the primary agency for Emergency Support
    Function (ESF) 8, Health and Medical. Within HHS, the Office of
    Emergency Preparedness is the ``executive agent'' for discharging HHS'
    responsibilities as primary agency under ESF 8 and coordinates
    extensively with other organizations of the U.S. Public Health Service,
    including CDC. FEMA relies on this coordination within ESF 8 to ensure
    that CDC contributions are incorporated in Federal response planning.
        Terrorism-related training at the Emergency Management Institute
    has been developed in an interagency environment and in conjunction
    with various Federal departments and agencies. HHS, of which CDC is a
    component, has been a key player in such training development, as have
    the Environmental Protection Agency, the Department of Energy, the
    Department of Justice, and the Department of Defense.
        Under Public Law 105-277, CDC was appropriated sums for a variety
    of initiatives to, among other things, enhance technical capabilities
    to identify certain biological agents, better identify potential
    biological and chemical terrorism agents, develop rapid toxic
    screening, strengthen State and local epidemiological and surveillance
    capacity, provide for regional laboratories for detecting and measuring
    biological and chemical agents, and establish a pharmaceutical and
    vaccine stockpile for civilian populations.
        Question. What public and media relations efforts will be
    implemented in the event of an incident to mitigate widespread panic?
        Answer. Widespread panic in any incident will only be mitigated if
    the public has confidence in the government's response. The effort must
    reflect that government, at all levels, is working together to quickly
    respond to the incident. To achieve this, the revised Terrorism Annex
    to the Federal Response Plan outlines the establishment of a Joint
    Information Center (JIC) that will ensure a coordinated flow of
    information to the news media and public.
        The JIC will: Include Public Information Officers from all key
    agencies and departments; Provide media relations counsel for
    operational leadership; Organize and conduct news briefings as often as
    needed; Maintain list of pre-designated subject matter expert
    spokespersons; Gather information from all levels of government;
    Develop critical updates and fact sheets; Distribute information via
    not only print and electronic news media but also Internet web sites,
    e-mail, and the Emergency Alert System (EAS).
        It is also important for first responders to communicate as quickly
    and accurately as possible with the public. In some incidents, this
    will begin prior to the arrival of Federal assets and the establishment
    of the JIC. The Rapid Response Information System (RRIS) and special
    toll-free hotlines make critical information quickly available to first
    responders.
        Emergency public information aspects of WMD incidents continue to
    be tested in field and tabletop exercises. Exercises provide an
    important opportunity to build critical interagency cooperation and
    ensure first responders understand their emergency public information
    role.
            united states fire administration (emittsburg, maryland)
        Question. How do you think we arrived at the problems outlined in
    the Blue Ribbon Panel Review?
        Answer. The USFA was required to implement level funding budgets
    since 1994, which limited USFA's ability to accomplish all goals as
    quickly as possible.
        FEMA submitted an enhanced fiscal year 2000 budget that is directly
    linked to our Government Performance and Results Act (GPRA) goals and
    objectives. Our enhanced fiscal year 2000 budget will provide for our
    efforts to more aggressively and effectively launch an organized and
    coordinated attack on the unacceptable incidents of fire and fire
    related deaths, injuries and property damage. The USFA budget for
    fiscal year 2000 was submitted as part of the President's budget at
    about the same time the Blue Ribbon Panel was commissioned to conduct
    their study. It is not a mere coincidence that the USFA budget request
    for fiscal year 2000, which began in fiscal year 1998, and the Blue
    Ribbon Panel Report rendered on October 1, 1998, both address the need
    for additional staff and funding resources.
        In addition, we experienced a complete change in individuals in the
    three most senior management positions that resulted in certain
    management difficulties which we are working to address.
        Question. What expectations do you have for the work to be done by
    the new Senior Advisor tasked to address improving the Fire
    Administration? Are there certain criteria in place that will be used
    to judge whether his work has been effective?
        Answer. As Senior Advisor, Chief Marinucci has been asked to
    develop a leadership and business plan for improving USFA's operations
    and implementing the Blue Ribbon Panel report. The plan must provide
    the appropriate leadership, management, and program structure to put
    USFA on a more pro-active course to address the new and challenging
    issues facing the fire protection community in the 21st Century.
        Question. Are you committed to implementing the recommendations
    made in the Blue Ribbon panel report?
        Answer. Yes. By implementing many of the recommendations in the
    report and requesting funds in the fiscal year 2000 budget which would
    allow implementation of many more (see the answer to question 14 above
    for information about specific recommendations), FEMA has quickly
    demonstrated a commitment to the spirit and purpose of the Blue Ribbon
    panel.
        Question. Do you plan to implement the recommendation to increase
    the role of the USFA in FEMA? If so, how?
        Answer. Yes. FEMA agrees strongly that the U.S. Fire Administration
    must be a key player within FEMA and plan to continue to involve the
    USFA as a partner with other Agency organizations. A most recent
    example was the signing of a Memorandum of Understanding with over
    twenty fire organizations to work with us on Project Impact activities.
    Implementation of the recommendations that result from Chief
    Marinucci's management review and the successful implementation of
    USFA's performance standards will certainly go a long way toward
    strengthening and enhancing the USFA's role within FEMA.
        Question. Do you support the recommendation to expand the
    residential capacity of the National Fire Academy by 110 rooms for
    students? Do you support a capital construction project on site? If you
    do support a capital construction project on site, how do you plan to
    find the resources?
        Answer. The issue of the additional 110 rooms, plus all supporting
    facilities, for NFA resident program students has been addressed in two
    recent reports to Congress. There are a limited number of classrooms
    and limited funds for student stipend reimbursements and contract
    instructor services. There are considerations that are more restrictive
    to NFA than the lack of dormitory space. The U.S. Fire Administration
    does not have the necessary resources to support this multi-faceted
    construction project on site at this point in time. FEMA would need
    additional resources to accomplish such a project.
        Question. Do you plan to change the reporting relationships among
    the USFA leadership that the panel found to be problematic? If so, how?
        Answer. We have created a new position at the USFA, Chief Operating
    Officer (COO), to oversee the day to day operations of the Fire
    Administration. As a Senior Executive Service career appointment, the
    COO will serve as the primary advisor to FEMA's Director and the USFA
    Administrator on overall operations and management of the USFA.
        The COO will report directly to the Director of FEMA, thus freeing
    the U.S. Fire Administrator to become a full time advocate for the fire
    services as recommended by the Blue Ribbon Panel report.
        Question. What are your plans to implement the recommendations to
    improve the research and development efforts by making effective use of
    the capabilities in the National Institute of Standards and Technology
    (NIST), Consumer Product Safety Commission and other public and private
    sector organizations?
        Answer. USFA initiated a new public effort to involve stakeholders
    from across the Nation that have indicated interest in USFA's research
    plans. NIST, CPSC, and other public and private partners participated
    in the initial meeting.
        Senior managers of NIST and USFA have discussed fire research and a
    basic agreement has been reached to continue national level meetings
    such as that described above. These open meetings will be hosted
    jointly by USFA and NIST. The outcome of these meetings will be a
    National Fire Research Agenda that will identify research needs across
    numerous areas of interest.
        In the original legislation establishing USFA, Congress noted that
    USFA is in a unique position as the point of contact for individuals in
    the fire safety community to voice opinion about the needs of the fire
    safety community and fire safety of the American citizen. USFA
    continues to serve in this capacity. As the Federal fire focus, USFA
    utilizes NIST as one of its primary sources for conducting research
    sponsored by USFA. USFA believes that with the modest enhancement
    proposed in its fiscal year 2000 budget request, its fire research
    program will be revitalized. Much of this revitalization will be
    directed through the research facilities of NIST, CPSC and other public
    and private sector organizations.
        Question. Do you plan to implement the recommendation to develop
    relationships with minority owned corporations to co-develop fire
    prevention campaigns designed specifically for at-risk groups? If so,
    how?
        Answer. USFA has worked with and plans to continue to work with
    minority firms to develop public fire safety educational materials
    directed toward at-risk target audiences.
        Groups with which cooperative efforts have addressed the at-risk
    populations include:
      --International Association of Black Professional Fire Fighters
      --Women in the Fire Service
      --Telemundo Hispanic Television Stations
      --Homung Community Representatives
      --Congress of National Black Churches.
        In addition, USFA has worked with other groups addressing at risk
    audiences:
      --American Red Cross
      --National Volunteer Fire Council
      --Safe Kids
      --Sesame Street
      --Coalition for a Safer America: Advertising Council, American
            Association of School Administrators, American Trauma Society,
            Avrett Free & Ginsburg, Congressional Fire Services Institute,
            Fleishman--Hillard, General Federation of Women's Clubs,
            International Association of Black Professional Fire Fighters,
            International Association of Fire Chiefs, International
            Association of Fire Fighters, National Association of
            Elementary School Principals, National Consumers League, The
            National Parent Teacher Association, Consumer Product Safety
            Commission
        USFA considers these partnerships as a means to address at-risk
    groups. When considering such partnerships, evaluation is made with
    regard to the knowledge and abilities of the potential partner within
    the proposed activity. When potential partners are identified or when
    partnerships are proposed, USFA seeks to maximize its limited funds
    through joint funding of the proposed project between all partners.
    USFA considers and evaluates all proposals to address fire related at-
    risk groups.
                           institutionalizing reforms
        Question. What steps have you taken to institutionalize the steps
    necessary to focus the agency on readiness, response and recovery?
        What steps has FEMA taken to institutionalize this focus for states
    and localities--to ensure they are ``fit for duty?''
        How often does FEMA do an assessment of local preparedness to
    respond to natural disasters?
        What steps is FEMA taking to respond to the unmet needs states and
    localities have in being ``fit for duty?''
        Answer. The current State Capability Assessment for Readiness (CAR)
    process institutionalizes the emergency management assessment at the
    State level. It also serves as a model for development of local
    emergency management assessment instruments and processes. The CAR
    process was jointly developed in fiscal year 1996 by FEMA working in
    partnership with the National Emergency Management Association (NEMA),
    an organization of State emergency managers. The CAR assessment
    process, which determines ``fitness for duty'' is structured around
    thirteen (13) functional areas. These 13 functional areas are: Laws and
    Authorities; Hazard Identification and Risk Assessment; Hazard
    Management; Resource Management; Planning; Direction, Control and
    Coordination; Communications and Warning; Operations and Procedures;
    Logistics and Facilities; Training; Exercises; Public Education and
    Information; and Finance and Administration.
        All 56 States, Territories and Insular Areas completed a CAR
    assessment during fiscal year 1997. A Report to the United States
    Senate Committee on Appropriations was developed and submitted to the
    President and Congress in December 1997, based on the results of the
    assessment process. The States were very supportive of the CAR
    assessment process. They used the results to identify deficiencies in
    programs and activities, and modify strategic plans and budgets in
    order to address their needs and the needs of their localities. The
    results were also used in FEMA's Preparedness Partnerships and
    Agreement/Cooperative Agreement process.
        Following issuance of the report, FEMA conducted Customer Feedback
    Workshops in early 1998 throughout the nation with State and regional
    counterparts in attendance. These workshops were designed to determine
    if the CAR was beneficial to States and to identify needed enhancements
    to improve the process and assessment instrument for the next scheduled
    assessment in the year 2000.
        NEMA has requested the involvement of FEMA in the development of a
    local template assessment instrument and process similar to the current
    CAR. States will have the option to modify/customize the template for
    use in their localities. Some States, for example Michigan, North
    Carolina, and Florida have already begun using the CAR to assess the
    local governments' emergency management preparedness capabilities. The
    number of States conducting local assessments is expected to increase
    dramatically over the next review cycle with the issuance of the local
    template.
        Finally, the CAR assessment instrument and process will incorporate
    the emergency management standards that are currently being developed
    under the auspices of the National Fire Protection Association (NFPA).
    The CAR is also being designed to serve as the assessment process
    supporting this standards and accreditation process.
        Question. What is the status of the Stafford Act reforms that are
    designed to reduce disaster relief costs?
        Answer. FEMA is now in the process of preparing a report to
    Congress that outlines the following actions that we are taking to
    reduce disaster relief costs:
        The Office of Financial Management has been working to reduce
    disaster costs in three areas: (1) closing out old disasters; (2)
    implementing better monitoring of disaster expenditures; and, (3)
    standardizing Agency policy on reimbursing State management costs.
        The Response and Recovery Directorate is proposing to reduce
    disaster costs through a number of initiatives: (1) publishing
    evaluation factors for major disasters that would adjust the financial
    indicator annually for inflation; (2) raising the $64 threshold now
    used to recommend cost-share adjustments up to current dollars and
    adjusting that indicator annually for inflation; (3) realizing
    administrative savings through the new Public Assistance process; and,
    (4) clarifying and strengthening the insurance purchase requirements
    under the Public Assistance Program.
        Question. In response to questions for last years hearing record,
    the agency noted that it had developed a series of 26 Essential
    Elements of Information (EEIs) that is planned to use to judge the
    severity, magnitude, impact and procedures for conducting a Preliminary
    Damage Assessment. What is the status of FEMA's work in reviewing the
    EEIs with other Federal departments and agencies that support FEMA
    under the Emergency Response Plan?
        Answer. FEMA established an interagency work group to review and
    validate the existing Essential Elements of Information. Based upon
    this review, 25 EEIs were retained and minor changes noted. The revised
    EEIs will be published in the updated Federal Response Plan. In
    addition, the work group is developing baseline Information Collection
    Plans for several disaster scenarios. The baseline plan for a major
    hurricane is complete and work has been initiated on an earthquake
    information collection plan.
        Question. What criteria has FEMA institutionalized to determine:
    what role FEMA will play in responding to a disaster; the extent of
    FEMA's involvement; what FEMA will pay for; and, whether FEMA will
    focus on rehabilitation, restoration or re-engineering?
        Answer. In the past six years FEMA has undertaken a number of
    initiatives to institutionalize improvements in disaster response.
    Following are a few of the most significant accomplishments:
        Strengthening and improving the Federal Response Plan so that the
    Federal government has a single well-recognized and effective means of
    responding to disasters and emergencies under the Stafford Act.
        Creating a national Urban Search and Rescue capability that
    consists of 27 teams throughout the nation, and that can be activated
    immediately in response to disasters anywhere in the United States.
        Improving our regulations, policies and guidance that clarify
    FEMA's role, the role of other Federal agencies, and the roles of State
    and local governments in responding to a disaster. This has been
    particularly effective in the Public Assistance Program, where a
    ``Policy Compendium'' clearly outlines what FEMA considers eligible
    costs. This guidance is available both in booklet form and under FEMA's
    web site on the internet.
        Developing and implementing a ``New Public Assistance'' program in
    concert with our State and local partners that simplifies and
    streamlines delivery of the program, and that keeps the end customer--
    the applicant--uppermost in our minds.
        Improving our centralized teleregistration and processing
    capability so that we can provide assistance to individuals through a
    toll-free number that is activated immediately upon the declaration of
    a disaster. This centralized capability can provide assistance within
    just a matter of days, and includes a helpline to answer applicant
    questions and needs throughout the process.
                     project impact/pre-disaster mitigation
        Question. What has been accomplished with Project Impact funds?
        Answer. Project Impact funds have enabled community-based
    mitigation to become a reality in an exciting way--it has reached
    people nation-wide. With Project Impact funds, we have been able to add
    Federal leadership, support and investment in a national momentum
    toward creating disaster-resistant communities. Previous grant programs
    reached selected audiences for targeted purposes. Project Impact
    motivates communities to change the way they deal with disasters. It
    encourages communities to use the seed money provided as a tool to
    leverage additional funding from public and private partners. As a
    result of Project Impact, interest in and awareness of the need for
    pre-disaster mitigation has sparked an interest in communities which
    has resulted in 118 communities to date and over 600 community business
    partners.
        Question. How many localities have received Project Impact grants?
        Answer. As of March 31, 1999, eighty-seven (87) localities have
    received Project Impact grant funding. Fifty-seven (57) fiscal year
    1997 and fiscal year 1998 localities/communities received Project
    Impact grants totaling approximately $24,500,000 and thirty (30) fiscal
    year 1999 localities/communities received approximately $8,400,000.
        The communities will be able to draw down on these obligated
    dollars as their projects come to fruition. In addition, all of the
    Project Impact communities are utilizing ``in-kind'' and cash
    contributions of non-Federal partners before and after drawing on
    Federal funds.
        Question. How much of the funding has actually been disbursed to
    the localities?
        Answer. As localities/communities gear up for Project Impact (pre-
    disaster mitigation), they are initially using the leveraging of funds
    from businesses and other federal partners to accomplish many of their
    current projects.
        Approximately $32,900,000 was available for spending by the
    localities/communities on or before March 31, 1999, it is up to the
    locality/community to request the dollars needed for continuing
    operations. The funding mechanism is set-up so that communities can
    draw-down funds as needed (similar to writing a check on a bank
    account).
        Our theory of providing seed money seems to be working. Thus far,
    communities are using leveraged dollars to accomplish their goals and
    projects.
        Question. How much in non-Federal resources have been leveraged?
        Answer. The 7 pilot communities have leveraged $5,757,000 in FEMA
    invested grants into estimated partner contributions of $26,000,000.
    This works out to a 452 percent return of the original investment. Of
    the 26 fiscal year 1998 communities which have signed Memorandums of
    Agreement (MOAs), 18 communities have reported leveraging $9,000,000 in
    FEMA invested grants into estimated partner contributions of
    $24,340,000. This works out to a 270 percent return of the original
    investment.
        Question. How has FEMA measured the leveraging?
        Answer. FEMA solicited leveraging information from each of the
    communities with signed MOAs, to determine what non-FEMA funds were
    leveraged against the initial FEMA investment. This information
    included total contributions received by each community, to include
    ``in-kind'' contributions, and benefits received from the leveraged
    contributions.
        Question. What does FEMA do to ensure that local governments and
    businesses are involved and fulfill their commitments? Does FEMA have
    an outreach effort it conducts to get non-Project Impact local
    governments and businesses involved with pre-disaster mitigation
    efforts?
        Answer. Community partnerships are vital to developing and
    implementing the initiative. Project Impact emphasizes community
    partnerships that include leaders from businesses, volunteer
    organizations, educational entities, and government. The local
    government is asked by FEMA to take the lead in convening and presiding
    over planning meetings. FEMA encourages the local government to include
    the Chamber of Commerce as well as specific business representatives.
    FEMA also provides the names of other businesses that have participated
    elsewhere in the State or Region.
        One of the criteria suggested to the States for their selection of
    a Project Impact community is to look toward those with good public-
    private partnership activities in place. This is necessary because
    Project Impact is self-directed by the community. It takes broad
    participation of community stakeholders to create consensus on actions
    that they need to take to make the community more disaster resistant.
    To date, Project Impact communities have partnered with over 600 public
    and private organizations.
        Question. What is FEMA doing to streamline and speed up the
    environmental and historic preservation impact reviews done by FEMA at
    the regional level?
        Answer. A variety of steps have been taken to improve and speed
    National Environmental Policy Act (NEPA) compliance reviews. Over the
    past several years FEMA has:
      --hired Environmental Officers for each Region to speed
            determinations;
      --offered a newly developed NEPA course in all 10 FEMA regions, and
            included State staff to better familiarize them with
            requirements of relevant statutes and improve their skills in
            conducting such reviews. This has greatly increased capability
            to process projects at the Federal and State levels;
      --published an expanded list of NEPA categorical exclusions. Use of
            these new exclusions has significantly reduced the time
            required for environmental review for approximately 50 percent
            of the projects submitted by States for HMGP funding; and
      --introduced the new ``Managing State'' concept for the management of
            Hazard Mitigation Grant Program funds, which includes
            additional education activities for State staff so that they
            can identify and assemble most of the environmental and
            historic review documentation necessary to fund a project.
        Question. What is FEMA doing to study the cost-effectiveness of
    Project Impact? Is an analysis being done to study the reduced disaster
    cost incurred in Project Impact communities after they have completed
    mitigation projects?
        Answer. FEMA will be studying the cost-effectiveness of Project
    Impact by: (1) applying cost-benefit analysis to structural projects;
    (2) annual data collection and evaluation of effectiveness of training,
    education, planning and administrative activities which do not lend
    themselves to traditional cost-benefit analyses; and (3) before and
    after comparisons of conditions and expenditures in the pre- and post-
    disaster environments in Project Impact communities.
        In the past the greatest incentive for a community to implement
    mitigation has typically been after a disaster. In order to change this
    trend and increase mitigation activity as a proactive rather than
    reactive solution, the Project Impact initiative was designed not only
    to help communities address current mitigation project needs but to
    encourage the community to incorporate natural hazard loss reduction as
    a continuing part of the community culture and activity. Therefore, the
    Project Impact grant is intended not only as a means to address
    immediate community mitigation needs but also as a way of leveraging
    funding and resources from other partners, and an incentive for
    becoming proactive about emergency management. As a result, community
    Project Impact leaders have been given some discretion on how the funds
    will be used. Specifically, this discretion allows the grant to be used
    for training, education, and initiative-related administration
    activities that do not readily lend themselves to a traditional cost-
    benefit analysis. However, when successfully implemented these
    activities can increase capability and the general public's knowledge
    of mitigation. A well-informed community can lead to important zoning
    and/or bond issues that provide tremendous loss reduction benefits.
        To assess the effectiveness of this strategy, FEMA is also
    implementing an evaluation process that will establish a baseline on
    the number of structures and infrastructure at risk as well as the
    current level of mitigation activity in the community at the time it
    begins the Project Impact process. Then each year for the next five
    years the community's progress will be evaluated to determine the
    reduction in the number of structures and the extent to which
    infrastructure is at risk, increases in mitigation education and
    training activities in communities, and activities to foster proactive
    business and/or government actions. The data collected will be used to
    make necessary policy changes as well as to demonstrate the success of
    strategy implementation.
                       emergency food and shelter program
        Question. What is your assessment of the EFSP program's
    effectiveness of meeting compelling human needs? What criteria are used
    to determine the effectiveness of the program?
        Answer. FEMA's assessment of the effectiveness of the program is
    based on the number of meals and nights of shelter provided each year.
    These numbers equate to millions of people who were hungry or having to
    sleep on the streets, being fed and sheltered indoors. It has also
    helped hundreds of thousands of the working poor with rent, mortgage
    and utility payments to prevent evictions, which could lead to
    homelessness. Providing individuals and families, young and old, with
    these basic necessities of life substantiates the effectiveness of the
    program.
        Periodically, surveys of EFS Local Boards and funded agencies are
    conducted to get their insights on the program's effectiveness. Data
    from the most recent survey is being compiled. Preliminary information
    indicates that while the EFS Program has been effective in helping to
    meet the food and shelter needs of many, the need is still there.
    Agencies report an increase in the number of working families seeking
    mass shelter, food and other emergency assistance.
        Question. What standards/criteria are used to determine local
    needs?
        Answer. The standards/criteria used to determine what the local
    needs are is made at the local level by a Local Board. Each
    jurisdiction, (city/county) that is eligible to receive EFSP funding
    must constitute a Local Board. The Local Board, whose members consist
    of a homeless or previously homeless person and representatives from
    charitable, voluntary and local government organizations from within
    the community. The Local Board decides how the EFSP funds will be
    divided to meet the unmet needs and what community organizations can
    best provide the services to meet those needs.
        Question. How involved are local governments in determining which
    local agencies will receive local EFSP funding?
        Answer. Each Local Board is required to have a representative from
    the local government. The local government representatives, in
    partnership with the other board members, determine which agencies to
    fund. The purpose of the Local Board is to ensure coordination of
    government and community resources that already exist. The EFSP funds
    are used to supplement and expand all ongoing services.
        Question. Has FEMA done an assessment of unmet local needs in terms
    of providing the types of services eligible for EFSP funding?
        Answer. Yes. The EFSP program does periodic assessments/surveys of
    Local Boards and funded agencies to determine what the local needs are,
    the effectiveness of the EFS Program funds in meeting those needs, and
    what the unmet needs are. Information is being compiled on the most
    recent survey that was conducted during November 1998. Preliminary
    results indicate that the most significant unmet need is in the area of
    rent, mortgage and/or utility assistance due to an increase in the
    number of working families seeking assistance.
        This has resulted in an increase in the number of families seeking
    overnight accommodations in mass shelters.
        Question. Do EFSP funds leverage any local or private funds?
        Answer. Yes. Numerous resources are leveraged at the local level in
    the EFS Program. Indeed, there are many in-kind resources leveraged in
    addition to facilities, utilities, staffing provided by the agencies,
    such as administrative costs, private donations from foundations,
    philanthropic organizations and other private donations. Some
    communities also leverage other funding to provide additional resources
    for expenditures not funded through this program. They include medical
    assistance, security deposits, and more than one month's rent, mortgage
    or utility payments. Many local grocers and restaurants also donate
    food and supplies, while hotels and motels donate overnight
    accommodations free or at a greatly reduced cost.
        Question. Does FEMA work with other agencies that provide funding
    for similar services to coordinate delivery efforts at the local level?
        Answer. Yes, it is imperative that the EFSP coordinate with other
    agencies since the program is supplemental in nature. The EFSP program
    supplements the ongoing efforts of agencies to provide shelter, food
    and supportive services. The coordination with other federal, state and
    local agencies are a must in order to ensure the efficiency and
    effectiveness of the assistance to be provided. For instance, the US
    Department of Agriculture provides canned goods and other staples of
    food to food banks and pantries, while funds from the EFSP are used to
    purchase fresh vegetables. The EFSP program provides one month's rental
    payment and local funds are used to pay the security deposit.
                                   y2k issues
        Question. Have you given any thought to the potential for problems
    associated with Y2K (such as civil unrest or utilities malfunctioning)?
        Answer. Based on the President's Council for Year 2000 Conversion
    First Quarterly Summary of Assessment Information, it is anticipated
    that there will be no major catastrophic impacts on public safety or
    health, or on key economic and infrastructure functions in the U.S.
    during the transition from 1999 to the year 2000. However, there may be
    numerous localized impacts of limited duration occurring simultaneously
    across the country. The Y2K conversion presents the emergency
    management community with a unique challenge. It is primarily a
    technological problem with well-known solutions. Based on current
    assessments, Y2K need not result in major disruptions. The all-hazards
    practices and techniques emergency managers routinely use for other
    disasters and emergencies should well serve our nation in planning for
    the potential consequences of Y2K conversion.
        The Federal Response Plan (FRP) will serve as the foundation for
    coordinating any Federal response to the consequences of Y2K
    disruptions. The FRP describes the structure by which the Federal
    Government mobilizes emergency resources and delivers disaster
    assistance. It is a proven framework for responding to hurricanes,
    floods, earthquakes, and other disasters and emergencies that overwhelm
    State and local governments.
        With respect to civil unrest, each State has primary responsibility
    for law enforcement, using State and local resources, including the
    National Guard. As such, the FRP makes no provision for direct Federal
    support of law enforcement functions in a disaster or emergency. In the
    event that State and local police forces are unable to adequately
    respond to a civil disturbance or other serious law enforcement
    emergency, a Governor may request Federal military assistance through
    the Attorney General. Procedures for coordinating such law enforcement
    responses are set forth in the Department of Defense Civil Disturbance
    Plan (Garden Plot).
        With respect to utilities malfunctioning, the Department of Energy
    believes that the electric grid is robust and stable and that any
    electric service problems that may occur will be localized and quickly
    addressed. In addition, it is expected that interruptions of the
    telecommunications infrastructure (major interchange carriers and
    primary local exchange carriers) will be minimal to nominal. In other
    utility areas, large and medium systems are expected to be compliant;
    smaller systems may be more problematic.
        Question. Does FEMA have a readiness, response and recovery plan to
    deal with any of the potential chaos that may occur in relation to Y2K?
    Is FEMA working with other Federal agencies, state and local
    governments to develop these types of plans?
        Answer. Readiness.--FEMA has published, as part of its State and
    local outreach activities, guidance entitled ``Contingency and
    Consequence Management Planning for Year 2000 Conversion: A Guide for
    State and Local Emergency Managers.'' This Guide is meant to assist
    States and local emergency management organizations in preparing Y2K
    contingency and consequence management plans. It provides information
    for identifying potential problems, conducting risk assessments,
    keeping the emergency management organization operations, informing and
    assisting the public, and developing and implementing Y2K consequence
    management plans. It is being as widely disseminated as possible to the
    emergency management community in hard copy and electronic format and
    has been posted on FEMA's website. Emergency Operations Plans,
    supplemented by the material suggested in this Guide, should form an
    effective basis for Y2K contingency planning and consequence management
    for States and local governments. Training to supplement the Guide will
    be available for State and local emergency managers.
        Response and Recovery.--FEMA is developing a special Y2K
    Operational Supplement to the Federal Response Plan as a prudent
    planning measure. The supplement will augment the current planning
    approach in the Federal Response Plan and address any unique
    circumstances associated with the unprecedented nature of the Y2K
    phenomenon. It will assess the Y2K risk and possible impacts; set forth
    planning assumptions; describe Federal monitoring operations and early
    warning systems; establish an expanded information and reporting
    function to ensure expeditious collection, analysis, and dissemination
    of situation assessments; and identify any additional resource
    requirements.
                modernizing fema's flood hazard mapping program
        Question. How long will it take FEMA to update its maps without any
    additional resources provided for the effort?
        Answer. Without additional resources, the existing backlog of
    outdated maps will never be eliminated. It is estimated that 19 percent
    of the current inventory already has outdated flood data, and
    approximately 4 percent of the 100,000-map panel inventory deteriorates
    each year. Because of finite funding, FEMA is able to update only 2 to
    3 percent of the inventory a year.
        Additionally, the majority of the inventory is in a manual format.
    The modernization plan calls for a 5-year catch-up period during which
    6 percent of the panels will be updated to reflect current flood data
    each year. Approximately 16 percent of the panels with adequate flood
    data but needing map maintenance and conversion to a digital format
    will be updated each year for 5 years. After the backlog of outdated
    maps is eliminated and the inventory is converted to digital format,
    adequate funding (about twice present levels) must be provided to avoid
    accumulating another backlog.
        Question. How much does it cost the government to go with outdated
    maps?
        Answer. It is estimated that the potential flood damages avoided
    over a 50-year period as a result of FEMA's map modernization plan will
    be approximately $26 billion more than would result at the current rate
    of mapping. If new floodplain mapping was stopped altogether, we
    project there would be an estimated $45 billion more in damage than
    would occur under the modernization plan. A significant portion of
    reduced losses will result in decreased Disaster Relief Funding.
        Question. Who pays for the maps now and who benefits from the maps?
        Answer. The NFIP mapping program is presently funded from two
    sources:
        Federal Policy Fee.--A Federal Policy Fee of $30 is charged to each
    of the approximately 4 million flood insurance policies sold. This
    funding source accounts for 90 percent of the funding for the mapping
    program. The Federal Policy Fee also pays for other activities,
    including floodplain management and flood mitigation assistance, as
    well as administrative expenses for the program; and,
        Fee Charge System.--Fees are charged for reviewing and processing
    map revision requests, and for printing and distributing the maps and
    engineering back-up data. The Fee Charge System accounts for
    approximately 10 percent of the funding for the mapping program.
        Although only a minority of taxpayers currently pay for the flood
    mapping program, all taxpayers benefit. The general public benefits
    through reduced disaster relief costs and reduced loss of life and
    property when floods occur. With the accurate identification of
    existing flood hazards, new construction can be designed to avoid the
    floodplain altogether or, at the least, minimize the potential flood
    loss by implementing the minimum Federal floodplain management
    requirements. This benefits all homeowners, business owners, the
    insurance industry, and other groups. Additionally, existing residences
    and businesses situated in the floodplain can be retrofitted or their
    contents relocated to minimize flood losses.
        Question. What is the status of FEMA's discussions with the housing
    industry and advocacy groups regarding the proposed mortgage
    transaction fee?
        Answer. The Coalition on Permitting Efficiency attended the recent
    (March 1-2, 1999) meeting of the Technical Mapping Advisory Council-a
    congressionally mandated advisory group representing various map user
    constituencies. This meeting provided FEMA with the opportunity to
    consult the Coalition, which represents 24 different associations and
    industries, including the National Association of Realtors, the
    National Association of Homebuilders, and the National League of
    Cities. In addition, FEMA has recently had conversations with the
    National Flood Determination Association.
        Question. What is the status of FEMA's Request for Proposals for
    new companies to update maps (TEC Contracts)?
        Answer. Solicitation EMW-1999-RP-0022, ``Engineering Review and
    Revision of Flood Insurance Maps'' was printed in the February 23, 1999
    issue of the Commerce Business Daily (CBD) and was posted in CBDnet on
    February 19, 1999. All information required by this solicitation was
    due to the Contracting Officer no later than 4:00 p.m. local time in
    Room 350, FEMA, 500 C Street, SW, Washington, D.C. 20472, on March 31,
    1999. FEMA is currently reviewing the qualifications of the offerers
    and anticipates announcing a selection by September 1, 1999.
        Question. What criteria will be used to evaluate companies applying
    for the TEC contracts?
        Answer. Selection will be in conformance with the provisions of
    Public Law 92-582 and based on the following criteria and evaluation
    points, in descending order of importance (Total points = 180):
        (1) Specialized, nationwide experience of firm and key personnel in
    hydrology, hydraulics, flood risk assessment and floodplain mapping for
    riverine environs (Max. pts. 25).
        (2) Demonstrated experience using Geographic Information Systems,
    with emphasis on spatial data production, analysis, and creation of
    soft and hard copy flood hazard and related products that are in
    accordance with relevant (i.e. FGDC, FEMA) standards: (a) Experience
    and/or innovation in the area of automated hydrology, hydraulics and
    floodplain delineation (0-5pts.). (b) Experience in and/or capability
    to produce digital and print-on-demand map products complete with
    metadata (0-5pts.). (c) Experience in effectively communicating and
    supporting local governments and private citizens in issues related to
    spatial data information and technologies used in hazard identification
    and risk assessment (0-5pts.). (d) Experience in successfully
    evaluating spatial data (base cartography, imagery, etc.) from a
    variety of sources for quality, completeness and accuracy and
    integrating them into a systematic process (system) to accomplish tasks
    related to this rating factor (0-5 pts.). (Max. pts. 20).
        (3) Demonstrated capacity to accomplish the work in the required
    time and ability to direct, manage, and control the entire project.
    (Max. pts. 20).
        (4) Past performance on contracts of comparable size with
    government agencies and private industry in terms of: (a) cost control
    (0-5pts.), (b) quality of work (0-5 pts.), (c) compliance with
    performance schedules (0-5 pts.). Submittals must include references'
    names, affiliations, and phone numbers (Max. pts. 15).
        (5) Experience of firm and key personnel in the coordination of,
    public relations/outreach involving, and facilitation of, technical
    issues with local officials, private citizens, Federal and State
    entities, and private industry (Max. pts. 15).
        (6) Experience of firm and key personnel demonstrating the
    capability to maintain adequate product quality control of contracts of
    comparable size (Max. pts. 10).
        (7) Specialized experience of firm and key personnel in flood risk
    assessment and floodplain mapping of coastal environs, including
    analysis and mapping of coastal and Great Lakes erosion zones (Max.
    pts. 10).
        (8) Demonstrated ability to deliver timely and effective guidance
    and technical assistance to both public and private sectors involved in
    various stages of maintenance and production of flood hazard mapping
    (Max. pts. 10).
        (9) Demonstrated ability to provide state-of-the-art technical
    guidance and advice to transform existing methodologies and processes,
    and to keep pace with future technological advancements (Max. pts. 10).
        (10) Experience and knowledge in the development and maintenance of
    Internet sites, including the distribution of spatial and text data via
    File Transfer Protocol (FTP) and the World Wide Web (Max. pts. 10).
        (11) Demonstrated experience in developing and applying new
    hydrologic, hydraulic, and general engineering approaches to unique or
    specialized flood risk situations (Max. pts. 10).
        (12) Experience and/or capability in current remote sensing
    technologies (i.e. LIDAR, IFSAR, GPS) used to develop high-resolution
    digital elevation models (Max. pts. 5).
        (13) Experience of firm and key personnel in manual cartographic
    production (Max. pts. 5).
        (14) Demonstrated capability in the identification and assessment
    of hazards and risks associated with erosion, hurricanes, alluvial
    fans, earthquakes, tsunamis, wind, and unsafe dams (Max. pts. 5).
        (15) Experience of firm as a technical review contractor for Local,
    State, and Federal or other Architect-Engineering firms (Max. pts. 5).
        (16) Experience and capability to design, build, maintain, and
    operate library reporting and storage systems for both manually and
    digitally produced spatial text data, and the experience and capability
    to retrieve the data from these systems in both hard copy and
    electronic format (Max. pts. 5).
        Question. Does the Director believe that new and innovative
    approaches and technologies are needed in the current map modernization
    process?
        Answer. The Director supports the new and innovative approaches and
    technologies that are a part of the modernization plan. We have already
    begun implementing a number of these new approaches. For instance, we
    have re-engineered the flood study process to include more up-front
    coordination with the community, state, and other Federal agencies.
    This up-front coordination will involve working with the community to
    identify all flood hazard data it has available, to learn of any flood-
    related concerns and flooding problems, and to identify areas of
    anticipated development. In addition, FEMA will adopt a more aggressive
    public outreach strategy to better inform the public of the risks of
    flood hazards and explain why the maps change and why they are
    important.
        Another example of an innovative approach that we are currently
    implementing is the Cooperating Technical Communities (CTCs) program,
    which increases community involvement. Specifically, the mapping
    modernization plan will proactively pursue strong Federal-state-
    regional-local partnerships through a variety of cooperative programs.
    In recent years, many states, communities, and other local entities, at
    their own expense, have invested considerable resources in identifying
    and updating flood hazard information. The intent of the CTC program is
    to facilitate and capitalize on these state and local efforts and
    coordinate them with FEMA's flood mapping efforts rather than having
    them simply occur on an ad-hoc basis. This will result in strengthened
    mapping and floodplain management programs and, thus, should reduce
    flood losses and disaster assistance.
        Another new approach supported by the Director involves
    partnerships between FEMA and other Federal agencies. For instance,
    FEMA is establishing a partnership with USGS for assistance in
    developing and maintaining base maps. FEMA is also working with other
    Federal agencies that develop mapping, elevation data, and flood
    studies. For instance, FEMA is establishing a partnership with NGS for
    assistance in establishing and disseminating geodetic data. FEMA is
    also establishing a partnership with the U.S. Fish and Wildlife Service
    for improved mapping of Coastal Barrier Resources System areas. In
    addition, FEMA's new digital map products will be compatible with
    Federal Geographic Data Committee standards and will support
    implementation of the National Clearinghouse for Spatial Data and the
    National Spatial Data Infrastructure. Finally, FEMA will work with
    NASA, the USACE, and the NRCS to use state-of-the-art data collection
    and hazard identification methodologies.
        Finally, the Director believes technological advances will make a
    significant contribution to the flood mapping program. Currently, we
    are evaluating LIDAR (Light Detection and Ranging) and IFSAR
    (Interferometric Synthetic Aperture Radar) to determine the costs and
    accuracy of these remote-sensing technologies. They hold the potential
    for cost effectively performing flood modeling and mapping.
        We are also exploring the use of automated GIS-based hydrologic and
    hydraulic models integrated with digital watershed models and digital
    elevation models, which may or may not be built from LIDAR/IFSAR and
    Global Positioning System elevation data. GIS-based hydrologic and
    hydraulic analyses create ``living'' models that are easy to revise as
    conditions change. They are also a powerful tool for communities to
    quickly evaluate the impacts of various watershed and floodplain
    developments.
        Digital maps will allow us to distribute the maps via CD-ROM and on
    the Internet. They will also enable print-on-demand technologies.
                                     ______

                   Questions Submitted by Senator Lautenberg

        Question. I understand from churches, charities, and local
    governments that, because their resources are limited, they are having
    to turn people away who are hungry and homeless. As you know, much of
    the funding for these programs comes directly from the federal
    Emergency Food and Shelter Program (EFSP). How do you respond to this?
        Answer. Many churches, charities and local governments (including
    the groups mentioned above) which have had to turn people away are
    recipients of this supplemental program. The Emergency Food and Shelter
    (EFS) National Board Program provides supplemental funding to over
    10,000 nonprofit and local government agencies who provide emergency
    financial and food assistance to people in need. The preliminary
    results of a recent survey of EFS funded agencies indicates an increase
    in the number of working families, elderly and unaccompanied children
    that are requesting food, rent and/or utility assistance. This increase
    has resulted in the depletion of EFS program funds much earlier than in
    past years. As a result, individuals and families are receiving reduced
    assistance and in some cases, turned away due to lack of resources.
    Agencies are encouraged to coordinate their resources and refer clients
    to other organizations that have resources. It is also hoped that the
    request for additional funding for the EFS Program will help to
    decrease the number of people turned away for food or shelter.
        Question. The Administration has included an additional $25 million
    for EFSP in its fiscal year 2000 budget. Do you have a sense of what
    this money could purchase at the local level? Is this in your opinion,
    a good investment?
        Answer. The increase of $25 million in the EFS Program budget will
    enable agencies to provide approximately 6,653,968 additional meals,
    964,309 additional nights of shelter, and pay 89,427 additional rents
    and utility bills to assist with keeping people sheltered in their
    homes.
        Whenever we can help the most vulnerable citizens in our country,
    in my opinion, it is a good investment. The saving of lives and helping
    people to gain a sense of well-being by providing the basic necessities
    in life is a good and sound investment. While the EFS program has been
    successful in its goal of providing supplemental emergency funding
    expeditiously and efficiently to local agencies, the need for emergency
    food and shelter is still evident.
        Question. Approximately what percentage of the administering
    agencies under EFSP are religiously affiliated?
        Answer. During the past two fiscal years, approximately 30 percent
    of the funded agencies classified themselves as religiously affiliated.
    These organizations included, but are not limited to Catholic
    Charities, Churches and Ministerial organizations, Jewish Federations,
    The Salvation Army, and St. Vincent de Paul Societies.
        Question. I understand that of all the programs that you
    administer, the EFSP is one of the best. Is this correct?
        Answer. While I am proud of the hard and caring work that all FEMA
    employees provide to people during some of the most difficult times in
    their lives, the EFS program does stand out as one of FEMA's exemplary
    programs. This can be attributed to the partnerships that have been
    forged at both the national and local levels with charitable and
    voluntary organizations, homeless and hunger advocates and local
    governments in the administration of the program.
        Question. Can you describe who you are helping with the EFSP
    program?
        Answer. The EFS program helps families and individuals, both
    working and unemployed, who are hungry, homeless or who may be facing
    homelessness. This includes the elderly, children, veterans, Native
    Americans, the disabled, and persons with mental illness.
        Question. What are the administrative costs of the EFSP program? I
    understand it is less than 4 percent. Is this correct?
        Answer. While the authorization for the EFS program allows for a 5
    percent administrative allowance, only 3.5 percent has been
    appropriated since the McKinney act authorization in 1985. This amount
    is divided among the organizations responsible for the implementation
    of the program at the national, state, local, and agency levels. Each
    recipient of these administrative allowances are judicious in their use
    of the funds, with many choosing to put their allowance back into the
    program to be used for direct services. Over the past several years,
    less than 3 percent has been used for administrative costs.
                                     ______

                       Question Submitted by Senator Byrd

        Question. West Virginia University has indicated an interest in the
    Disaster Resistant Universities initiative in the fiscal year 2000
    budget request for the Federal Emergency Management Agency. West
    Virginia University facilities, both directly and indirectly, through
    its extension programs throughout the state, have been impacted in the
    past by natural disasters. How do you believe that the Disaster
    Resistant Universities program can help West Virginia University and
    the people of West Virginia. Please elaborate for the record.
        Answer. As you know, West Virginia University (WVU) contributes
    greatly to the lives of West Virginians. Because of the vital role its'
    regional campuses, extension offices, agricultural, aquacultural, and
    health science facilities play in all 55 counties of West Virginia, WVU
    represents the best in American land grant universities. A fully
    functioning WVU is critical to the economy, education, and quality of
    life for the entire State.
        Unfortunately, WVU has not always been fully functioning at the
    times West Virginia has needed it most--after a disaster--because the
    university is vulnerable to the same natural events, including floods,
    snow and wind, that afflict the rest of the state. In the past five
    years alone, WVU county extension offices were forced to close for a
    total of ten weeks due to natural disasters. While these closures occur
    at times of greatest need, they can also adversely affect WVU's
    research activities that contribute to West Virginia industries, such
    as coal mining, agriculture, and chemical production, among others.
        The Disaster Resistant Universities initiative proposed in FEMA's
    fiscal year 2000 budget request could help WVU protect itself, and the
    dozens of communities surrounding its facilities and dependent upon it,
    against natural disasters. This program will make available to WVU the
    expertise of universities around the country that have experienced
    disasters or have exhaustively planned for them. The DRU program will
    also enable WVU and other research universities to work with Federal
    research agencies to protect the taxpayer's substantial investment in
    research in these institutions.
        Additionally, by encouraging universities to work with FEMA, state
    governments, local communities and the private sector (using the
    Project Impact model), this program will give universities like WVU the
    tools to better serve the people of their state immediately following a
    disaster. WVU will better plan its emergency response, and be better
    able to provide healthcare, engineering advice, and other services to
    West Virginians.
        The actual mitigation work at West Virginia's campuses and
    extension facilities could be funded through a national matching fund
    that has been proposed by universities. It has been demonstrated that
    the appropriation of such funds will achieve long-term savings,
    particularly at universities, where the human and economic costs of
    disaster recovery are very high as compared to the costs of pre-
    disaster mitigation. While this program would use Federal money due to
    the national interest in protecting research and education, it is
    important to note that Federal resources alone cannot solve the
    problem, but should be used to leverage the support of other university
    stakeholders.
        The Disaster Resistant Universities initiative requested in FEMA's
    budget will enable university leaders to form public-private
    partnerships to assess and reduce the vulnerability of WVU and the
    state as a whole. Should a fund be established, it would provide
    resources to universities on a matching basis to mitigate their
    potential disaster losses. By protecting one of West Virginia's most
    vital resources, its primary public university, this program will
    prevent the next major flood, snow storm, or tornado from becoming a
    disaster.

                              subcommittee recess

        Senator Bond. The hearing is recessed. Thank you.
        [Whereupon, at 11:04 a.m., Tuesday, March 4, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

     DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2000

                                  ----------

                            THURSDAY, MARCH 11, 1999

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

                 CORPORATION FOR NATIONAL AND COMMUNITY SERVICE

    STATEMENT OF HON. HARRIS WOFFORD, CHIEF EXECUTIVE
                OFFICER
    ACCOMPANIED BY:
            WENDY ZENKER, CHIEF OPERATING OFFICER
            HON. LUISE S. JORDAN, INSPECTOR GENERAL
            KAREN MOLNAR, KPMG AUDITOR

                    STATEMENT OF SENATOR CHRISTOPHER S. BOND

        Senator Bond. Good morning. The Subcommittee on VA, HUD and
    Independent Agencies will come to order. This is the
    subcommittee's second hearing on the fiscal year 2000 budget.
    This morning our subcommittee will hear testimony on the
    President's fiscal year 2000 budget request for the Corporation
    for National and Community Service and the Department of
    Treasury's Community Development Financial Institutions or CDFI
    Fund.
        We will first hear from the Corporation's chief executive
    officer, Senator Harris Wofford, who will be followed by the
    Honorable Luise Jordan, the Corporation's Inspector General.
    The subcommittee will then hear from Ms. Ellen Lazar, director
    of the CDFI Fund.
        The Appropriations Committee and the VA Subcommittee will
    face another year of very difficult budget decisions as I have
    indicated previously. Under the budget caps imposed under the
    1997 Balanced Budget Act, the Federal Government will have $29
    billion less to spend for discretionary activities in fiscal
    year 2000 than what was available last fiscal year.
        Unfortunately the President's budget busted these caps by
    about $18 billion by assuming offsets from tobacco revenues,
    Superfund taxes and other gimmicks which simply will not fly.
    This makes our job quite a bit harder because it raises
    expectations that we simply will not be able to accommodate
    reasonably within the VA/HUD subcommittee because of shortfalls
    in the President's request.
        The largest such shortfall is within the VA medical care
    appropriation request, which would be frozen at current levels.
    For example, the administration request for VA does not account
    for the new costs of treating patients with Hepatitis C. The VA
    estimates this problem alone will cost at least $500 million
    next year.
        Further, the subcommittee will be faced with the annual
    need to fund Section 8 housing assistance contract renewals
    which aid low-income families including the elderly and
    disabled. Once again we will be forced to make some difficult
    trade-offs in order to accommodate such dire needs.
        Moreover, despite the overall decrease in the VA/HUD
    account under the President's budget, the President has
    requested a significant spending increase for the Corporation.
    Specifically, $545.5 million has been requested, an increase of
    $110 million over the fiscal year 99 appropriation.
        Within the President's budget request the Corporation would
    expand the AmeriCorps Service of 53,000 to 69,000 by the year
    2000, reaching a goal of 100,000 in fiscal year 2002. In
    addition, the President is proposing to expand AmeriCorps to
    high school students, expand service-learning programs for
    school-age youth and increase opportunities for seniors to
    serve.
        The Corporation certainly has a number of admirable,
    important goals such as improving child literacy. That is an
    area where I am a strong advocate. Nevertheless, there are many
    significant issues concerning the implementation of the
    program.
        First, it will be extremely difficult to fund an increase
    in spending for this agency when this subcommittee will be
    faced with funding demands for priorities such as veterans'
    medical care and the renewal of HUD Section 8 housing
    assistance contracts.
        Second, providing an increase in funds to an agency that
    has been fraught with significant management problems is very
    troubling. I have repeatedly expressed concerns about the
    Corporation's management. Yet it continues to be a problem
    every year.
        I had hoped to hear the OIG's audit of the Corporation's
    financial statements at this hearing. KPMG, under contract to
    the OIG, has been conducting an extensive, costly and time-
    consuming audit of the Corporation's fiscal year 1998 financial
    statement. Unfortunately, the completion of the audit has been
    delayed, primarily due to the flaws in the Corporation's
    balances related to grants. I am very disappointed that the
    Corporation's books cannot yet be audited. This has been a
    priority concern of the subcommittee since the inception of the
    Corporation.
        We added a significant amount of money--I believe it was $3
    million--last year to gain a handle on these problems. It
    remains a priority. We do know, however, that KPMG's work will
    reveal material weaknesses in at least eight areas of the
    Corporation's financial operations. Actually that is two more
    than the number of material weaknesses that was reported last
    year. Many of these problems are the same as those that have
    been reported on since the first audits of the Corporation were
    conducted.
        I also am concerned about a recent audit finding of surplus
    funds in the National Service Trust account. Based on an
    extensive analysis of actual usage of education awards, the
    Corporation had $357 million in trust investment to fund the
    education award liabilities, which is estimated to be $161
    million, which means that there may be $196 million in
    projected surplus funds in the trust account.
        Frankly, this raises questions about the Corporation's
    bookkeeping and ability to forecast accurately its true funding
    needs. I would like to hear more about this surplus from the
    auditors of the Corporation and I would like the Corporation
    and the auditors to explain why such a large surplus exists and
    whether these surplus funds represent excess amounts of what is
    actually needed to meet all the Corporation's education award
    liability.
        In addition to ensuring auditable or clean books, the
    Corporation must also correct its management problems. Having
    auditable financial statements is just one of the first steps
    of management reform. I believe that the problems I have just
    cited prove that point.
        Last year we agreed to provide additional funds to help the
    Corporation achieve better financial management. We had hoped
    and continue to hope that these funds will, indeed, be put to
    the best use in addressing the Corporation's management
    problems. Unfortunately, the Corporation has already fallen
    behind the time frame directed under last year's
    appropriations.
        Because of these shortfalls, I must say I am disappointed
    with the Corporation's progress to the commitment to that
    mandate. Nevertheless, I expect the Corporation to comply with
    all the legislative mandates and to do so in a timely manner.
        The Corporation's slogan is getting things done. I credit
    the Corporation for assembling a positive action plan to
    address its management and administrative problems. However, it
    is just a plan and many of its corrective actions have not been
    implemented.
        In fact, some of its planned time frames have already
    slipped and it will likely be another 6 to 9 months before any
    real results will be achieved in the plan. Therefore, it will
    be a while until the Corporation is able to demonstrate if it
    has adequately addressed its problems. I am still waiting to
    see if the Corporation can, quote, get things done, close
    quotes.
        I cannot emphasize enough that we have to be able to tell
    our colleagues in the Senate and the American taxpayers that we
    know how the money is being spent and it is being spent in
    compliance with the applicable laws and regulations.
        Until the Corporation has demonstrated the ability
    effectively and efficiently to manage its existing resources
    and programs, it will be very difficult for me to support any
    expansion of funding for the Corporation.
        Now it is my pleasure to turn to my ranking member, Senator
    Mikulski for her statements and comments.

                     STATEMENT OF SENATOR BARBARA MIKULSKI

        Senator Mikulski. Thank you very much, Mr. Chairman. And I
    want to welcome the National Service CEO, Senator Harris
    Wofford, and the IG, Luise Jordan, for our first panel, as well
    as the chief operating officer.
        As you know, I was one of the prime movers of this program
    because I think volunteer programs highlight what is best about
    America. Volunteerism is the backbone of your communities, from
    preserving the safety net for seniors to helping get behind our
    kids and our teachers. The whole idea behind national service
    was to link our values with our public policy. And when the
    legislation was passed, we knew it was going to be in many ways
    breaking new ground, using at the same time existing values.
        Now the legislation is up for reauthorization, and not only
    for our annual appropriation, but the legislation is up for
    reauthorization. And I believe just like we have to show fiscal
    accountability, Mr. Chairman, we have to say what did this
    program do and was it worth it?
        So what I want to focus on in my questions was to go back
    to the original intent of national service and then ask about
    very specific questions now on the impact of the program. The
    whole idea of National Service was to link our values with
    public policy. It was also to say ``Yes'' to the young people
    who were saying ``No'' to drugs and alcohol and other evils in
    our society.
        And we also wanted to provide an opportunity structure, by
    providing a way for many of them to reduce their biggest debt
    or their first mortgage, their student loan or to accrue money
    to be able to go on to higher education. But this program was
    founded on the concept that for every right, there is a
    responsibility. For every opportunity, there is an obligation
    and, therefore, to be involved in the community.
        The other was to make sure that both the volunteers
    became--be rekindled with the concept of habits of the heart,
    but also to spark other volunteer efforts in the community. The
    point is that National Service was not designed to be a social
    welfare program, nor a giveaway program, but to really recruit
    people to serve in their communities and be able to have a
    voucher--this is the National Service part--to go onto their
    communities.
        Now, I never really liked the way this program was
    launched. I knew that it was rocky in terms of its
    administrative structures because it was new, because it had to
    take on some of the old ACTION programs, and essentially it was
    launched in many ways like a rock concert. It was a lot of show
    biz, a lot of fanfare, a lot of volunteers were just parachuted
    into communities. And I am not so sure that the core concept of
    good, solid training before they go to the community, real
    projects focused on five areas like public safety and education
    and so on for them to do or closely adhere to. This is not
    about the volunteers. It was about this.
        Often when this program has been in trouble what we heard
    were anecdotes, and we would have pep rallies and wonderful
    young people showing up with baseball caps who wanted to give
    me T-shirts. We are not in a post-T-shirt environment.
        And what we need to know is really what has gone on,
    because I think it has been difficult to separate out the
    fiscal accounting problems and then the show biz. Somewhere in
    the middle is hard, solid information about how many volunteers
    have we recruited, how many have stayed in the program, what
    have they done once they left the program, did they use the
    program to further their higher education? Have they formed
    alumni associations like what the Peace Corps has done, where
    they continue--the Peace Corps is a state of mind as well as a
    service that had been given, where they go on and continue to
    serve in their community for a lifetime. That is what I want to
    know about, is the volunteers.
        The next thing I want to know about is what happened in
    communities. Sure, you can run in and tutor. But did it have
    the same adhesive quality as me reading Dr. Suess to a 4-year-
    old? That is a nice photo op for me, but I do not know if it is
    a learning opportunity for a child. And it is great if we
    tutor, but the question is at the end of the day, backing up
    hard working teachers or have we advanced education, have we
    advanced public safety, have we recruited and been able to
    deliver immunization and have our volunteers, because of what
    they do, generated more volunteers in local communities?
        So those are the kinds of results. Because if I do not have
    fiscal accountability and real results, it is going to be very
    hard to both get the program funded at the level the President
    wants and also to be able to do the reauthorization.
        With the end of this century and looking forward to the
    millennium, I hope this could be one of the programs that
    really take the values of the old century into the next
    century, but at the same time use the excellent knowledge that
    we have about maximizing volunteer resources, sound fiscal
    accountability, so that--so that we really do have an
    opportunity structure.
        I look forward to hearing this testimony and want to thank
    the administration of the National Service for their
    cooperation with this committee. But I think this is kind of a
    crucial year for National Service. We are either going to go on
    or we are going to sputter out. The two significant issues that
    will determine about whether we go on and have a momentum that
    I hope the program has, is sound fiscal accountability and a
    clear direction of where we have been. And a direction of where
    we are going with the idealistic young people who sign up, that
    we do not let them down, we do not let communities down and we
    do not let taxpayers down.
        In many instances I look forward to the quantitative and
    other data that will help me continue to be the strong advocate
    that I am for this program. Thank you.
        [The statement follows:]

               Prepared Statement of Senator Barbara A. Mikulski

        Good morning Mr. Chairman and thank you. I want to welcome National
    Service CEO Harris Wofford and Inspector General Luise Jordan for our
    first panel. I am proud to be called the godmother of National Service.
    I think volunteer programs highlight what is best about America.
    Volunteerism is the backbone of our communities, from preserving the
    safety net for seniors to keeping our communities clean and getting our
    kids ready to learn.
        And I also want to welcome CDFI Director and Maryland native Ellen
    Lazar for our second panel.
                           national service/overview
        The whole idea behind the National Service program was to link our
    values with our public policy. We wanted to say yes to the young people
    who say no to drugs and alcohol and many of the other ills in society.
        We wanted to provide them with an opportunity structure by
    providing a way to reduce what for many people is a first mortgage--
    their student debt. The specter of high student debt prevents many
    young people from pursuing a college education.
        Second, we wanted to link responsibility to the opportunity,
    essentially to reinforce the old civic virtues that needed to be
    rekindled. The program is designed to give members an experience that
    is meaningful for them and the communities where they work.
        The point is that National Service was not designed to be a means
    tested program. It was meant to provide a broad base of young people
    from a variety of social classes and backgrounds an opportunity to
    serve their country through sweat equity work in their communities.
                              financial management
        Since its inception the organization has been plagued with issues
    that have caused me concern, and I know a great deal of concern for
    other Members. The issues have centered around sound financial
    management, and ensuring accountability that directed everyone to focus
    on accomplishing the mission which I stated earlier.
        Mr. Chairman, this is a serious concern of mine. Management issues
    revolving around the financial accountability and the audibility of
    records have persisted even through changes in personnel. I understand
    that progress has been made, and I commend the work of Chief Operating
    Officer Wendy Zinker, but there is still some serious work to be done.
        This morning, I know you will direct many questions to the
    corporation regarding financial management and accountability. I will
    be interested to hear the responses.
                                 mission focus
        This morning I want to focus on mission. I want to know what
    exactly we have gotten for our money. I want to know if we have gotten
    the ``equity'' part of the sweat equity that was intended.
        Stories about the changed lives of members and their new
    perspectives on life are important. But this morning, I want to talk
    specific, quantifiable facts.
        I want to discuss how effective the Corporation has been at:
      --recruiting members--how many have completed their service, how many
            have used their education awards; generating additional
            volunteers in communities
      --how many have been generated and what have they done in their
            communities;
      --producing tangible benefits in local communities--how is the
            Corporation measuring for results and impact what members have
            done.
        Again, Mr. Chairman, I am proud to be considered the godmother of
    National Service. For years I have championed the importance of helping
    promote the habits of the heart.
        Many of us were energized by the Presidents Summit on Service two
    years ago in Philadelphia that focused on promoting volunteerism. And I
    believe that the Corporation has a critical role to play in this
    effort. But we can't be content with feel good stories about kids in
    tee shirts.
        We must stand sentry to ensure that Corporation members are reading
    to young children and helping increase literacy, planting trees and
    cleaning gullies--helping the environment, organizing local volunteer
    groups and spreading the habits of the heart.
        This will be my focus this morning. The Corporation's ability to
    generate bi-partisan support will depend largely on the extent to which
    it can demonstrate meaningful tangible results in local communities.
                                      cdfi
        CDFI has a as its mission providing an opportunity structure that
    helps those who practice self help.
        In a perfect world, we may not need a CDFI. But we don't live in a
    perfect world. We live in a world with distressed communities that are
    under served by the mainline private financial institutions.
        In many of these communities there are willing people who want to
    improve their lot in life, but they lack the capital or expertise
    needed.
        This is where CDFI helps to fill the void. I look forward to
    hearing from Ms. Lazar this morning on the progress CDFI has made in
    addressing management concerns raised over the last several years.
        But as with the Corporation, I want to stay mission focused. I want
    to ensure that CDFI doesn't just move money out of the door, but helps
    move people up and out of poverty and despair. There needs to be a
    system in place to evaluate grant recipients' progress in meeting their
    goals.
        There also needs to be a system to measure how effective CDFI is in
    helping grant recipients improve their communities and empower local
    residents.
        Mr. Chairman, I look forward to the dialogue with you and this
    morning's witnesses.

        Senator Bond. Thank you very much, Senator Mikulski, for
    that very strong statement, and I certainly endorse the
    comments you made.
        Senator Wofford, it is always a pleasure to welcome you.
    You have submitted a 29-page statement. I assure you we will
    make it a part of the record and I assure you that we are
    better off reading it than having it read to us.
        So we would like to give you up to 10 minutes to make a
    summary of your report and comment perhaps, if you wish, on any
    of the points that Senator Mikulski and I have written.
        Thank you, Senator.

                          statement of harris wofford

        Mr. Wofford. I will certainly not go beyond 10 minutes, Mr.
    Chairman.
        Thank you for letting Wendy Zenker, our chief operating
    officer, accompany me here. And thank you, Mr. Chairman and
    Senator Mikulski, for giving that quite appropriate double-
    barrel challenge to us, and we want to meet that challenge to
    the best of our ability today in response to your questions.
        Many of the points are in that 28-page testimony. First, it
    responds to a number of your concerns, Mr. Chairman, and
    second, it contains some hard data that will be of interest to
    Senator Mikulski.
        Now, Mr. Chairman, this morning I am presenting the
    administration's budget request and, to the extent we have time
    this morning, I want to discuss the success of National Service
    and report to you on our efforts to improve financial
    management. But I am going to focus my oral testimony on the
    financial management issues.
        My written statement contains extensive information about
    the accomplishments of National Service and I welcome
    questions. And I particularly intend, Senator Mikulski, to take
    your precise questions, and present a report to you that is in
    the very categories that you have just put to us.
        And I think you will be pleased with some of the
    evaluations we are reporting on this morning.

                              financial statements

        Mr. Chairman, our top priority continues to be--has to be--
    achieving a clean opinion on the audit of a full set of
    financial statements and going on to remove the material
    weaknesses. We have made real progress.
        As the chart indicates, we have gone from financial
    statements not auditable in 1994 to 1996, to a qualified
    opinion on our fiscal year 1997 balance-sheet-only audit, to
    the current full-scope audit of our fiscal year 1998 financial
    statements. Those three steps represent a lot of work,
    dedication and progress.

        ----------------------------------------------------------------

                                  Auditability

    Fiscal Year 1994-96
      --Financial statements not auditable
    Fiscal Year 1997
      --Qualified opinion on Statement of Financial Position
      --No audit of Statement of Operations or cash flow
      --Two qualifications, six material weaknesses identified
    Fiscal Year 1998
      --Audit of full set of statements for fiscal year 1998 near
            completion
      --Results not yet available
      --Implementing Action Plan to correct weaknesses

        ----------------------------------------------------------------

        We, too, Mr. Chairman, had hoped that along with our
    Inspector General Luise Jordan we could report on the results
    of the fiscal year 1998 audit today. However, the Inspector
    General and her auditors from KPMG are holding open that audit
    while we provide additional documentation they need.
        That audit is ongoing. And the Inspector General and I will
    report to you the results of the audit in the very near future.
    But even if we obtain a clean opinion, which, of course, is our
    aim, we know that we will still have financial management
    material weaknesses.
        Last fall Congress provided additional resources to speed
    our progress in correcting those weaknesses. We submitted a
    detailed action plan to do so that builds on the previous plans
    and steps that we had taken and accomplished much in.
        The plan calls for action in nine areas. It includes 177
    specific tasks with deadlines. To date we have completed 69 of
    them. Let me be clear: though progress has been made, it is not
    enough to satisfy you, Senator Mikulski, or me. Much remains to
    be done.
        Let me tell you what we are doing in three key areas shown
    on this chart, areas that affect many of the material
    weaknesses, and are key to the solutions.
    [GRAPHIC] [TIFF OMITTED] T05MA11.000

                        progress on financial management

        Since last fall all of our mission critical systems, except
    for financial management, have been made year 2000 compliant.
    And most of our hardware is now compliant. We are confident we
    will be prepared for the year 2000. Many of the problems stem
    from the weaknesses in our core accounting system that we took
    over.
        We have selected a new financial management system known as
    Momentum, and implementation is under way. The system will be
    fully operational this year.
        To ensure the accuracy of the data in the National Service
    Trust we are, right now, installing imaging technology, and we
    are pilot-testing a Web-based reporting system, a breakthrough
    system in this field. By next year, they will both be fully
    operational.
        In our next report, due the middle of April, you will
    continue to see progress on these and on other items in the
    Action Plan. And we will be able to report to you the results
    of the audit.

                            independent evaluations

        As we grapple with these critical questions of financial
    management, Mr. Chairman, let us not lose sight of the success
    and impact of National Service. Today we are releasing an
    independent study, reflected on the chart, that demonstrates
    how AmeriCorps is strengthening local organizations and
    communities and having a positive impact on the lives of
    AmeriCorps members--now totalling in 4 years, more than
    100,000.

        ----------------------------------------------------------------

              Summary of Recent National Evaluation of AmeriCorps

        Eighty-two percent of community representatives report AmeriCorps'
    impact as ``good'' or ``outstanding.''
        AmeriCorps improves the quality and quantity of local
    organizations' community services.
        More than 75 percent of members have gained significant life
    skills.
        AmeriCorps instills ethic of service in members.

        Source: Aguirre International, 1999.

        ----------------------------------------------------------------

        I hope members of this committee will read the summary of
    this report which we are providing for the committee and we'll
    be happy to sit down with your staff, and with you, to talk
    further in depth on what those results mean. It was conducted
    by Aguirre International. Mr. Aguirre was President Ford's
    Commissioner of Education and we consider this a very landmark
    and important study.
        As this other chart shows, recent studies have also
    documented that service learning programs benefit communities
    while instilling a sense of civic responsibility and raising
    the academic performance of participating students.

        ----------------------------------------------------------------

             Recent National Evaluations of Learn and Serve America

        Students participating in service-learning programs report gains in
    following areas: Civic attitudes; Volunteering; School engagement;
    Academic performance.
        Projects rate students' service as outstanding.

        Source: Brandeis University and Abt Associates, 1998.

        ----------------------------------------------------------------

        Mr. Chairman, you can see that our work around the country
    is going well. And we will look forward to showing you in more
    detail how well it is going. In many cases we have a state-by-
    state analysis including the extraordinarily successful--many
    programs in the State of Maryland and programs in Missouri.
    There are many places where the state commissions, appointed by
    governors, have had their own evaluations. And we have
    materials from governors estimating the impacts, such as
    Governor Voinovich's last letter to me outlining the impact of
    National Service programs that he thought was tremendous in
    Ohio. And the outline of the impact that Governor Locke and
    Governor Racicot of Washington and Montana sent to all new
    governors telling them of the tremendous contribution of the
    three programs of National Service and the commissions in their
    states.
        I think it is this success that people around the country
    see on the ground that is the reason for the growing bipartisan
    support--not only in Congress but especially in the states,
    cities, schools and neighborhoods where ordinary Americans are
    making an extraordinary difference every day.

                               prepared statement

        So I look forward to working with you to extend the reach
    of National Service and to complete the task of making the
    Corporation the kind of high-performing organization we all
    want it to be. Thank you.
        [The statement follows:]

                      Prepared Statement of Harris Wofford

        Mr. Chairman, Senator Mikulski, and members of the Subcommittee, I
    appreciate this opportunity to review the achievements of national
    service over the last year, report on the status of our efforts to
    issue financial statements and improve financial management, discuss
    our fiscal year 2000 budget request, and respond to your questions. I
    very much appreciate the Committee's past support, including the $10
    million in additional fiscal year 1999 appropriations for AmeriCorps
    grants, as well as the additional funds to speed our progress on
    essential improvements in our financial management systems.
        The Corporation has made good progress on many fronts. Last
    October, the 100,000th AmeriCorps member was sworn in. The service of
    AmeriCorps members in more than a thousand local, state and national
    non-profit programs is helping solve community problems all across the
    country. Service-learning activities of more than a million college,
    high school and elementary school students, assisted by our Learn and
    Serve program, is demonstrating how well-organized community service
    can help the community while instilling the ethic of service and pride
    of citizenship in participating students. In short, through AmeriCorps
    and Learn and Serve America, the Corporation is carrying out the three
    prime purposes set by Congress in the National and Community Service
    Trust Act of 1993 (42 U.S.C. Sec. 12501):
        (1) meet the unmet human, educational, environmental, and public
    safety needs of the United States, without displacing existing workers;
        (2) renew the ethic of civic responsibility and the spirit of
    community throughout the United States; and
        (3) expand educational opportunity by rewarding individuals who
    participate in national service with an increased ability to pursue
    higher education or job training.
        Before providing more details of the accomplishments of these
    programs, let me start with a brief summary of our budget request and a
    discussion of our work to improve financial management.
                           i. budget request summary
        The total fiscal year 2000 budget request for national service
    programs authorized under the National and Community Service Trust Act
    is $545.5 million, an increase of $110 million over the fiscal year
    1999 appropriated level of $435.5 million. This is a large increase for
    a relatively small agency, but the needs that AmeriCorps members are
    helping communities meet--particularly the needs of children and
    youth--are very large. The added value of this service by AmeriCorps
    members (generally full-time) in leveraging large numbers of unpaid
    part-time community volunteers and in strengthening the work of non-
    profit, educational and faith-based organizations is a powerful new
    resource for the renewal of America's civic sector.
        The new funds will provide for approximately 60,000 AmeriCorps
    members through grant programs and the education award program, as well
    as approximately 1,100 AmeriCorps members through the National Civilian
    Community Corps (NCCC) program. As part of the AmeriCorps budget, our
    budget request also includes a new program to engage 5,000 high school
    students in intensive, full-time service during the summer.
    Participants in the AmeriCorps*VISTA program, funded through the
    Subcommittee on Labor, HHS, Education and Related Agencies, will bring
    the total to approximately 69,000 AmeriCorps members, with a goal of
    100,000 members per year starting in 2002.
        The new funds for the Learn and Serve America program will help
    schools, colleges and universities, and community organizations
    strengthen and expand service-learning activities. If the 60 million
    students in America are seen as--and see themselves as--resources and
    potential leaders, they can be a powerful source of service for
    communities. Tapping this potential is a double investment--in the
    education of the next generation as citizens of character and
    competence, and in meeting the country's unmet needs.
        I also want to emphasize the important contributions of the Points
    of Light Foundation and how much the Corporation values its partnership
    with the Foundation and with its network of hundreds of Volunteer
    Centers. An increasing number of AmeriCorps members and
    AmeriCorps*VISTA members--already more than a hundred--are working
    directly with, and under the leadership of, these centers for volunteer
    service. We are requesting $5.5 million for the Points of Light
    Foundation in fiscal year 2000.
        Jointly, the Corporation and the Points of Light Foundation were
    the original sponsors and organizers of the Presidents' Summit for
    America's Future in Philadelphia convened in 1997 by President Clinton
    and President Bush. We work together as key partners in the post-Summit
    campaign led by General Colin Powell's America's Promise--the Alliance
    for Youth. This close and continuing collaboration between the
    Foundation created by President Bush as a center for volunteering and
    the Corporation proposed by President Clinton as the vehicle for
    national service is a demonstration of how what George Romney called
    ``the twin engines'' of full-time stipended national service and part-
    time unpaid community volunteering can and should pull together to help
    communities solve serious social problems.
        We are seeking $33 million for program administration, including
    funds for State Commissions--an increase of $4.5 million over the
    fiscal year 1999 level. This increase will provide the administrative
    support necessary to keep up with the growing work-load of the
    Corporation and is discussed in greater detail later in the testimony.
    In addition, we are requesting $5.5 million for program evaluation, and
    a separate appropriation of $3 million from this Subcommittee for the
    Office of the Inspector General.
                         the audit and the action plan
        The Corporation shares the view of the Subcommittee that prompt
    action on auditability and other financial and management weaknesses is
    urgently needed. These issues are our top internal priority. With the
    help of the Committee and the Inspector General, we have focused
    substantial resources and activity on achieving solid and lasting
    solutions.
        The Corporation has made steady progress over the past year toward
    its goal of improving fiscal oversight and of obtaining an unqualified
    opinion on its financial statements. As the Subcommittee knows, until
    last year, the Corporation was unable to produce financial statements
    that the Inspector General could audit. But, in July 1998, the
    Inspector General issued an Auditability Assessment that indicated that
    the Corporation had made progress and that, although late, we could
    proceed with an audit effort for fiscal year 1997. In October 1998, the
    Inspector General issued a qualified opinion on the Corporation's
    fiscal year 1997 Statement of Financial Position. There were two
    qualifications--grant accrual and net position--and six material
    weaknesses.
        Now, for fiscal year 1998, the Corporation is preparing a full set
    of statements, and these statements are being subjected to independent
    audit by the Inspector General. The Corporation, the Inspector General
    and the auditors are still at work on the audit. We are collecting and
    providing information to the auditors, and the auditors are reviewing
    and assessing that data. At this time, we are uncertain of the
    auditor's opinion, but we are working closely with the Inspector
    General and her audit staff to complete the financial statement audit.
        We know that there are material weaknesses--weaknesses identified
    in the fiscal year 1997 balance sheet audit and two new weaknesses that
    will be identified in this audit resulting from the broader scope of
    the fiscal year 1998 audit. Based on the fiscal year 1997 audit, and
    with funds made available by this Committee, we are implementing a
    comprehensive Action Plan to correct these weaknesses and improve
    Corporation management. We are working to correct a number of these
    weaknesses this year; others will take longer. But you can and will see
    progress every month as we work to achieve the goals set forth in this
    Plan.
        We submitted the Action Plan to your Subcommittee on December 21,
    1998. It included 168 tasks. In a February 17, 1999, letter from
    Chairman Bond and Chairman Walsh of the House VA/HUD Subcommittee, you
    asked that we revise the plan to include procurement management and to
    provide more information on the expenditure of funds associated with
    the plan. In our first progress report on February 19, 1999, (which I
    would like to submit for the record) we did those two things. The Plan
    now includes 177 tasks, of which 69 have been completed. You also asked
    for more information on specific performance measures. We have included
    such information in our Government Performance and Results Act
    Performance Plan and will be happy to discuss additional measures with
    your offices.
        Your letter of February 17 indicates that, with these changes, you
    have no substantive disagreements with the contents of the Action Plan.
    In fact, we believe the Plan offers us a clear path toward resolving
    outstanding financial management issues once and for all. Although
    these changes cannot happen overnight, there is a firm commitment on
    the part of the Corporation to advancing solutions as quickly as we
    possibly can.
        The Action Plan includes 9 goals and a number of objectives within
    each goal: (1) General Control Environment; (2) National Service Trust;
    (3) Financial Operations; (4) Grants Management; (5) Financial Systems;
    (6) Financial Reporting; (7) Information Technology--Year 2000; (8)
    Information Technology; and (9) Procurement Management. Summary
    information on these goals and objectives follows:
        General Control Environment.--We are working to establish a strong
    and effective control environment, including a commitment to
    excellence, organizational structure, and assignment of authority and
    responsibility. Included in this goal is the financial statement audit
    process. On other important fronts we have done good work towards
    issuing a comprehensive set of policies and procedures; we are working
    on an assessment of management controls by selected Corporation
    managers as part of a pilot program for fiscal year 1998; we are
    filling key positions; we are developing a comprehensive training plan;
    and we are including financial performance measures in the
    Corporation's Government Performance and Results Act Performance Plan.
        National Service Trust.--We are determined to ensure the integrity
    of the National Service Trust, accurately recording member information
    and education award liability, and efficiently processing transactions
    related to enrollment and award processing.
        In the past year, we and our prime grantees, the State Commissions,
    have undertaken two major technological initiatives specifically
    designed to strengthen the Trust. First, as I reported last year, we
    have introduced imaging technology designed to improve the quality and
    dependability of information in the Trust.
        We are using imaging technology to electronically capture our
    records and ensure that we have complete and readily accessible
    information for every member enrolled in the National Service Trust. By
    the middle of April, a contractor will complete the process of scanning
    all of the paper documentation from our files on every current member
    of the National Service Trust, and we will then begin the process of
    checking the input data with our program records to capture any missing
    pieces of data. Additionally, in April, the National Service Trust will
    begin using imaging technology to scan forms into the system as the
    forms are received.
        Second, we are in the midst of testing a breakthrough innovation--a
    world wide web-based reporting system (WBRS), that will enable the
    National Service Trust to receive member data-- enrollment forms,
    change of status forms, and end-of-term forms--electronically. WBRS
    currently is being used to input enrollment data on a trial basis in
    Maine and California. If the tests are successful, State Commissions
    will be using this technology for enrollment forms by the end of this
    year. In partnership with the Corporation, the State Commissions
    developed WBRS. The Corporation contracted with Ernst and Young in
    October 1998 to do a security review of the data transfer. When
    appropriate development, testing and training are completed, we will
    phase in the use of the technology for change of status and end-of-term
    forms and extend the system to our national direct grantees.
        There are three related goals: Financial Operations, Financial
    Systems and Financial Reporting.
        Financial Operations.--We are making progress in the area of
    financial operations. We promulgated our debt collection regulations
    and are working to finalize our agreement to have the Department of the
    Treasury service our delinquent financial transactions. Other efforts
    are underway to clean up financial data in preparation for the
    conversion to the Momentum accounting system.
        Financial Systems.--We are in the midst of implementing a new
    financial management system--Momentum--that will modernize our record-
    keeping and allow us to input and recover data in an easier and more
    timely fashion than our previous system. The Corporation selected the
    Momentum package last November and entered into a cross-servicing
    agreement with the Department of the Interior's National Business
    Center to support the implementation process. Momentum is a commercial
    off-the-shelf software system compliant with the Federal Government's
    Joint Financial Management Improvement Program system requirements, and
    it is Year 2000 compliant. Momentum implementation includes data
    conversion, setting up system interfaces, testing and staff training.
    We have an aggressive schedule to complete this process and make the
    Momentum system fully operational this year.
        Financial Reporting.--Our goal is to produce accurate and timely
    financial information, issue timely reports and financial statements,
    obtain an unqualified opinion on our financial statements and reduce--
    and as soon as possible eliminate--the number of reported material
    weaknesses. I have already described our progress in this area.
        Grants Management.--We have undertaken important efforts to improve
    grants administration and the procedures for AmeriCorps service hour
    reporting. In January we held a conference for all State Commission and
    National Direct Executive Directors to reinforce the importance of the
    procedures and reporting requirements associated with their grants.
    Executive Directors have been contacting us with detailed follow-up
    questions, and we have already sent out a formal response to questions
    elicited at the conference and intend to continue to follow-up with the
    grantees. Also, as a further step in devolution to the governor-
    appointed state commissions, we have eliminated any Washington office
    programmatic review of the formula program proposals submitted by well-
    functioning State Commissions. With OMB approval this past year, we are
    testing simplified grant approaches, including fixed amount grants.
        Information Technology--Year 2000 and beyond.--Making sure that all
    systems are Year 2000 compliant is a goal that cuts across all aspects
    of the Corporation. Through the additional funding included in the
    fiscal year 1999 Treasury, Postal Service Appropriations bill, the
    Corporation received $800,000 to assist in our compliance and
    verification work.
        Our mission-critical systems, except for the financial management
    system and its related interfaces, are Year 2000 compliant today. We
    will be performing independent verification and validation in the
    coming months. Our headquarters and service center network and personal
    computer workstations are compliant; we are still working on our field
    office and NCCC workstations, but anticipate no difficulty. The new
    Chief Information Officer whom we will designate soon will do much of
    our long-range planning in the information technology area. Some
    aspects of our long-range plan will include improving our technology
    for communication with state offices, designing a single, integrated
    grants system, selecting a procurement module to add to the Momentum
    system, and providing better data for decision-making.
        Procurement Management.--We added this goal to our Action Plan in
    February in response to work conducted by the Inspector General. We are
    revising procurement policies and are working to resolve specific
    contract issues. We are also developing training sessions for our
    procurement office and Corporation staff.
        The Corporation is committed to improving its management and has
    made substantial progress in this direction. More remains to be done,
    and the Subcommittee will continue to see progress in carrying out our
    Action Plan. We will continue to report regularly to you and the other
    appropriate committees in Congress.
                     government performance and results act
        The Corporation continues its full compliance with the requirements
    of the Government Performance and Results Act. Building on the
    experience of the first year under GPRA, we have prepared an expanded
    annual Performance Plan for fiscal year 2000. This plan provides in a
    more accessible format our revised performance goals for fiscal year
    1999 and the goals for fiscal year 2000. We have organized our
    performance goals into two broad categories: annual performance
    indicators, and focused (usually one-time-only) program evaluation
    studies.
        Annual Performance Indicators are measures based on information
    collected regularly (usually yearly) from grantees and subgrantees of
    the Corporation and from program participants. Primarily these
    indicators measure aspects of program performance that are in the
    direct control of the Corporation. These data are useful for oversight
    and management of the programs. Many of these measures focus on what
    programs do with federal funds--such as implementing projects;
    selecting, training and enrolling Members; and awarding subgrants. In
    addition, annual indicators can include customer satisfaction,
    community impacts, and program accomplishments.
        Focused (Usually One-time-only) Program Evaluation Studies
    represent a significant area of investment by the Corporation. Unlike
    annual performance indicators, many outcome evaluation studies are not
    likely to occur every year because they are more expensive and time
    consuming to carry out. Program outcome studies, however less frequent
    than indicator data, will provide useful information on what national
    service programs achieve for the American people.
        Our 2000 Performance Plan contains information on programs and
    administrative activities that will interest anyone wanting to learn
    more about the Corporation and national service. For each program, the
    fiscal year 2000 Performance Plan presents:
      --A concise description of the program with information on program
            design, numbers of participants, types of service, and levels
            of funding.
      --Special initiatives underway and planned for the coming years.
      --Performance indicators and goals for fiscal year 1999 and fiscal
            year 2000.
      --Key findings from completed program evaluations.
      --Pending and planned program evaluation topics.
        This year we have added a section that highlights the three budget
    activities supporting the Corporation's programs: Innovation,
    Evaluation, and Program Administration. ``Innovation'' describes our
    plans to expand and strengthen training and technical assistance for
    all streams of service. Under ``Evaluation'' is found the Corporation's
    evaluation plan for 1999 and beyond. And ``Program Administration''
    summarizes the efforts underway to improve financial management. This
    new section includes five new performance indicators that focus on our
    most critical administrative issues: auditability, data accuracy in the
    Trust, grants management, financial management systems, and the Year
    2000 status of computer systems.
        Finally, the new format of the fiscal year 2000 Performance Plan
    represents the first step in linking the budget proposal with the
    Performance Plan. Next year, we plan to submit one, fully-integrated,
    budget and performance plan.
                             program administration
        The Corporation is requesting $33 million for Program
    Administration in fiscal year 2000--an increase of $4.5 million over
    the fiscal year 1999 appropriation. Program administration supports the
    Federal share of the costs of activities of the State Commissions,
    which implement and monitor national service programs at the local
    level, as well as the activities of the program, policy, and management
    staff in the Corporation's headquarters.
        Last year, the Congress provided an increase of $1.5 million in
    Program Administration funding to address urgent program administration
    requirements related to financial management, grants management and
    systems implementation. Congress also called on the Corporation to
    shift $1.5 million out of lower priority efforts to address urgent
    program administration needs. These additional funds have improved the
    quality and the timeliness of the Corporation's responses to these
    outstanding problems. Now, in order for the Corporation to move forward
    on financial and management issues in the most expeditious manner
    possible, more funds are needed.
        The workload of the Corporation has grown enormously since 1994.
    The annual number of AmeriCorps members has increased from 25,000 in
    fiscal year 1995 to approximately 50,000 in fiscal year 1999 to a
    proposed 69,000 in fiscal year 2000. The cumulative number of
    enrollments in the National Service Trust has grown from those initial
    25,000 to over 100,000 and will grow to over 140,000 with funds already
    appropriated. The Corporation needs additional resources to respond to
    this greatly increased workload.
        The requested increase in funding will support the following
    urgently needed activities, many of which are described in further
    detail in the section of the testimony dealing with the audit and
    Action Plan: achieving an unqualified opinion on our financial
    statements and reducing the number of material weaknesses;
    significantly increasing funds devoted to systems development;
    strengthening the National Service Trust; increasing the support for
    State Commissions; and replacing aging computer hardware.
     americorps and service-learning evaluations and accomplishments--the
                               impact of service
        In the last year, we have received the results of three major
    evaluations of Corporation programs. The following is a brief summary
    of each evaluation. The results show that national service has a
    dramatic impact both on the communities and individuals served and the
    service participants themselves.
    Impact Evaluation of AmeriCorps State/National Direct
        Today we are releasing one of those studies--an independent
    evaluation of the impact of AmeriCorps State/National programs
    performed by Aguirre International. This study collected survey data
    from all ongoing programs and specifically examined 60 randomly-
    selected programs over a three year period. The study looked at what
    AmeriCorps members accomplished, the impact of those accomplishments on
    service recipients, the impact on the life skills and civic attitudes
    of members, and the impact of AmeriCorps on grantee institutions and
    the communities in which the programs were located.
    Among the key findings of the study
        AmeriCorps programs strengthened local organizations and
    communities served:
      --The majority of institutions that received AmeriCorps grants
            reported that association with AmeriCorps improved their
            organization's quality and/or quantity of services and
            increased their overall professionalism.
      --82 percent of community representatives interviewed reported that
            AmeriCorps' impact upon their community had been ``very good''
            or ``outstanding.''
        AmeriCorps provided significant member benefits:
      --More than 75 percent of AmeriCorps members reported substantial
            gains in life skills during their program year. These changes
            occurred in members of all ethnic, racial, economic and
            educational backgrounds.
      --AmeriCorps members' life skills gains were significantly greater
            than the gains reported by a matched comparison group of
            nonmembers. Members whose skills were the lowest upon entering
            the program gained the most.
      --AmeriCorps members' levels of civic engagement were positively
            affected by AmeriCorps service.
        We are pleased that this major new study demonstrates that
    AmeriCorps is accomplishing precisely what it was designed to do--it is
    getting things done in our communities and producing significant
    benefits for those who serve.
                          learn and serve america k-12
        Between 1995 and 1998 Brandeis University and Abt Associates
    conducted an evaluation of 17 high quality service-learning programs at
    middle schools and high schools across the country. The evaluation
    followed a group of participating and comparison group students over
    two years. The evaluation found:
        Service-Learning programs provide significant benefits to their
    communities:
        The service provided by the students was highly rated by the
    community agencies where students provided assistance; 99 percent of
    the agencies rated their experience as ``good'' or ``excellent.''
        On average, participants in the programs in the study produced
    service valued at nearly four times the program cost during the 1995-
    1996 program year.
        The service-learning programs in the study were strongly supported
    by administrators and teachers, and a large majority of programs appear
    likely to continue to operate after the end of their grants.
        Service-learning programs had a positive impact on students:
        Students rated their program experience highly with more than 95
    percent of the students reporting that they were satisfied with their
    community service experience.
        At the end of one program year, student participants compared to
    non-participants showed significant positive impacts. The students:
    were more appreciative of cultural diversity, service leadership and
    civic involvement; were more likely to be involved in some form of
    volunteer service; provided more than twice as many hours of service;
    were more likely to show small, positive impacts on school engagement
    and on math and science grades and core grade point averages.
        The Superintendent of Schools in Gresham, South Carolina states
    that Corporation grants have funded ``service-learning programs that
    reinforce academic skills taught in the classroom and meet community
    needs'' and have had ``a significant impact on our school system and
    the community. It has ``reconnected our youth to the community and has
    actively engaged our young people in the learning process.'' An example
    of such results in the Gresham High School is in the appendix.
                    learn and serve america higher education
        Between 1995 and 1998 the Rand Corporation conducted an intensive
    evaluation of the Learn and Serve Higher Education Program's
    implementation, achievements and impacts on sponsor institutions,
    community agencies and participating students. The study found:
        Participating students made valuable contributions to the
    organizations--non-profit agencies, schools, and others--in which they
    served.
        Community organizations' staff assigned high marks to the student
    volunteers. Respondents assigned the highest ratings to students'
    enthusiasm, ability to work with staff and clients, and interpersonal
    skills. Staff reported that they were able to improve the quality of
    services and provide more services as a result of the student
    volunteers.
        Students in service-learning courses, compared to students in
    similar courses without a service component, reported larger gains in
    civic participation (involvement in community service) and life skills
    (interpersonal skills and understanding of diversity).
                       literacy and education activities
        Since fiscal year 1994, education programs, including especially
    literacy activities for elementary students, have been a high priority
    for national service. Governor-appointed state commissions on national
    and community service have focused national service resources on needs
    in education. In addition, AmeriCorps*National and Education Award
    programs, as well as service-learning programs at the K-12 and higher
    education levels, have focused service on the education needs of young
    people.
        For fiscal year 1998, this Subcommittee appropriated an additional
    $25 million to the Corporation to conduct activities designed to ensure
    that every school child can read well and independently by the end of
    the third grade. These additional funds were granted to 30 separate
    organizations selected by states, including statewide literacy
    initiatives in Florida, Louisiana, Maryland, Maine, Massachusetts,
    Mississippi, New Jersey, Ohio, Oklahoma, Washington, and West Virginia.
    In total, an additional 1,700 full-time equivalent AmeriCorps members
    are engaged this year as organizers, leaders, and participants in these
    local literacy programs, including summer and after-school programs.
        Research results show that national service can produce strong
    positive outcomes in early childhood literacy. Literacy programs
    supported by the Corporation under the AmeriCorps*State and National
    category reported the following results for the 1996-97 program year:
        In all programs, 5,700 members at 305 sites supported the tutoring
    of youth in grades 1-12. Sixty-seven percent of youth tutored in grades
    1-12 (of 128,000 measured) showed improvement during the program year.
        In all programs, 4,700 members supported academic mentoring at 258
    sites. Seventy-six percent (of 53,000 mentored students measured)
    showed improvement during the program year.
        In all programs, over 2,000 members taught in grades 1-12. Sixty-
    nine percent (of 70,000 students measured) showed improvement during
    the program year.
        In addition to the very positive, self-reported achievements by
    projects, independent evaluations of specific literacy programs are
    documenting positive outcomes. Professor George Farkas of the
    University of Texas documented gains for a Reading One-to-One program
    of 0.4 to 0.7 grade equivalents above what students would have attained
    without tutoring, a significant improvement. The program uses college
    students, AmeriCorps members, and community residents to tutor more
    than 6,000 students in more than 70 schools across ten school districts
    in Texas.
        Other recent reports contain an equally positive message. In the
    District of Columbia, low-achieving children who were tutored by
    Federal Work-Study students and other volunteers in a program managed
    by AmeriCorps*VISTA members had reading scores at the national average
    at the end of the first year of the program. In New Haven, Connecticut,
    the Leadership, Education, Athletics in Partnership program helped
    produce independently documented increases in children's reading test
    scores. In this program children read an average of 24 books during the
    summer.
        In addition to AmeriCorps, the Corporation's service-learning
    programs, also under the jurisdiction of this Subcommittee, have
    contributed to the America Reads Challenge. The Corporation works in
    coordination with the Department of Education. Over 1,000 colleges and
    universities have pledged to use a portion of their Federal Work-Study
    funds to enable college students to tutor children and work in family
    literacy programs. In addition, the Corporation's grants to state
    education agencies support service-learning programs in schools and
    communities across the country. The dominant service activity reported
    by service-learning grantees at the middle and high school level is
    education, including mentoring, tutoring, and classroom assistance.
    These programs have double benefits; since teaching is often the best
    way to learn, middle and high school students who tutor younger
    students often increase their own skills, not only in English but in
    math, science, and the use of computers.
                                   americorps
    AmeriCorps*State and National Program Update
        Last October, the 100,000th AmeriCorps member was sworn in, and
    members are continuing to get things done in their communities all
    across the country. Together, AmeriCorps members, most age 18 to 25,
    are showing their idealism and devoting a year or more to help
    strengthen communities by tackling the nation's most serious problems.
        Since the inception of the program, over 100,000 AmeriCorps members
    have:
      --Served nearly 33 million people in more that 4,000 communities.
      --Taught, tutored or mentored over 2.6 million children.
      --Served over 560,000 at-risk youth through after-school programs.
      --Built or rehabilitated over 25,000 homes.
      --Given food, clothing or other necessities to homeless individuals
            in over 2.4 million instances.
      --Planted 52.5 million trees.
      --Recruited, trained or supervised over 1.6 million volunteers.
        In an appendix to this statement, we are providing examples of
    AmeriCorps members getting things done in our communities.
    Fiscal Year 1999 Budget Update
        Last year Congress appropriated an additional $10 million for
    AmeriCorps grants. As a further example of our commitment to devolving
    authority, all of that funding was directed to state initiatives. Of
    that $10 million, $3 million was added to the formula grants to state
    commissions. The other $7 million was directed towards a Governor's
    Service Initiative, which will fund new statewide initiatives that tie
    into a governor's priorities and could benefit by a service component.
    Fiscal Year 2000 Budget Request for AmeriCorps
        The budget request for fiscal year 2000 for AmeriCorps will provide
    for approximately 60,000 AmeriCorps members through grant programs and
    the education award program, as well as approximately 1,100 AmeriCorps
    members through the National Civilian Community Corps (NCCC) program.
    Participants in the AmeriCorps*VISTA program, funded through the
    Subcommittee on Labor, HHS, Education and Related Agencies, will bring
    the total to approximately 69,000 AmeriCorps members, with a goal of
    100,000 members per year starting in 2002.
        That total includes a new program to engage 5,000 high school
    students in intensive, full-time service during the summer. This new
    initiative will allow high school students already involved in
    community service to serve full-time in the summer and, if they wish,
    part-time during the school year and receive reduced stipends and
    education awards for their service during the summer.
    AmeriCorps*NCCC
        The National Civilian Community Corps (NCCC) is a distinctive part
    of the AmeriCorps network of programs; it is a residential program, and
    it is the only element of AmeriCorps that is administered directly by
    the Corporation for National Service. NCCC members are housed in
    dormitory-style residences primarily at closed or downsized military
    bases at Charleston, SC; San Diego, CA; Denver, CO; Perry Point, MD;
    and Washington, DC. Members serve on teams in the local community and
    are deployed on ``spikes'' in communities in every state to meet the
    critical needs of urban and rural communities, including disaster
    relief, education, environment, public safety, and other human needs.
        Although now a part of AmeriCorps, the NCCC was first proposed in
    1992 in separate legislation, S. 2373, sponsored by Senators Boren,
    Warner, and Specter. Their bill sought to create a civilian community
    corps modeled on the Depression-era Civilian Conservation Corps (CCC)
    while simultaneously responding to the need to reuse closed military
    bases. The CCC section of the bill was offered and unanimously approved
    as an amendment to the fiscal year 1993 Defense Authorization Act.
    Among the key sponsors of this bipartisan amendment were Senators
    Boren, Dole, Warner, Mikulski, McCain, Kennedy, Seymour, and Nunn. In a
    floor statement during debate on the amendment, Senator Dole said ``As
    I thought about this program, it was easy to see that many of today's
    youth could benefit from a modernized version of the CCC * * *. Far too
    many of our youth--both in urban and rural areas--are at risk--to
    drugs, to crime, to gangs, to teen pregnancy. It is these youths who
    could benefit from the new CCC Program.'' The following year, the
    National and Community Service Act of 1993 placed the administration of
    the NCCC in the hands of the newly-created Corporation for National
    Service.
        The NCCC is one of the most successful and effective components of
    AmeriCorps. For example, in fiscal year 1998, members performed about
    550 service projects in local communities in all 50 states.
    Accomplishments included renovating 346 houses, building 91 new homes,
    and tutoring 18,000 children, among many others. Here are several of
    the distinctive features of the NCCC that account for its extraordinary
    success:
        NCCC members are highly trained and organized. They are
    particularly effective at mobilizing and supervising other volunteers.
    Habitat for Humanity and the Boys and Girls Clubs rely heavily on NCCC
    members to supervise and thereby enhance the effectiveness of their
    part-time volunteers. NCCC members are specially trained to respond
    rapidly in times of natural disaster, and they work in close
    partnership with the Federal Emergency Management Agency (FEMA) and the
    Red Cross to respond to almost every major natural disaster, including
    fires, tornadoes, floods, and even the Oklahoma City bombing.
        True to its roots, NCCC adheres in part to a military model--
    members wear uniforms, work in teams, participate in a physical fitness
    regimen, and serve in a highly structured and tightly disciplined
    environment.
        Members work long hours doing hard work--and the results are
    visible in communities across the nation. This has made the NCCC one of
    the most popular AmeriCorps programs. In 1998, more than 3,000
    applicants applied for approximately 850 positions.
        Funding for the NCCC was originally set in 1994 at $30 million
    (including $20 million in an earmarked Department of Defense
    appropriation). The 1995 appropriation was reduced in a rescission from
    $26 million to $18 million, and funding has been held at that level
    ever since. As a consequence, the NCCC has reduced the number of
    members, delayed filling personnel vacancies, reduced the number of
    ``spikes,'' and otherwise done everything possible to make ends meet.
    However, it is now clear that fewer communities are being served, and
    program quality is at risk of slipping.
        The budget request for NCCC, a $3 million increase over the fiscal
    year 1999 level. The requested increase will finance the continuation
    of activities at five campuses and the enrollment of 1,141 Corps
    members, a 29 percent increase from fiscal year 1999 member population.
    The increase will also address reductions of essential personnel,
    operations, and administrative/logistics that were incurred in fiscal
    year 1998 when the fifth campus was established.
        In addition the increased participation level financed by the
    request would serve to decrease the per member cost of the program. The
    NCCC's per member costs are artificially inflated currently at almost
    $26,000 per member (including the education award) because NCCC has had
    to limit and even cut the number of members in recent years. Recently,
    the Corporation reached a bipartisan agreement with Senator Grassley to
    reduce the Corporation's average budgeted cost per AmeriCorps member by
    $1,000 per year to reach $15,000 per member next year. If Congress
    approves the NCCC's fiscal year 2000 budget request, the number of
    members will increase, reducing the per member cost to about $23,100
    and allowing the Corporation to achieve the goal of an average
    AmeriCorps member cost of $15,000.
        We urge Congress to adopt the President's budget request to
    increase funding for the NCCC to $21 million in fiscal year 2000--the
    first increase in four years.
    AmeriCorps National Direct
        The National and Community Service Act dictates that two-thirds of
    AmeriCorps funding flows to State Commissions and the remaining one-
    third supports national non-profit organizations through AmeriCorps
    National Direct grants. Each year since 1996, the appropriations law
    has imposed a cap of $40 million on these AmeriCorps National Direct
    grants.
        When established in 1996, the cap on AmeriCorps National Direct
    funding sought to address Congressional concerns stemming from grant
    allocations to other federal agencies. As part of a bipartisan
    agreement with Senator Grassley, the Corporation later agreed to
    eliminate all grants to federal agencies.
        Currently, AmeriCorps makes national direct grants to 39 national
    non-profits, including Habitat for Humanity, the American Red Cross,
    YouthBuild USA, Los Angeles Veterans Initiative, City Year, Youth
    Volunteer Corps of America, and the National Association of Community
    Health Centers. These non-profit organizations are widely supported in
    the Congress and in our communities. The Corporation ensures that these
    programs are funded in a completely non-partisan and non-ideological
    manner.
        National non-profits have special qualifications to engage in
    national service activities at the local level, including:
      --years of expertise in supporting service: many of these
            organizations were funded from 1990 to 1993 by Commission on
            National and Community Service appointed by President Bush;
      --well-developed program concepts and service delivery models;
      --experience in program management and community collaboration;
      --readily accessible training for staff and members; and
      --strong ability to reach under-served areas and expand programs to
            states with smaller populations.
        The National Direct grant program minimizes the administrative
    burden necessary to deliver national service. For nationwide
    organizations like Habitat for Humanity or the American Red Cross, it
    is more efficient to apply one time to the Corporation and then to
    allocate resources to local chapters, rather than to apply multiple
    times through individual State Commissions.
        AmeriCorps National Direct programs also cost less than other
    AmeriCorps programs, because national non-profit organizations:
      --Provide significant matching funds. The 1998 programmatic match is
            57 percent, which is significantly higher than the requirements
            of the statute and the match provided by AmeriCorps state
            projects; and
      --Attract major private support. Partners include corporations such
            as IBM, Sony, Dow Chemical, the Timberland Corporation, Nike,
            United Parcel Service, and the Disney Corporation that
            otherwise might not engage in national service.
        The cap on National Direct prevents AmeriCorps from supporting some
    of its most effective grantees:
      --The Corporation's ability to meet increasing demands for service
            addressing local community needs has been curtailed, as
            community-based affiliates of national non-profit organizations
            translate reduced grant support into a reduced number of
            AmeriCorps members and receive no funds for program
            development;
      --The quality of service efforts is increasingly challenged due to
            limited training funds; and
      --Since new grants require funding reductions to existing programs,
            which endangers the continued viability of these efforts, it is
            impossible for the Corporation to fund more than a handful of
            prospective new National Direct grantees in any given year.
        For these reasons, we strongly believe that the overall quality and
    effectiveness of AmeriCorps programs will increase if the
    appropriations cap is lifted, and we are enabled to carry out the
    original intent of the 1993 Act that one-third funds are awarded in the
    form of National Direct Grants. We ask the Subcommittee to give this
    request careful consideration.
                   important initiatives and special programs
    AmeriCorps' Call to Service
        Last month, AmeriCorps launched the Call to Service--a year-long
    effort to encourage young Americans to serve their community and
    country through AmeriCorps. Asking young people, ``Are you up to the
    challenge?'' the Call to Service, which is AmeriCorps' biggest
    recruitment drive to date, seeks to enroll more than 50,000 AmeriCorps
    members over the next year.
        The Call to Service was kicked off on February 10th at the
    University of Maryland with participation from President Clinton,
    Maryland Gov. Glendening and Lt. Gov. Kathleen Kennedy Townsend,
    University of Maryland President Mote, AmeriCorps members and others.
    It will continue throughout the spring and summer with a number of
    campus-based events, community-wide service events, summer of service
    kick-offs, and the events marking AmeriCorps' five-year anniversary in
    September.
    AmeriCorps Promise Fellows
        As noted earlier, along with the Points of Light Foundation, the
    Corporation was a co-convenor of the Presidents' Summit for America's
    Future in Philadelphia two years ago. We continue to work closely with
    General Powell and America's Promise, the organization designed to
    follow-up on the five goals established at the Summit. As a special
    initiative in conjunction with General Powell and America's Promise,
    the Corporation created the AmeriCorps Promise Fellow initiative, which
    is designed to identify and support talented individuals who will
    assist with state and local efforts to provide all young people with
    the five fundamental resources identified at the Presidents' Summit:
      --Caring adults in their lives, as parents, mentors, tutors, coaches;
      --Safe places with structured activities in which to learn and grow;
      --A healthy start and a healthy future;
      --An effective education that equips them with marketable skills, and
      --An opportunity to give back to communities through their own
            service.
        Five hundred new AmeriCorps members will serve this year as
    AmeriCorps Promise Fellows to help communities meet the needs of young
    people.
        AmeriCorps Promise Fellows will be community organizers and
    facilitators drawn from many walks of life, including academia,
    business, the military, and the service field. They will bring their
    diverse and considerable experience to the hundreds of national, state,
    and local nonprofit organizations that are sponsoring them. Among the
    projects that AmeriCorps Promise Fellows will support are:
      --Recruiting and coordinating volunteers to run after-school
            programs;
      --Implementing curricula coordinating service and education in
            elementary schools;
      --Coordinating communities' Summit follow-up activities, and
      --Building private sector support for projects supporting children
            and youth.
        The more than 500 AmeriCorps Promise Fellows will serve in almost
    every state, two American Indian tribes, and one U.S. territory, as
    well as with 17 national organizations that deliver community services
    on a local basis.
        In an appendix, we have also provided several examples of the
    manner in which States intend to deploy Promise Fellows to solve
    problems in local communities. I am also attaching to this testimony
    General Powell's statement on the AmeriCorps Promise Fellows published
    on America's Promise web site--www.americaspromise.org.
                      americorps education awards program
        The Education Awards Program is a central element in the
    Corporation's plans to expand the number of AmeriCorps members. Because
    we will add more members to the Education Award Program this year, we
    anticipate even further reductions in the cost per AmeriCorps member to
    the Corporation and more opportunities for traditional nonprofit
    organizations to take advantage of the opportunity to utilize
    AmeriCorps members.
        Across the country, faith-based organizations tackle some of our
    greatest challenges--and AmeriCorps members are playing an increasingly
    significant role in helping them solve community problems. Of the
    40,000 AmeriCorps positions this year, nearly 6,000 are in faith-based
    organizations. Since 1994, more than 13,000 AmeriCorps members have
    served with faith-based groups. A significant number of these positions
    are in the Education Awards program.
        Since its inception as a bipartisan initiative agreed to with
    Senator Grassley, the AmeriCorps Education Awards Program has greatly
    expanded opportunities for young people to serve as AmeriCorps members,
    brought new communities and new sponsors as partners in AmeriCorps, and
    produced new non-federal resources to support service programs. Now
    beginning its third year, the Education Awards program encourages
    organizations to apply to State Commissions or to the Corporation and
    demonstrate their capacity to recruit, train, supervise and generally
    support AmeriCorps members with little Corporation assistance beyond
    the education award. The members who successfully serve in such
    programs are eligible to receive an AmeriCorps educational award, but
    they do not receive a living allowance, health care or child care from
    the Corporation, and the sponsoring organizations receive only minimal
    administrative assistance. At the Presidents' Summit on America's
    Future in Philadelphia, President Clinton challenged faith-based
    organizations, non-profits, and colleges and universities to support
    this initiative.
        We have approved and launched more than 140 Education Awards
    programs, including about 80 organizations that had not previously
    hosted AmeriCorps members. The rest are existing AmeriCorps grantees
    that were able to add new components as a result of this new
    opportunity. Once fully operational, the programs approved thus far
    will support more than 20,000 new AmeriCorps members. In general,
    sponsors are national, state, and local organizations and agencies, and
    programs range in size from 1,000 or more to fewer than 20 members,
    carrying out service to respond to all types of community problems.
    Sponsors include:
      --The Boys and Girls Clubs of America, which will place 1,000
            AmeriCorps members in Clubs across the country to serve younger
            Club members and engage those younger boys and girls themselves
            in service to their communities;
      --Two national faith-based organizations: the National Council of
            Churches and the Catholic Network for Volunteer Service, which
            together have placed over 6,000 AmeriCorps members in non-
            religious community service activity;
      --The L.A. Veterans' Initiative, which is placing more than 200
            members across the country to assist in homeless veterans'
            returns to independent and productive living; and
      --A number of colleges and universities that are placing college
            students in intensive community service settings.
                   the martin luther king jr. day of service
        In 1994, Congress passed the King Holiday and Service Act of 1994
    to transform the federal holiday honoring Dr. King into a day of
    service that reflects his life and teaching, bringing people together
    around the common focus of service. At that time, Congress charged the
    Corporation for National Service to work in partnership with the
    National King Holiday Commission (now replaced by the King Center for
    Nonviolent Social Change, Inc.) and play a leading role in making the
    holiday a day ``on'' for service, not just a day off from work or
    school. Service was at the heart of Martin Luther King Jr.'s philosophy
    and action. Dr. King said, ``Everybody can be great because anyone can
    serve,'' and urged Americans to take action to improve our communities
    and the lives of fellow citizens. Our other national partners include:
    the United Way of America; the Points of Light Foundation and its
    Volunteer Center network; First Book, which donated over a million
    books to literacy efforts; and Do Something, a youth service
    organization that provides a special service-learning curriculum to
    school aged youth.
        This year on the King holiday tens of thousands of volunteers in
    thousands of projects across the country joined together to tutor
    children, build homes, clean parks, paint classrooms, deliver meals,
    and provide other service to improve their communities in all fifty
    states, the District of Columbia, Puerto Rico, and the Virgin Islands.
    The projects varied widely in scale and in focus. In Philadelphia,
    12,000 volunteers fanned out across the city to renovate schools, clean
    neighborhoods, and read to children. In Jackson, Mississippi over a
    dozen youth groups served together on cross-faith, cross-racial teams
    to renovate low income housing and restore afterschool play spaces. In
    Zuni, New Mexico, volunteers from the Indian Reservation and from the
    Senior Corps and AmeriCorps collaborated with the local fire department
    to create a wood bank for low-income residents to heat their homes
    through the winter. In all these efforts we have called on all the
    Corporation's streams of service--AmeriCorps, Learn and Serve America
    and the Senior Corps--to play an active part in the observance.
        In the fourth year of the Martin Luther King Jr. Day of Service, we
    are gaining momentum toward our goal--fulfilling the legislative
    responsibility to promote service in honor of Dr. King.
        In an appendix, we have provided examples of Martin Luther King Jr.
    Day of Service activities.
                            learn and serve america
                        fiscal year 2000 budget request
        The Learn and Serve America fiscal year 2000 appropriation request
    reflects an increase of $7,000,000 over the fiscal year 1999 budget.
    These additional funds are requested to expand the reach and impact of
    service-learning programs for school-age and college youth and meet the
    local demand for service-learning implementation and training. Learn
    and Serve America's funding has remained constant since fiscal year
    1996. In the intervening years, service-learning has gained stature and
    importance in education at the elementary, secondary and post-secondary
    levels because of its positive impact on youth in academic achievement,
    school engagement, civic responsibility, understanding of racial
    diversity, and in the contribution service-learning makes to
    communities.
        The goal of the Learn and Serve America programs is to make service
    an integral part of the education and life experiences of all young
    people, thereby building a lifelong ethic of responsibility and
    service. All Learn and Serve America programs--K-12 school- and
    community-based and higher education--integrate community service with
    academic curriculum or with out-of-school time and extracurricular
    learning opportunities.
        In fiscal year 2000, Learn and Serve America's new and existing
    resources and capabilities at the local, state and national levels will
    be mobilized to: support the increasing demand for service-learning
    implementation and training; support the expansion of out-of-school
    time programs; better support higher education institutions' efforts to
    create permanent service-learning programs; and increase the ability of
    colleges and universities to utilize Federal Work-Study students in
    community service, including America Reads literacy programs.
        In an appendix, we have provided examples of local service-learning
    programs at the K-12 and higher education levels.
               special service-learning initiatives and programs
    National Service-Learning Leader Schools Program
        Sponsored by the Corporation for National Service, the National
    Service-Learning Leader Schools Program is a new presidential
    initiative that will recognize high schools from across the nation for
    high quality service learning. In its pilot year, 1998-1999, the
    program will recognize up to 100 high schools for their exemplary
    integration of student service into the curriculum and the life of the
    school. The first National Service-Learning Leader Schools will be
    announced in June 1999, and at that time, the schools will begin a two-
    year award period in which they will provide support and training to
    other schools interested in developing or expanding service-learning
    programs.
    The President's Student Service Scholarships
        The President's Student Service Scholarships program is now in its
    third year and has awarded scholarships to over 4,000 young people, but
    many more students are eligible and deserving. Each high school in the
    country may select one junior or senior to receive a $1,000 scholarship
    for outstanding service to the community. Through the National Service
    Trust, the Corporation for National Service provides $500, which is
    matched with $500 from local scholarship sponsors. Scholarship
    recipients must have served at least 100 hours within a 12-month
    period. In addition to the scholarships, many other students will
    receive recognition through the President's Student Service Award
    program, which honors youth ages 5 to 25 who perform at least 100 hours
    of service to the community in a 12-month period; they receive a gold
    pin, as well as a presidential certificate, and a letter from the
    President.
        The scholarship program is succeeding. Matching scholarships have
    been provided by the high schools themselves as well as by a host of
    community foundations, local businesses, and religious and civic
    organizations including Kiwanis Clubs, Lions Clubs, the Miss America
    Organization, Elks Lodges, Moose Lodges, and Dollars for Scholars.
        In addition, states and regional partners are supporting the
    President's Service Scholarships. For example, in Minnesota the state
    legislature has made funds available to meet the match for each
    scholarship awarded in the state; in Houston, Texas local corporate and
    foundation sponsors provide the match for the scholarship in 50
    schools. Local nonprofits such as hospitals, senior centers, YMCAs or
    YWCAs, or United Ways may benefit from or coordinate student service;
    they provide the match for the scholarship in many communities.
        We are working to expand our partnerships to encourage the
    additional matching resources required to expand the program. Boys and
    Girls Clubs, for example, have agreed to match up to 2,000 scholarships
    to young people in their local sites.
        Our fiscal year 2000 budget proposal includes $10 million for the
    President's Student Service Scholarship to support scholarships for
    20,000 high school juniors and seniors.
    Points of Light Foundation
        Under Title III of the National and Community Service Act, the
    Corporation for National Service is authorized to provide funds for the
    Points of Light Foundation, which was created under President Bush to
    encourage every American and every American institution to help solve
    the nation's most critical problems by volunteering in community
    service. The Foundation also disseminates information on promising
    community service approaches and builds the capacity of institutions
    and individual leaders to support volunteer service. The Corporation
    enthusiastically urges the Committee to appropriate $5.5 million for
    the Points of Light Foundation in fiscal year 2000, the same amount
    appropriated last year. The Corporation and the Points of Light
    Foundation continue to work closely together in pursuit of our common
    objectives.
                                   conclusion
        In conclusion, the success of AmeriCorps and Learn and Serve
    America warrant the additional support requested in the budget. Thank
    you.
                                     ______

              Appendix One--Examples of National Service Programs

                         americorps*state and national
        The following is a sampling of AmeriCorps members' accomplishments
    around the country:
        In St. Louis, Missouri, AmeriCorps members serve with the St. Louis
    Partners Safety Service Corps. The team has assisted the U.S. Forest
    Service in fire suppression on over 1,600 acres in Missouri. The Corps
    has also received recognition from President Clinton for their work
    around the country, which includes clearing fallen trees from roads and
    power lines in the wake of ice storms in Maine and New Hampshire,
    providing relief and assistance to residents of Michigan following
    severe storms that included gale force winds and responding to an
    interagency call for assistance in fighting major forest and grass
    fires in Florida.
        In Montgomery County, Maryland, AmeriCorps members participate in
    Community Assisted Policing (CAP) with the Montgomery County Police,
    who credit AmeriCorps members with adding to their arrest rates. With
    AmeriCorps members tracking down the location of criminals, police were
    able to arrest 33 percent of those with outstanding warrants. In
    addition, with AmeriCorps members completing administrative duties,
    police were able to devote additional time in December to the Driving
    While Intoxicated (DWI) Holiday Task force, which resulted in 201
    arrests of drunk drivers, many of whom were underage.
        In Birmingham, Mobile and Montgomery, Alabama, AmeriCorps members
    serve in 13 schools through the Alliance for Catholic Education (ACE).
    During their two-year commitment, ACE AmeriCorps members participate in
    intensive teacher-training and service-learning courses during the
    summers and teach full-time. Over the past four years, ACE AmeriCorps
    members in schools across the South have taught nearly 5,000
    underprivileged school children, and 100 percent of participating
    principals have rated the program highly.
        ACE AmeriCorps members make an impact with their students that goes
    far beyond the classes they teach. At St. Jude's High School in
    Montgomery, ACE AmeriCorps members have started a popular drama program
    and directed students in several service-learning projects. In
    Birmingham, an ACE AmeriCorps member directs a service project that she
    integrates with classroom work. Students volunteer at a homeless
    shelter/soup kitchen and then are assigned to write and reflect about
    their experiences.
        In Des Moines, Iowa, AmeriCorps members serve at the Iowa Coalition
    Against Domestic Violence. Operating since 1985, the Iowa Coalition
    Against Domestic Violence offers assistance to battered women and
    children living in 99 rural communities throughout Iowa. AmeriCorps
    members enable the Coalition to maintain field offices in underserved
    areas, offering services in crisis intervention, counseling, protective
    orders, shelter, and medical services. Last year, members assisted
    close to 3,500 women and 4,000 children through 29 domestic violence
    agencies/projects across the state. Additionally, members provided 260
    education programs to the public, including classes on date rape and
    conflict resolution to hundreds of elementary, junior high and high
    school students. Overall, the AmeriCorps program in the last four years
    has made it possible for members to assist 20,000 victims of domestic
    violence.
        Throughout West Virginia, AmeriCorps members serve with Energy
    Express. Initially serving two sites in 1994, Energy Express now
    includes 68 sites where AmeriCorps members provide summer learning
    experiences and nutrition to children living in low-income and rural
    communities across West Virginia. Of the more than 3,000 elementary age
    children enrolled in the 1998 summer program, 70 percent of those
    tested maintained or improved their reading achievement scores and
    benefited from a nutritious breakfast and lunch served daily over the
    six-week program.
        In Flagstaff, Arizona, AmeriCorps members serve in the Coconino
    County Rural Environmental Corps. AmeriCorps members focus on three
    areas of the environment in Northern Arizona: fire prevention,
    hazardous fuel reduction, and natural resource management. Members
    performed home fire safety inspections for 370 residents, thinned eight
    acres of land near the Flagstaff Arboretum, participated in annual
    revegetation projects, and developed a youth service component to
    assist with U.S. Forest Service trail maintenance. In response to a
    firewood shortage in Native American communities in Northern Arizona,
    thinned wood was dried and delivered for use during cold winter months.
        In Houston, Texas, 135 AmeriCorps members serve children in
    disadvantaged neighborhoods throughout Houston, reaching a school
    population of nearly 6,000 through SERVE HOUSTON. The wide array of
    services provided by AmeriCorps members include learning enrichment
    activities, one-on-one tutoring, student wellness education,
    development of parent resource centers, and ongoing service-learning
    opportunities. Through their comprehensive activities, and in close
    collaboration with individual school staff, SERVE HOUSTON members
    expand these schools' overall capacity to provide academic and extra-
    curricular activities, and get things done for these kids. AmeriCorps
    members work with a wide variety of community partners including the
    YMCA of Greater Houston, Volunteer Houston, Interfaith Ministries,
    Junior Achievement, the Scouts of America, and the Children's Museum of
    Houston.
        In New Jersey, AmeriCorps Members serve through the New Jersey
    Department of Education in ten New Jersey schools. Members provide safe
    havens for children by extending the school day where they tutor
    children and run after school programs. Members also provide in-class
    academic support and mentoring activities aimed at improving math,
    science, and literacy skills. The program aims to improve the school
    success of 80 percent of 600 students served in 5 districts--Camden,
    Paterson, Pleasantville, Roselle, and Trenton.
        In Montana, 40 full-time and 80 part-time AmeriCorps members serve
    through the Montana Conservation Corps. The AmeriCorps members serve
    throughout the state on crews of 6 under the leadership of a crew
    supervisor, and they work to address critical needs in maintaining
    Montana's natural resources. AmeriCorps members are constructing and
    maintaining 250 miles of trail and 36 parks, restoring and enhancing
    degraded watersheds, helping improve water quality, correcting site
    erosion, and preventing further degradation and restoring habitat.
    AmeriCorps members are constructing homes for ten low-income families,
    and rehabilitating housing for 80 low-income senior citizens and ten
    community agency facilities. Through its CorpsLink program, the
    AmeriCorps members are mentoring 450 adjudicated youth that they have
    engaged in 210 service projects.
        In Idaho, 17 full-time and 19 part-time Idaho Trio AmeriCorps
    members are improving the academic performance of 2,309 Head Start, K-
    12 and college students in various sites throughout the state. The
    majority of these students face challenges including physical
    disabilities, disruptive home life, and poor English skills. Teachers
    benefit from AmeriCorps members providing in-class support by giving
    one-on-one and small group assistance to many students.
                           americorps promise fellows
        The following are some examples of how states intend to utilize the
    new Promise Fellows:
        In Arizona, ten AmeriCorps Promise Fellows will be serving in urban
    and rural communities across the state to build upon and enhance the
    existing network of service organizations. Three AmeriCorps Promise
    Fellows will be based at the Arizona Governor's Community Policy Office
    where they will concentrate on identifying existing service
    organizations that are already providing the five fundamental resources
    for children and youth in Arizona. Those programs will serve as models
    that can be replicated and teamed with other service organizations.
    Seven AmeriCorps Promise fellows will be placed in rural and under-
    served communities. For example, an AmeriCorps Promise Fellow serving
    in Graham and Greeley counties will, among other things, develop a
    youth council, bringing high school students in the area together to
    share ideas, give voice to community concerns, and themselves serve the
    community.
        In Florida, eleven AmeriCorps Promise Fellows will be engaged in a
    variety of diverse activities to help fulfill the goals set for
    children and youth at the Presidents' Summit in Philadelphia and the
    Florida Promise Summit, including:
      --Identifying safe places for children in Pinellas County through the
            Youthmapping for Safe Places;
      --Starting a literacy project that will distribute books to programs
            across the state;
      --Organizing a mentor recruitment drive to involve more people in
            becoming positive role models; and
      --Creating and managing a Youth Opportunities Directory to provide
            valuable resources to every child.
        In Oklahoma, thirteen AmeriCorps Promise Fellows will serve to
    develop, expand and coordinate initiatives aimed at answering the
    America's Promise Challenge, including:
      --Designing a database of volunteers for the American Red Cross;
      --Expanding the volunteer base for the Oklahoma City Boys and Girls
            Clubs;
      --Developing an afterschool program at the Texas County YMCA in
            Guymon, OK to provide safe places and more mentors to youth in
            the area; and
      --Creating a volunteer center for the United Way of Ponca City, OK.
                     martin luther king jr. day of service
        The following are examples of Martin Luther King Jr. Day service
    projects: In Athens, Alabama, the city of Athens provided a day of
    continuous service and education for adults, teens, and children about
    how to resolve racial conflicts. Community leaders provided educational
    training on nonviolent solutions and then the attendees participated in
    serving lunch to area senior citizens and the needy.
        In Baltimore, Maryland, students, faculty, staff and alumnae of the
    College of Notre Dame of Maryland along with community volunteers
    staffed the Caroline Center, a job training/education program for women
    living in poverty. Their efforts allowed the Center to open on the
    holiday and to provide a safe, supervised environment when the schools
    were closed. Volunteers worked with children at the center to create
    picture books about racial harmony and cultural diversity. The women of
    the Center participated in seminars about self and community
    development and were also given a presentation on the role of women in
    the Civil Rights Movement.
        In Helena, Montana, staff and volunteers from the United Way read
    books to over 150 youth for the holiday. The books focused on the
    accomplishments of Martin Luther King and the contributions of African-
    American and Native American cultures. Following the reading, children
    and adults served in local community service projects in the Helena
    area.
        In Passaic, New Jersey, staff of the Anderson Lee Vocational and
    Technical School and NAACP youth volunteers helped to renovate three
    classrooms in need of repair. The volunteers added plumbing fixtures,
    installed new flooring, and repainted faded walls.
        In Austin, Texas, on the Saturday before the holiday, residents of
    Austin fanned out over the city to over 40 sites to participate in
    community service projects. Over 1,500 people helped to build houses
    with Habitat for Humanity; planted trees; cleaned-up trash in
    neighborhoods; visited nursing homes; and participated in clothes
    drives.
        In Morgantown, West Virginia, volunteers renovated a playground to
    ensure compliance with state regulations. They refinished existing
    playground equipment, replaced rusted fencing, and enlarged the play
    area by 15 feet to install a new playground set.
              learn and serve america--school- and community-based
        The following are examples of the success of School- and Community-
    based Learn and Serve America programs:
        In Gresham, South Carolina, high school students, after completing
    a needs assessment, built a rural fire department on property donated
    by a community member. Having a fire department in the community has
    resulted in a re-classification which has saved every homeowner
    substantial money on their homeowner's insurance. This experience has
    greatly impacted the safety curriculum throughout the K-12 system.
        In Sedalia, Missouri at Smith-Cotton High School, industrial
    technology students with help from the art students converted waste
    materials from a local pre-fabricated building company into 400
    bluebird nesting boxes. Students installed the nesting boxes on the
    vast Missouri State Fair Grounds, the adjacent State Fair Community
    College campus, the City of Sedalia's soccer fields, and other public
    grounds. A late summer inspection revealed dramatic nesting success,
    and the students learned basic wood shop, equipment safety and
    operation, problem-solving, mass manufacturing techniques, quality
    control, and natural history.
        In Iowa City, Iowa the Iowa Service-Learning Partnership
    incorporates service-learning into teacher education programs at Iowa
    State University, the University of Iowa, and Northern Iowa University.
    Along with training current K-12 teachers and administrators, the
    Partnership trains future teachers who pair up with supervising
    teachers during their student teaching assignments to implement a
    service-learning project for the K-12 students.
        More than 3,500 Iowa school children have been involved in service-
    learning projects, thanks to the work of the 400 current teachers, and
    450 prospective teachers who have received training in service-learning
    concepts and practice over the past three years. A follow-up study
    found 50 percent of the classroom teachers continued service-learning a
    year after the original Partnership experience.
        At Jane Addams Elementary School, in Chicago, Illinois fifth
    through eighth grade students tutor younger students in several
    academic areas. Students this year achieved the highest level ever in
    the history of the school on national basic skills tests for
    mathematics and reading. The school is located in an inner-city
    neighborhood that is populated by first generation immigrants. Because
    English is a second language for most students, peer tutors received
    special pre-service training in tutoring techniques.
        The Hamilton YMCA, a branch of the YMCA of Metropolitan
    Chattanooga, Tennessee, has expanded their Before and After School
    Child Care Tutorial program in partnership with East Brainerd
    Elementary School. The after-school program involves children ages 5 to
    11 in service-leaning projects such as peer tutoring and creating a
    vegetable garden at school. Twenty-five students tutor 70 ``at-risk''
    elementary school pupils in their areas of academic weakness. In
    collaboration with local environmental agencies, the students are
    developing a Field Guide to be used on the East Brainerd Elementary
    Nature Trail by 500 students at the school. The program has a proven
    track record of student gains in academic achievement and self-esteem.
                   learn and serve america--higher education
        The following are examples of the success of Higher Education Learn
    and Serve America programs:
        In Mobile, AL, first year engineering students at the University of
    South Alabama partner with math and science middle school teachers to
    design course software and hardware that meet the classroom needs and
    specifications of the teachers. This affords the college students an
    opportunity to practice engineering design within a ``real world''
    environment, while meeting the community-identified need of more
    active, hands-on learning of science and math at the middle school
    level.
        In Crow Agency, MT, Business Administration students at Little Big
    Horn College work with the Tribal Business Information Center to
    provide technical assistance and office services to the Center. They
    also serve as information systems technicians for community agencies,
    work with local, state, and national parks to serve as cultural and
    historical interpreters, and serve as advocates for clients with health
    or educational needs.
        Based in Mesa, Arizona, the Campus Compact National Center for
    Community Colleges has a national project which teams seven community
    colleges with a neighboring four-year college or university to
    collaborate on community service-learning projects, and faculty and
    student service-learning training and research projects. Nationally,
    the program's goal is to provide exemplary models and effective
    practices for developing and sustaining partnerships between two- and
    four-year institutions of higher education to serve community needs.
    Each collaborative project is locally determined and managed. Examples
    of these innovative programs include:
      --an Ohio program in which service-learning courses are focused on
            the restoration of a polluted Appalachian watershed and on the
            history and heritage of the impoverished community living in
            the watershed area; and
      --an America Reads program in Florida in which college students tutor
            elementary school children both in school and in community-
            based afterschool centers while developing their teaching
            skills through service-learning courses in education,
            psychology, and communication.
            national service programs engaged in literacy activities
        The following are some examples of national service programs
    engaged in literacy activities: In Connecticut, AmeriCorps members
    tutor seven- and eight-year-olds in reading during the school year and
    during the summer in nine public housing communities in Hartford, New
    Haven, and New London, CT. Members also coach parents in supporting
    their child's efforts to read, volunteer in classrooms, and work with
    teachers to reinforce school curriculum with supplementary services.
        In Florida, AmeriCorps members tutor under-achieving K-3 students
    so that all will read at or above their respective grade level. Members
    also train middle and high school students to become elementary school
    student tutors, and teach parent education workshops to parents to
    increase the number of parents reading to their young children. Members
    serve throughout Florida in local elementary schools with critically
    low student performance.
        In Houston, Texas, Literacy*AmeriCorps Members provide literacy
    instruction for children and adults and target the specific need of
    increasing children's reading skills. AmeriCorps Members increase
    literacy for families by providing English as a Second Language
    courses, basic skills, pre-GED and GED classes, homework assistance to
    school-age children, and family and parent literacy programs. America
    Reads activities include recruiting and training volunteers as tutors
    for young children.
        In San Francisco, California, there is a higher education service-
    learning program where Corporation funds help train and place college
    work-study students in schools to provide one-on-one tutoring to third
    grade students who are underachieving in reading. The program includes
    an intensive 45 hours of training in reading instruction, reflection
    sessions and mentoring opportunities with teacher collaborators. The
    project expects to develop materials for dissemination, including the
    revised course syllabus, a tutoring resource manual and readings,
    placement procedures and supervision guidelines, recruitment materials,
    and evaluation instruments assessing the performance of tutors and
    tutees alike.
        In Washington state, the Governor has launched a statewide effort
    to improve literacy among young children. All parts of national
    service, including AmeriCorps and service-learning, are contributing to
    this effort.
                                     ______

                         [From the Dispatch, Feb. 1999]

                     A Salute to the First Promise Fellows

                           (By General Colin Powell)

        For some of our young people, preserving our democratic way of life
    means shouldering a rifle, or climbing into a cockpit, or weighing
    anchor and setting out to sea. For others it means helping a child to
    read, or helping that child to secure needed vaccinations or health
    care. Or it means building a park, or helping to bring peace to
    troubled neighborhoods, or helping communities recover from natural
    disasters, or reclaiming the environment.
        For a select group of young people called Promise Fellows, it means
    a special mission: It means providing young people with access to the
    five America's Promise Fundamental Resources they need to lead
    successful lives.
        The Promise Fellows are new dimension in the ongoing partnership
    between America's Promise and the Corporation for National Service--
    AmeriCorps. From the very beginning, the Corporation for National
    Service has been one of our staunchest allies. Former Senator Harris
    Wofford, the Corporation's CEO, helped make the Presidents' Summit in
    Philadelphia the seminal event it was, and he has been a valued
    supporter of America's Promise ever since.
        The creation of the AmeriCorps Promise Fellowships was announced by
    President Clinton last June. This month, the first Promise Fellows--
    some 500 of them--will undertake their training and then fan out all
    across the country to assist in local efforts to provide the five
    America's Promise Fundamental Resources.
        Promise Fellows will be starting a literacy project in Florida that
    will distribute books to programs across the state. In Illinois, they
    will organize a summit for youth and community members. In Oklahoma,
    they will be developing an after-school program at a local YMCA and
    establishing a database of volunteers for the local Red Cross. In North
    Carolina, they will assist a program that matches elementary school
    children with senior volunteer mentors. In Mississippi, they will work
    with 100 Black Men of America to recruit 10,000 new mentors in the city
    of Jackson. In New Jersey, Promise Fellows will serve as coordinators
    of Communities of Promise projects in all 21 New Jersey counties.
    Nationally, Promise Fellows will work with another ally of America's
    Promise, Communities in Schools, to identify and create up to 500
    Schools of Promise across the country.
        These are just a few of the many ways in which Promise Fellows will
    be making America a better place by giving young people a better chance
    at life. Their motto is, ``Delivering on America's Promise to Youth''--
    and that is exactly what they are going to do.
        The 500 Promise Fellows are the first of the hundreds more we
    expect in the years ahead. Because these young people are going to be
    serving in positions of leadership, they are going to exert an
    influence far in excess of their numbers. They are going to be
    catalysts and coordinators for a whole range of projects designed to
    advance the five America's Promise Fundamental Resources. They are
    going to be examples and role models for other young people. Finally,
    when they finish their year of service as Promise Fellows, they are
    going to carry that experience with them for the rest of their lives.
    Whenever they are confronted with a problem or need in their
    communities--particularly one involving young people--they will be able
    to draw on their experience as Promise Fellows in devising solutions,
    and their neighbors will be able to look to them for leadership and
    advice. I look forward to giving you further reports on the success of
    this new adventure in public service.

        Senator Bond. Thank you very much, Senator. We will have a
    number of questions for you submitted for the record. But let
    me go back to the management reform. You made the commitment
    last year to correct a number of the weaknesses. The IG has
    found that the same material weaknesses exist. In fact, the
    number of material weaknesses has expanded to two new areas in
    the Corporation's financial operations.
        You have developed an action plan. What sort of strategy or
    plan did you have in place last year to address the material
    weaknesses? Have you determined that implementing this action
    plan will eliminate or will remedy the weaknesses, and when do
    you expect to have them remedied?

                         addressing material weaknesses

        Mr. Wofford. In just a minute, if I may, I would like our
    chief operating officer, who has been a driving leader in this,
    to add her comments.
        As to the sequence of plans, I would like to make sure you
    see this is not just one plan after other plan. The top
    management of OMB, before our last hearing, had put a lot of
    power and leadership--working with us very directly--into the
    plan we reported to you at this committee. We made great
    progress in that plan.
        As the other studies by the Inspector General, our own
    studies, and then the balance sheet qualified opinion and its
    recommendations and findings came, we necessarily had to go
    into greater depth, greater detail and specificity with our
    plan submitted to you. I was glad to see that except for the
    two additional points you wanted us rightly to include in that
    plan--which we have now added--that will show you every 60 days
    whether we have made our targets, you have no objection to the
    plan that is before you.
        Let me add one other thing about that sequence and the
    sequence of leadership. Out of the collaboration with OMB's
    management leadership, we were very fortunate to bring on board
    our new chief operating officer--they let us have Wendy Zenker,
    one of their top people, who by the way had run grants
    management at the Department of Education some time before.
        But she came in, fortunately overlapping at the same time
    that our chief operating officer was taken to be Secretary of
    the Army, and a little while thereafter, you probably know, our
    chief financial officer was taken to be the chief financial
    officer of Internal Revenue.
        Wendy Zenker has given extraordinary leadership. She has
    been brought in as a strong extra accounting support and I
    would like her to comment, if she may, on your question.
        Senator Bond. Thank you.

                           statement of wendy zenker

        Ms. Zenker. Thank you very much, Mr. Chairman. As you
    noted, we do have an Action Plan that addressed, at the time,
    all of the six material weaknesses that the Inspector General
    had noted in her fiscal year 1997 balance sheet audit that was
    issued in October of last year. We specifically organized the
    plan around those material weaknesses so we would have an
    assurance that we would be able to show to you progress, and
    also results, in correcting those weaknesses. The plan is
    dynamic. As the year goes on, as we learn more, if it is
    necessary to modify the plan or add a particular goal or
    objective, we do that. As a matter of fact, in our February
    progress report to you we added procurement management. We
    recognized, based on the information that we had been
    receiving, that there was, in all likelihood, a material
    weakness in that area and have added that to our action plan.
    So, as I say, we can show you results every 60 days and we can
    show you real improvement within this year and the next.
        You asked how long it will take to fix the material
    weaknesses. We believe that we can fix them within the next 2
    years. That is, 1999 and 2000. The reason I say that to you is
    because many of the weaknesses are tied to our very poor
    current financial management system. The efforts that we are
    taking to install a new financial management system will
    address several of the material weaknesses that the Inspector
    General has identified.
        Senator Bond. Thank you very much, Mrs. Zenker. Senator
    Wofford, we are delighted you brought in a chief operating
    officer, but we are still very much concerned about the
    attention and time being dedicated to the Corporation's
    management weaknesses.
        What are the reasons that you do not have a CFO? You have a
    deputy. What are you going to do about that?

                            chief financial officer

        Mr. Wofford. I am glad to be able to report to you that,
    after a frustrating and hard search, we have identified someone
    who we think will perform with outstanding ability and
    experience. That person is being vetted at this moment by the
    White House.
        Senator Bond. When do you hope to have them on board?
        Mr. Wofford. I hope any day; we hope very soon. We will
    have the vetting process for the initial announcement and, of
    course, thereafter----
        Senator Bond. Obviously we wish you luck.
        Mr. Wofford [continuing]. There are the various studies
    that go on, as you well know, before that person can take full
    charge. That is why it is very fortunate that during this
    interim, which was longer than we wanted, that we have had the
    kind of leadership that Wendy Zenker is giving right now, every
    day. So we have had nothing dropped. In fact, she came directly
    out of the shaping of our plan last year, and came over here to
    help us implement it.

                             national service trust

        Senator Bond. Senator, the Corporation is requesting $93
    million more for the National Service Trust account. The IG
    states in her testimony that as of September 30 last year, the
    trust liability totaled $161 billion, but the Corporation had
    reserved $357 million in the trust. And thus, she calculated,
    there is a projected surplus of about $196 million, according
    to the auditors.
        Do you agree with the auditors' assessment? Was this
    existence of the surplus factored in? And the thing that really
    concerns us, both from both a financial management as well as
    programmatic standpoint, does this indicate that the actual
    education award usage was less than what the Corporation has
    been estimating?
        Mr. Wofford. No. Let me separate the two parts of this
    problem, which it is crucial to separate.
        One, the most prudent and appropriate way to report the
    liability on the financial statements is in the audit that is
    just underway now. The Corporation in the beginning, it seems
    to me rightly, reflected the Act, which says that every member
    of the trust--of AmeriCorps--who completes service is entitled
    to an education award. And we have an obligation--in fact, the
    Act makes it very clear--that the money for those educational
    awards must be held in the trust.
        Therefore, in the beginning, with no evidence as to how
    many would use those awards, knowing, of course, that some
    would not--some may not want to go to college, a significant
    proportion are over 30, and even though an increasing number of
    people over 30 and over 70 are interested in college--we have
    always known that not all members are going to use it. Some go
    directly to jobs out of programs that have taught them how to
    build houses for the homeless. But we accept the auditor's
    recommendation that, at this point, it would be wise to
    discount the amount needed--the amount that is listed as a
    liability, because now we have some experience.
        Experience indicates that about 78 percent--and it could go
    higher--use the award. So we accept the recommendation of the
    auditors and we are changing the financial statement to reflect
    that liability.
        But that is a different question from what funds are needed
    now to be in the trust fund.
        We have been discounting our request to Congress at that 78
    percent rate for 2 years now. And if we had not discounted it
    by that factor, we would be asking for some 70 million more for
    the trust.
        Maybe Wendy Zenker would want to see if I adequately
    conveyed that.
        Ms. Zenker. One way to think about this is--there is one
    way to think about the liability as we record it on the
    financial statement, and a different way that we prepare our
    budget estimates that we share with you and the Congress.
        In terms of our liability on the statement, we felt that it
    was prudent to take a very conservative approach and assume
    that every member who enrolled in the trust was going to use
    their education award until we had actual facts and proof that
    that was not the case.
        Senator Bond. In essence, now you agree that there is
    that----
        Ms. Zenker. We still believe it is a judgment call. We have
    not gone through a full 7-year cycle yet. So for the first
    class that were enrolled, we have some usage figures and very
    high usage figures for that class. But since they have not had
    the full 7 years, we do not know, for sure, exactly how many
    people will use their education award.
        Mr. Wofford. Some are predicting a peak coming at the end
    of the 7 years when people say, I will no longer have my
    voucher--my education award--if I do not use it. So we have to
    take into account the uncertainty.
        Senator Bond. That is possible.
        I think I have benefited from a hometown-like system. Back
    in the heartland, if you have a referee that comes from the
    same town as one of the teams, you can always count on getting
    better calls.
        I think I have gotten a better call on the light system. So
    I will terminate my question and turn to my ranking member for
    her questions. Maybe we can give you a small hometown
    advantage.
        Senator Mikulski. That is fine with me. As you know, we
    have two basketball teams in the tournament, one a big school
    like Maryland and then we are very proud of Mount St. Mary's
    College, a small college that has a lot of grit and
    determination. Keep your eye on them. It is the small sizes
    that sometimes triumphant over the giants. [Laughter.]

                       use of americorps education awards

        Having said that, I would like to follow up really on
    Senator Bond's question about use. I really had a hard time
    following that answer. And here is my question: Of the number
    of volunteers, full-time and then the number of AmeriCorps
    volunteers part-time--remember the part-time model which was to
    be so crucial, was one of the things I advocated, because it
    did not require relocation, enabled people of disabilities to
    be recruited because their supports would be available.
        My question is as far as you know now, how many people have
    either used AmeriCorps to pay down their debt, which is one
    category, or to use their voucher for additional education?
        Mr. Wofford. Over 76,000 have earned the educational awards
    and, of those, already 35,000 have used them or are using them
    now.
        Senator Mikulski. To do what?
        Mr. Wofford. To pay either the loans that they had taken
    out from college or to pay directly to colleges.
        Senator Mikulski. Of the 35,000 then, how many have used
    their service in AmeriCorps to pay down their debt, which was
    one of the original purposes of the program?
        Mr. Wofford. About 34 percent have used it to pay down
    their debt, 56 percent use it to pay for continuing college
    education, and 10 percent use it for both purposes.
        Senator Mikulski. I do not know what continuing college
    education means.
        Mr. Wofford. About 25 percent of all members are precollege
    and they use their award to pay for entering college.
        Senator Mikulski. Yes?
        Mr. Wofford. A continuing might also be that more than----
        Senator Mikulski. I am going to be very hard here. Forty-
    five percent used it to pay down their debt. And was that the
    full-time or the part-time people?
        Mr. Wofford. Both: we can give you the breakdown, in
    general, there is no significant difference in the use of
    awards between full-time and part-time members.
        Senator Mikulski. That will be important. If we are looking
    ahead at where we need to put our money, and even where you are
    going to do your recruitment, which is who are the most people
    who make the advantage, this is like the epidemiology of the
    program. It tells you what is healthy and what needs
    immunization and what has got real big problems.
        So if 45 percent did that, but when we say continuing--are
    you saying that 30 percent of the 55 percent are people who
    used AmeriCorps to essentially get a voucher to begin their
    higher education?
        Mr. Wofford. The--exactly 30 percent, I will not say.
        Senator Mikulski. I do not care if it is 29 or 30.
        Mr. Wofford. Senator, yes. Of those who have not gone to
    college, a high proportion----
        Senator Mikulski. That is not continuing. They never began.
        Mr. Wofford. I meant beginning their education; it is post-
    secondary education. Some go to job training; most go to
    college. Second, there is a significant number who serve in the
    middle of their college. They take a year out--the full-time
    members. And an even larger number of the part-time members are
    in college as they serve, and they use it for future college
    expenses.
        Senator Mikulski. Is that the part-time group?
        Mr. Wofford. Yes. A significant proportion of part-time
    AmeriCorps members are at the same time studying at college. It
    is part-time service in AmeriCorps, and they earn a part-time
    educational award. Part-time service is an area you have been
    interested in growing, and last year we had over 14,000 part-
    time and reduced part-time members, compared to 7,500 the year
    before.
        Senator Mikulski. Yes. And I would like then to have worthy
    information on this.
        Now the 25 percent who then use their voucher to begin some
    type of post-secondary education, whether it is job training
    that is very specific--it could be computer something or other
    or it could be--how many of those went to a full 4-year program
    and how many went to a 2-year program?
        Mr. Wofford. We may be able to get that information for
    you. And, if not, we can get it in due course.
        [The information follows:]

    ----------------------------------------------------------------------------------------------------------------
                                                               Full-time  Full-time  Part-time  Part-time     All
                           Program year                         members    percent    members    percent    members
    ----------------------------------------------------------------------------------------------------------------
    1994.....................................................     16,054         64      9,163         36     25,217
    1995.....................................................     17,844         71      7,338         29     25,182
    1996.....................................................     17,608         70      7,520         30     25,128
    1997.....................................................     22,963         61     14,586         39     37,549
                                                              ------------------------------------------------------
          Total..............................................     74,469         66     38,607         34    113,076
    ----------------------------------------------------------------------------------------------------------------

        Senator Mikulski. That is not a judgment about whether you
    go to 2 year or 4 year. Again, it talks about who are we
    recruiting and who sticks with the program.
        I think it would be fantastic if somebody who never had a
    chance comes into AmeriCorps and then they go and get their
    voucher to get their 2-year program in nursing, or maybe a 2-
    year program in emergency management, something they have got a
    flavor for when they worked in AmeriCorps, and they keep on
    going with the experience they earned in it.
        Maybe they go into construction technology because they did
    Habitat for Humanity, but those 2 years--AmeriCorps goes 2
    years day school and then maybe they go on to night school or
    the wonderful ways higher education recruits people. But you
    see how we have to----
        Mr. Wofford. Exactly.

                                   attrition

        Senator Mikulski. Now of the number of the people that have
    come into AmeriCorps, what is the dropout rate?
        Mr. Wofford. I think the 78 percent figure is one way of
    throwing light on that. The report that is----
        Senator Mikulski. What is the dropout rate?
        Mr. Wofford. About 16 percent--who come in, do not complete
    the service, or have a shorter term of service. They do not
    have urgent personal or family reasons to leave, and they have
    not left for positive reasons, such as to take a job in a
    welfare-to-work program.
        Ms. Zenker. There is, Senator, a range of dropout rates. I
    do not mean to not answer your question. But when we look at
    each of our program years, we have statistics that range from
    16 to 20 percent in terms of a dropout rate.
        Senator Mikulski. What is the dropout rate in each year of
    the last 3 years?
        Ms. Zenker. For the last 3 years--if I may, if I can start
    from the first year? We only have 4 to report to you.
        Senator Mikulski. Sure.
        Ms. Zenker. The dropout rate in year one, which was the
    1994 to 1995 year was 20 percent. The dropout rate in year two,
    1995 to 1996, was 18 percent. The dropout rate in year three,
    1996 to 1997, was 14 percent. And the dropout rate in the year
    four, 1997 to 1998, is currently 16 percent but we still have
    people serving in that year. I would suggest that that is not a
    final figure.
        Senator Mikulski. You would say in terms of the dropout
    rate that you have really improved your screening procedure.
    You see, for everybody, for whatever reason they drop out, we
    have made a tremendous investment. And they have taken a slot.
    So the better the screening--that is a pretty good rate.
        Mr. Wofford. Senator, could I just add two figures that may
    be very important to you in comparing this. Forty-seven percent
    of first year students at 2-year public colleges drop out.
    Thirty-one percent of first year students at 2-year private
    schools drop out. Thirty-three percent----
        Senator Mikulski. We are not talking about going to school.
    There are a lot of reasons why people drop out of school. And
    this is not a hearing in the Ed Labor Committee. I am very
    familiar with why they drop out of school. What I am interested
    here is--that is not a comparison that is relevant.
        Mr. Wofford. Peace Corps and Job Corps and the military are
    the other three figures I will give you just to compare.
        Senator Mikulski. I am interested in AmeriCorps. I am
    interested in the viability of AmeriCorps. That is what this
    hearing is about.
        Mr. Wofford. No one is more interested than you----
        Senator Mikulski. So then having asked that question, I see
    that my time is up in terms of recruitment. I was just going to
    ask another question.
        Senator Bond. Take one more. I will give you the hometown
    advantage.

                  sustainability of americorps program impact

        Senator Mikulski. Thank you. Could you then tell me the
    issue in terms of the in-programmatic impacts? We have a
    variety of statements here. You in your own reports talk about
    how, for example, reading improves when the volunteers are
    there. What I am interested in is what are the studies to show
    when the volunteers leave.
        In other words, is there a sustainability to the impact of
    AmeriCorps as compared to AmeriCorps being there?
        Mr. Wofford. In the report that Aguirre prepared--that we
    are releasing on AmeriCorps, we have figures that are not on
    this chart of the estimate of the percentage who continue to
    serve as volunteers in their communities. There is a very
    strong report from this--I think you will find a very
    substantial report on just exactly how AmeriCorps has
    instilled--the evidence that shows that it has instilled an
    ethic of continuing service in the members.
        There is already an AmeriCorps alums organization that the
    AmeriCorps members have started that is very actively----
        Senator Mikulski. That is an alumni association? Because
    that was going to be one of the key components of the program.
        Mr. Wofford. There is definitely one, very active and full
    of plans and growing and committed to furthering service. The
    alums have committed themselves to the five goals of the
    President's summit and have made specific commitments as to
    what they want to do.
        Senator Mikulski. Let me just ask my last question here and
    then I will come back for a second round. It says here: in all
    programs 5,700 members at 305 sites supported the tutoring of
    youths in grades 1 to 12. Sixty-seven percent of those tutored
    showed improvement during the program year, which is great.
        Then what happened in the second year? Do we know that? In
    other words, what is next? If you build a Habitat for Humanity
    house, there is the house. I know it is hard to do education. I
    know it is hard to do public health. I know it is hard to do
    these to do these things.
        Mr. Wofford. In tutoring and reading?
        Senator Mikulski. Yes.
        Mr. Wofford. The report I want to do for you is going to
    show the accumulating evidence from around the country from
    literacy programs, in which AmeriCorps members serve, that
    involve measurable test scores year by year.
        Remember, that the AmeriCorps member--we do not run
    literacy programs. AmeriCorps members get assigned to local
    literacy----
        Senator Mikulski. I understand all that. Is that report
    done, Senator Wofford?
        Mr. Wofford. We have a lot of that--yes, because we are a
    major partner in the----
        Senator Mikulski. Is the report done?
        Mr. Wofford. We have reports that are done.
        Senator Mikulski. It says the summary of recent national
    evaluation. Is that a single report?
        Mr. Wofford. No. In addition to this summary report, which
    we are releasing today, we have a number of reports that we and
    the Education Department have on what AmeriCorps participating
    literacy programs are accomplishing. We will send you the
    report and that study in a summary.
        Senator Mikulski. We will come back to it.
        Senator Bond. Thank you, Senator Mikulski. We are delighted
    to have Senator Kyl today.
        Senator Kyl. Thank you, Mr. Chairman. I will take so little
    time that it will make up for all of that hometowning that you
    were doing with each other. I just wanted to stop by and say
    hello to Senator Wofford and commend you for your efforts in
    trying to accomplish all that I know you wish to accomplish
    with the program.
        Mr. Chairman, since I am (A) a late arrival and (B) new to
    the committee with not enough information to really contribute,
    I will defer to you and your expertise to continue the line of
    questioning. Thank you.
        Senator Bond. Senator Kyl, you are always welcomed and we
    are delighted to have any questions.
        I am going to turn back to Senator Mikulski. I have just
    one or two quick questions. We are going to have the IG and
    KPMG. If you could stay around, Senator Wofford, I welcome to
    give you an opportunity to respond orally to any of the points
    that they raise. And obviously on this hearing as in any others
    we not only will keep the record open for questions that
    members may have, but if information developed at the hearing
    triggers your additional thoughts, if you want to have specific
    responses to that, we would be happy to have it.

                             national service trust

        To follow up on the National Service Trust, 16 percent do
    not use the education award. How is this accounted for in the
    trust fund account? Do you now believe that that $196 million
    is excess funds?
        Ms. Zenker. No, Senator, I do not. As we stated, there is a
    distinction between the way we provided the liability estimate
    and the draft financial statement and the way we provided a
    budget estimate for the Congress. In providing a budget
    estimate, we have taken into account what is simply called
    ``the discount''--the people who have earned an award but who
    we do not believe will use those awards. So we have applied
    that discount factor in our budget estimating practices that we
    have shared with you. There is still a modest surplus in the
    trust account and it is there for the unexpected use of these
    awards by students who may, indeed, come back and use them.
        If some of those people show up and say, we are in our last
    two program years, we want to make use of that education award,
    we feel we need to have the money available for them to make
    use of that award.
        So there is a modest amount of money that is in the trust.
    But there is no large surplus to the extent that has been
    described.

                            waste, fraud, and abuse

        Senator Bond. Let me turn for the last general question to
    an area that reflects the concern we have about the
    Corporation's management capacity, and that is the
    vulnerability to waste, fraud or abuse.
        The Inspector General has repeatedly found problems related
    to grant oversight and monitoring. In one case an OIG
    investigation revealed evidence that at one grantee site the
    executive director had misapplied funds and as a result the IRS
    seized and sold the site's assets to satisfy delinquent taxes.
    The OIG also questioned more than 12 percent of the grantee's
    claimed costs, and yet despite these problems I understand that
    the Corporation continues to fund this grantee.
        Could you tell us why you continue to fund the grantee?
    What procedures and controls do you have in place currently to
    prevent these sorts of problems, and have there been other
    cases where you have taken action against noncompliant
    grantees?
        Mr. Wofford. Indeed, is the answer to the latter. The
    Congressional Hunger Center is the sponsor of the program that
    is referred to. One of their sites did have the problems that
    we found--certainly the Inspector General found and that site
    has been terminated by the Congressional----
        Senator Bond. It was a site-specific problem of a larger
    grantee?
        Mr. Wofford. It was a site-specific problem. And we have
    confidence in the Congressional Hunger Center's impact as a
    program; it is one of the outstanding programs in the
    Corporation. That site was a disaster.
        Senator Bond. Did you find that or was it the IG that found
    it?
        Ms. Zenker. Initially, there was a participant at the site
    who brought the issue to our attention. When we heard of it, we
    directed that individual immediately to go to the IG's office
    so that the IG could conduct the appropriate investigation into
    what was going on.
        Senator Bond. Are the problems that were found there the
    kinds of problems that you would normally identify in your
    oversight of grantees?
        Ms. Zenker. If I may, Mr. Chairman. We have a situation in
    the Corporation where we have grants that we give to state
    commissions and other national directs, and they in turn give
    subgrants to sites around the country. We have a direct
    responsibility to monitor our grants and we do that. We are not
    able to monitor our subgrantees.
        Senator Bond. Was this a subgrantee?
        Ms. Zenker. It was a subgrant of the Congressional Hunger
    Center, a smaller site. I would have to honestly tell you, I do
    not think we have the resources to appropriately monitor all of
    the subgrantees and program sites around the country. What we
    do try to do is to make sure that our grantees understand what
    their responsibilities are to monitor those sites and those
    subgrantees.
        Senator Bond. So in this instance the grantee blew it?
        Ms. Zenker. To a certain extent the grantee blew it. They
    hired and had a program director at a site who turned out to be
    a crook. I am looking for another word but I cannot find one.
        Senator Bond. That is the problem. How do we make sure that
    somebody is getting the crooks out of there?
        Ms. Zenker. In this instance it happened, and I would
    suggest the response happened in the appropriate way. This is
    one project director in terms of thousands that we have around
    the country. It was a bad apple and through the hotline, and
    other mechanisms to encourage people to bring these things to
    our attention, the Inspector General was able to go out and do
    the type of review that needed to be done to shut down the
    site.
        Mr. Wofford. Mr. Chairman, could I just add, we have
    convened all the national nonprofit grantees and all the main
    grantors from the state commissions appointed by governors to a
    training conference that focused on just this issue.
        The Inspector General gave a very detailed and challenging
    report of the hardest of her findings. The impact of that
    training conference--I have seen it in a number of states that
    I have visited. The state commission executive directors have
    themselves called conferences of their grantees to make sure
    that they are monitoring more effectively, if they had been
    inadequate in the past.
        There are a number of additional steps we are going to take
    to ensure the responsibility of the state commissions--to which
    two-thirds of the grants are made--and the national nonprofits.

                              monitoring grantees

        Senator Bond. The final question is, do you now have in
    place the resources to do an effective job of monitoring,
    whether it is through your direct grantees or through the state
    commissions? And, if not, have you requested the funds to
    provide those resources to make sure there is an effective
    grants monitoring regimen in place?
        Ms. Zenker. Mr. Chairman, yes. We have requested additional
    funds to improve our grants management activities. But even as
    we await the results of the 2000 budget request, we are still
    this year putting more resources into grants management and
    into grant monitoring.
        One of the activities that our program offices have done is
    to look at the criteria that we provide to determine where they
    should perform site visits this year--so that we make sure we
    go to the more vulnerable sites versus the stronger sites in
    our oversight activities. So we are doing things this year, but
    in terms of our 2000 request, a portion of that will also go to
    improve grants management.
        Senator Bond. Thank you very much. Senator Mikulski.
        Senator Mikulski. Thank you, Mr. Chairman. I know we will
    have other questions submitted to the record.

              characteristics of full- and part-time participants

        Just now that as we look at the results of AmeriCorps Learn
    and Serve, particularly AmeriCorps, I am interested in the
    distinction between the full-time participant as well as the
    part-time participant and who really made use of either/or. Did
    they come predominantly from--what social backgrounds, et
    cetera?
        And, also, the part-time model which was to be focused on
    the fact that many people cannot go away because of family
    obligations or do not want to go away, but want to participate
    in a program like this. So that is why the part-time model was
    there, to meet that need.
        And it was often designed particularly for women and
    perhaps a little bit older women volunteers who wanted to be in
    AmeriCorps because they either had a family obligation--they
    might have been a caregiver to an older parent--as well as
    people even, for example, with certain disabilities. If you
    have your whole network lined up in your hometown, like in
    Baltimore, and you have your physician, you have your support
    services and so on, you can still be a volunteer. In fact, it
    is important to show that in AmeriCorps everybody is welcomed
    who wants to do a job. That was one of the other aspects.
        So anyway, I am interested in the part-time model. As we go
    ahead with reauthorization, we need to know this as well as the
    funding.
        What I have here is the Brandeis report which I have read,
    which says that everybody likes AmeriCorps and everybody likes
    AmeriCorps when they are there, but it is questionable about
    the sustainable effort. That is complicated in education. But
    if we go to this report--that says Aguirre International? Is
    this report going to be released today?
        Mr. Wofford. Yes.
        Senator Mikulski. I sure wish we would have had it for the
    hearing.
        Mr. Wofford. My testimony goes into some detail, the 28-
    page testimony.
        Senator Mikulski. I appreciate that. But I would have liked
    to have seen the report. What time are you going to release it?
        Mr. Wofford. It is available, as far as I know, right now.
    We have it here. We will give it to you----
        [The information follows:]

         AMERICORPS STATE/NATIONAL FULL-TIME/PART-TIME STATUS 1997-1998
                                [In percentages]
    ------------------------------------------------------------------------
                                                             Full-    Part-
                                                              time     time
    ------------------------------------------------------------------------
    Service commitment:
        Full-time.........................................       77  .......
        Part-time.........................................       23  .......
                                                           -----------------
          Total...........................................      100  .......
                                                           =================
    Race/ethnicity:
        African American..................................       27       25
        American Indian...................................        2        1
        Asian/Pacific Islander............................        1        5
        Hispanic..........................................       16       20
        White.............................................       52       46
        Other.............................................        2        3
                                                           -----------------
          Total...........................................      100      100
                                                           =================
    Gender:
        Female............................................       70       68
        Male..............................................       30       32
                                                           -----------------
          Total...........................................      100      100
                                                           =================
    Age:
        21 or younger.....................................       20       36
        22-29.............................................       51       28
        30-37.............................................       13       14
        38-45.............................................        9       13
        Over 45...........................................        7        9
                                                           -----------------
          Total...........................................      100      100
                                                           =================
    Education completed:
        Less than H.S.....................................        5        8
        High School.......................................       17       19
        Some College......................................       36       46
        College Grad......................................       36       20
        Grade. Degree.....................................        6        7
                                                           -----------------
          Total...........................................      100      100
                                                           =================
    Income status (family):
        $5,000 or less....................................        7       11
        $5,001 to $10,000.................................       14       12
        $10,001 to $20,000................................       18       20
        $20,001 to $30,000................................        9       15
        $30,001 to $40,000................................       14       10
        $40,001 to $50,000................................        8        9
        $50,001 to $60,000................................        8        6
        $60,001 to $70,000................................        5        6
        Over $70,000......................................       17       11
                                                           -----------------
          Total...........................................      100      100
                                                           =================
    Members' household employment status:
        Unskilled laborer.................................       14       17
        Semi-skilled laborer..............................       11        4
        Skilled laborer...................................       25       28
        Clerical/sales....................................       20       26
        Professional/managerial/technical.................       30       25
        Other.............................................  .......  .......
                                                           -----------------
          Total...........................................      100      100
    ------------------------------------------------------------------------

        Senator Mikulski. I would have liked to have had it last
    night or something. This is the hearing. This is the shot. This
    is the opportunity. I am glad you are releasing it and
    everybody who has a newspaper will read it. But I would like to
    know when do I get to read it. I do not mean to be brusque
    here.
        Mr. Wofford. The detailed summary of this was provided to
    the staff.
        Senator Mikulski. I do not want a summary, Senator Wofford.
    I really want this report because I am digging into this
    program. I really do not want a summary. I really wanted the
    report. So let us see what we can do here. But this is kind of
    where we are: I am going to be helpful, but this was my window
    of opportunity to really then focus on this for the hearing. So
    let us have the report. Do you understand?
        Mr. Wofford. Yes.
        Senator Mikulski. I am glad you gave the testimony. If I
    had the report, I could have had, I think, better questions.
        Mr. Wofford. We will give you an analysis of the part-time,
    which is an increasing proportion of AmeriCorps.
        May I add one other thing, Mr. Chairman, on this point?
    Namely----
        Senator Mikulski. I did not give up my time yet.
        Mr. Wofford. I give up mine, which does not exist.

                      health services and senior services

        Senator Mikulski. In terms of all of the people that we are
    talking about here, it says that AmeriCorps members serve in
    clinics, VA hospitals and other health-related facilities. It
    says close to 500,000 people were immunized. I would like to
    know what other things they did in the area of health services.
        It says that over a million volunteers were generated,
    recruited, trained or supervised. I hope the report goes into
    how that happened and, also, this whole thing with the effort
    to the seniors, helping them maintain independent living would
    be very important, because that was one of the other missions
    and I would like to know where that is spelled out. Is that all
    in that report or not?
        Mr. Wofford. It will be in the report that will come to
    you. I cannot say that it is all in the Aguirre report. No.
        [Clerk's note.--The following report ``Making a Difference:
    Impact of AmeriCorps* State/National Direct on Members and
    Communities 1994-95 and 1995-96'' can be found in the
    subcommittee files.]
        Senator Mikulski. I have other questions for the record. I
    know we want to move on to the IG and anything else that
    Senator Wofford wants to tell you.
        Senator Bond. I will give Senator Wofford an opportunity to
    take one last crack.
        Mr. Wofford. Just one minute to make clear that with the
    exception of a few programs--Teach for America, a large program
    which sends teachers all around the country; Alliance for
    Catholic Education which sends teachers to southern Catholic
    schools--a few programs, the overwhelming majority of our
    programs are programs locally based where people serve locally.
    We do not come in from outside.
        I want to make those facts clear to Senator Mikulski
    because it is not a program--with the exception of the American
    Red Cross project and the Disaster Relief teams of NCCC--that
    parachutes anyone into a community. The Red Cross sends people
    into disaster areas, the AmeriCorps teams. Otherwise it is a
    locally based program in which the local programs select the
    members, recruit them, administer them.
        Senator Bond. Thank you very much, Senator Wofford. I
    appreciate your testimony and Ms. Zenker's. And I do ask you to
    stick around if you would care to respond. And now I invite the
    Corporation's Inspector General Luise Jordan and Karen Molnar
    from KPMG to come forward. If you would, take your places up
    here. We would appreciate that.
        We have just heard from the Corporation regarding a variety
    of issues about their efforts to correct management
    deficiencies. If you have any thoughts you have in response to
    the Corporation's testimony, we would welcome those.
        I also would like to hear the auditors' assessment to date
    on the financial statements audit. Especially on the
    auditability of the Corporation's statement. I will be
    especially interested in hearing the auditors' view on the
    Corporation's progress, addressing its management deficiencies
    and what recommendations you may have that can assist the
    Corporation.
        Last, I am concerned about the discussion of the audit
    finding of the $196 million in surplus funds. We are going to
    invite you to provide details on that. I understand you have
    written testimony which we will make a part of the record. And
    I would like to ask you to take about 5 minutes to make any
    oral statement you wish to make. Thank you.

                          statement of luise S. Jordan

        Ms. Jordan. Mr. Chairman, Senator Mikulski, I appreciate
    the opportunity to be here today to provide information related
    to the Corporation's financial management.
        To answer your question, although the Corporation has taken
    steps to achieve financial accountability, progress to correct
    its financial management deficiencies has been slow. Last year
    for the first time we were able to audit the Corporation's
    balance sheet. Presently we are in the final phases of a full-
    scope audit of the Corporation's 1998 financial statements.
        The audit, as you indicated, is being performed by KPMG
    under contract to my office. Karen Molnar, the auditor partner
    responsible for the work, has accompanied me here today.
    Senator Bond, your referee hails from Missouri.
        We planned and conducted the audit in accordance with
    generally accepted government auditing standards with an
    intended reporting deadline of March 31, 1999. Because of known
    internal control weaknesses, the audit required, as you
    indicated, extensive, costly and time-consuming procedures that
    took into account in their design the pervasive deficiencies in
    the Corporation's operations and systems.
        Today, however, I am reporting that completion of the audit
    is delayed due primarily to my decision to allow the
    Corporation to revise its estimates of grant advances and
    payables. The balances related to grants are among the most
    significant items on the financial statements. Audit work to
    date has revealed that the Corporation's procedures to estimate
    the advances and payables are flawed. Because the estimates are
    flawed, the Corporation has requested additional time to
    correct the information by using actual information from
    grantee-submitted financial reports.
        The Corporation's work is made more time-consuming and more
    extensive because not all the financial reports have been
    entered into the financial systems. To date, however, as has
    been discussed, the financial statement audit has revealed
    material weaknesses in eight areas including two new areas.
    Those will be item 7 and 8 in this list.
        First, the general control environment. The Corporation's
    general control environment is weak and not conducive to
    ensuring an effective system of internal control. Control
    environment factors include commitment to competence,
    management philosophy and operating style, organizational
    structure and assignment of authority and responsibility. The
    control environment sets the tone of an organization,
    influences the level of control consciousness and provides the
    discipline and structure of an organization. The Corporation's
    lack of effective management control is evidenced by the volume
    of material weaknesses and other reportable conditions
    identified in this audit and the number that have remained
    uncorrected over the years. Without a strong control
    environment, control weaknesses will continue, increasing the
    risks and inefficiencies and reducing the reliability of the
    Corporation's financial information.
        Second, Financial management and reporting. The Corporation
    does not currently have a chief financial officer or other
    strong financial management personnel in place to provide
    leadership and oversight necessary for effective quality
    control of accounting and financial reporting activity. It
    lacks an effective quality control structure to ensure that
    significant errors and omissions are identified and corrected
    in its financial information.
        Third, Grants management. Adequate procedures for
    monitoring grantees' financial activities and their compliance
    with laws and regulations are not in place. Expired grants are
    not closed out on a timely basis. And, as I stated earlier, a
    reliable method for estimating expenses incurred by grantees
    has not been established.
        We have repeatedly reported deficiencies related to grants
    oversight and monitoring in individual audit reports and in our
    semiannual reports. Over the past 4 years our audits of 73 of
    the Corporation's grantees reported that over one-third
    experienced problems with their financial reports. The audits
    disclosed that more than half of these grantees had accounting
    systems and management controls inadequate to report the
    expenditures or to safeguard Federal funds and that about a
    half had inadequate timekeeping systems. We also reported that
    one-third of these grantees failed to adequately monitor their
    subrecipients.
        As a result of these and other conditions, we questioned
    more than six million, or six percent, of the funds awarded to
    the grantees.
        The Corporation remains responsible for the proper spending
    of its funds, the proper oversight of its programs, regardless
    of the location or regardless of whether a grantee is a
    subgrantee or immediate grantee.
        Financial systems. The Corporation's general----
        Senator Bond. Unfortunately--we will make your full
    statement part of the record. And, if you would, just hit on
    the high points. We have other witnesses we need to get on to.
        Ms. Jordan. All right. As a result of these conditions, the
    Corporation cannot provide reasonable assurance that its
    management controls properly safeguard its assets, that its
    information is accurate and it complies with laws and
    regulations. As I stated when I began, most of these conditions
    have been reported as material weaknesses since we began
    auditing.
        In response, the Corporation has initiated several action
    plans. However, much remains to be accomplished. The
    Corporation's most recent action plan incorporates many of the
    recommendations. It is the Corporation's most ambitious plan to
    date. However, because it has only been in effect for 2 months,
    it is too early to know when or whether the Corporation will
    correct these deficiencies. However, based on the Corporation's
    history, it is probable that without a strong and consistent
    commitment from senior management to effective management,
    without a serious and continuous commitment of resources and
    without competent financial management oversight and
    monitoring, the deficiencies will not be corrected in a timely
    fashion.

                               prepared statement

        Last but equally important, the audit revealed that as of
    September 30 the National Service Trust had a projected surplus
    of $196 million. Under the National Community Service Act as
    amended this surplus can be used to provide additional
    education benefits. Ms. Molnar is here to provide any
    additional information on that matter, if we can, at this time.
        And at this time I will be glad to answer any questions
    that you or Senator Mikulski has of me.
        [The statement follows:]

                     Prepared Statement of Luise S. Jordan

        Mr. Chairman and members of the subcommittee, I appreciate the
    opportunity to be here today to provide information related to the
    Corporation's financial management.
        OIG first reported financial management issues in an Auditability
    Assessment of the Corporation issued in March 1996. The assessment
    resulted from our attempts to audit the Corporation's financial
    statements as required by the Government Corporation Control Act.
    During an initial survey of the Corporation's internal controls, we
    found many material weaknesses in the Corporation's records and
    accounting systems. As a result, we concluded that the Corporation's
    financial statements were unauditable. Although the Corporation has
    taken steps to achieve financial accountability, progress to correct
    the deficiencies has been slow. Last year, for the first time, we were
    able to audit the Corporation's balance sheet.
        Presently, we are in the final phases of a full-scope audit of the
    Corporation's fiscal year 1998 financial statements. The audit is being
    performed by KPMG under contract to OIG. Karyn Molnar, the audit
    partner responsible for the work, is accompanying me today.
        We planned and conducted the audit in accordance with generally
    accepted government auditing standards, with an intended reporting
    deadline of March 31, 1999. Because of the known financial management
    weaknesses that we have previously reported, our audit required
    extensive, costly, and time-consuming audit procedures that considered
    the material weaknesses and other pervasive deficiencies in the
    Corporation's operations and systems.
        Today, however, I am reporting that completion of the audit is
    delayed. The delay is due primarily to my decision to allow the
    Corporation to revise its estimates of grant advances and payables. The
    balances related to grants are among the most significant items on the
    Corporation's financial statements. Audit work to date has revealed
    that the Corporation's procedures to estimate grant advances and
    payables are flawed. Because the estimates are flawed, the Corporation
    has requested additional time to correct the information by using
    ``actual'' information from grantee financial status reports (FSRs).
    The Corporation's work is made even more extensive because not all of
    the FSRs have not been entered into the Corporation's financial systems
    on a timely basis.
        The financial statement audit has revealed material weaknesses in
    eight areas of the Corporation's financial operations, including
    material weaknesses in two new areas, specifically--
        General Control Environment.--The Corporation's general control
    environment is weak and is not conducive to ensuring that an effective
    system of internal control is maintained to safeguard assets, produce
    reliable financial reports, and comply with applicable laws and
    regulations. The control environment sets the tone of an organization
    and, thereby, influences the level of control consciousness and
    provides the discipline and structure of an organization. Control
    environment factors include commitment to competence, management
    philosophy and operating style, organizational structure, and
    assignment of authority and responsibility.
        That the Corporation lacks an effective management control
    environment is evidenced by the volume of material weaknesses and other
    reportable conditions identified in the audit and the number that have
    remained uncorrected over the years. Without a strong control
    environment, control weaknesses will continue to permeate the
    organization, thus increasing risks and inefficiencies and reducing the
    reliability of financial information.
        Financial Management and Reporting.--The Corporation does not have
    a Chief Financial Officer or other strong financial management
    personnel in place to provide the leadership and oversight necessary
    for effective quality control of accounting and financial reporting
    activities. The Corporation lacks an effective quality control process
    to ensure that significant errors and omissions are identified and
    corrected in its financial information. Throughout the audit, the
    auditors found numerous errors in the Corporation's draft statements
    and supporting documentation, many of which would have been caught and
    corrected if an effective process was in place, and competent financial
    managers had adequately reviewed the information.
        Grants Management.--Adequate procedures for monitoring grantees'
    financial activity and compliance with laws and regulations are not in
    place; expired grants are not closed out on a timely basis; and a
    reliable method for estimating expenses incurred by grantees, and
    related amounts advanced or payable to grantees, has not been
    established.
        OIG has repeatedly reported deficiencies related to grants
    oversight and monitoring in individual audit reports and in our
    Semiannual reports. For example, over the past four years, our audits
    of 73 of the Corporation's grantees reported that over one-third have
    experienced problems with their FSRs, which provide critical
    information on grant expenditures. The audits also disclosed that more
    than half of these grantees had accounting systems and management
    controls that were inadequate to report grant expenditures and to
    safeguard Federal funds, and that about half (47 percent) had
    inadequate time-keeping systems. We also reported that about one-third
    of these grantees failed to provide adequate oversight of their
    subrecipients. OIG investigations have also dealt with allegations of
    irregularities at grantees, some of which may have been prevented by
    better grantee oversight. As a result of these and other conditions we
    have questioned more than $6 million (6 percent of the funds awarded to
    these grantees).
        In one recent audit, we reported on a grantee that had experienced
    severe financial problems at one of its operating sites. Although an
    OIG investigation had revealed evidence that the site's Executive
    Director had misapplied funds, the cognizant United States Attorney
    declined to prosecute. The Internal Revenue Service, however, seized
    and sold the site's assets to satisfy delinquent taxes, and the
    operating site closed. When this occurred, high-level Corporation
    management came to my office to express their consternation as to how
    this could have happened just months after awarding the grant. I
    responded that my Office had reported to the Corporation in March 1996
    that it did not perform or require effective reviews of grantee
    financial systems or controls prior to grant awards.
        Later, during fiscal year 1998, at the request of the then Chief
    Operating Officer, we audited both the grantee and the Corporation's
    oversight of the grant. The grant audit revealed numerous compliance
    and internal control weaknesses still existed at the grantee. We
    questioned more than 12 percent of the grantee's claimed costs.
        The review of the Corporation's oversight found that the
    Corporation had failed to adequately monitor the grant--even though it
    was aware of the grantee's history. Site visits performed by the
    Corporation had focused largely on programmatic, rather than financial
    matters. We also reported that the Corporation failed to monitor and
    detect that the grantee drew down funds in excess of its needs and that
    the grantee had not submitted required information such as evaluation
    reports, rosters of its AmeriCorps Members, and its required financial
    audit reports, to the Corporation on a timely basis. The Corporation
    continues to fund this grantee.
        Issues related to grantee financial information have been reported
    in a number of OIG audit reports and Semiannual Reports to the
    Congress. We recently reported that the Corporation had yet to close
    out grants made by its predecessor, the former Commission on National
    Service, although grant performance periods expired several years ago.
    It is my understanding that, few, if any, of the Commission or
    AmeriCorps grants have been closed. Closing out grants is necessary to
    determine the actual spending so that the accounting records and
    related budgetary information can be properly adjusted.
        In September 1998, we issued our report on the audit of the
    Corporation's fiscal year 1997 balance sheet. In that report we
    described the need for the Corporation to ensure timely processing of
    its FSRs and to develop an appropriate methodology to estimate grant
    advances and payables. We clearly stated that deficiencies in these
    processes were a major factor in our inability to issue a ``clean''
    opinion on the balance sheet. We recommended that Corporation take
    action to correct these deficiencies. As I mentioned earlier, the
    Corporation's failure to take action is the major cause of the delay in
    completing our audit of the Corporation's fiscal year 1998 financial
    statements.
        Financial Systems.--The Corporation's general ledger system is not
    adequate to support its financial information needs, including funds
    control, or to facilitate the preparation of annual financial
    statements. The Corporation plans to replace its general ledger
    accounting system during this fiscal year. As we have previously
    reported, it must do so because the current system is not Y2K
    compliant. We have also called your attention to the high risk related
    to the tight time frames in which the new system is scheduled to be
    implemented. To the best of our knowledge, the Corporation has not
    identified any contingency plan to support its financial operations
    should implementation fail or be delayed.
        National Service Trust.--Procedures to obtain AmeriCorps membership
    roster information prepared by program sites and to reconcile this data
    to corresponding information on file at the Corporation are
    ineffective. This information is necessary to support the payment of
    education awards and to validate the accuracy and completeness of the
    data supporting the calculation of the service award liability.
        Fund Balance with Treasury.--The reconciliation of Corporation
    records to those maintained by Treasury is not performed in an
    effective manner and does not adequately support the separate balances
    related to Appropriations, Gift, and Trust accounts. Not reconciling
    fund balances could result in material misstatements in the financial
    statements and increases the risk that data in the general ledger is
    inaccurate or incomplete. In addition, the absence of effective
    procedures increases the risk that a misappropriation of cash could
    remain undetected, and hinders effective cash management.
        Net Position.--Adequate procedures for ensuring accurate and timely
    deobligation of funds for undelivered orders are not in place, and
    changes in the components of net position are not reviewed for
    propriety on a timely basis. As a result, the Corporation reports
    obligations that will never be expended. Controls have not been
    established to ensure compliance with appropriation laws.
        Revenue from Reimbursable Agreements.--Procedures are not in place
    to ensure revenue related to offsetting collections from reimbursable
    agreements is fairly stated and properly recorded in the general ledger
    accounts.
        As a result of these eight conditions, the Corporation cannot
    provide reasonable assurance that its assets are properly safeguarded,
    its financial information (including budgetary information) is
    accurate, and that it complies with laws and regulations.
        Most of these conditions have been reported as material weaknesses
    since we began auditing the Corporation. In response, the Corporation
    has initiated various action plans over the past several years.
    However, as the above listing indicates, much remains to be done.
        The Corporation's most recent Action Plan, issued December 21,
    1998, incorporates many of the recommendations that we have made over
    the years to correct these conditions. Issued in response to a
    Conference Committee report, it is by far, the Corporation's most
    ambitious plan to date.
        Because the latest Action Plan has only been in effect for two
    months, it is too early to know when or whether the Corporation will
    correct these serious deficiencies. However, based on the Corporation's
    history, it is clear that without a serious and continuous commitment
    of resources, and competent financial management oversight and
    monitoring, the deficiencies will not be corrected in a timely and
    effective manner.
        In addition to weaknesses in the Corporation's financial
    operations, the audit work completed to date has revealed two issues
    relating to compliance with laws and regulations.
        First, the Corporation is subject to the reporting requirements of
    the Government Corporation Control Act, as amended. This Act requires
    Corporation management to provide an annual statement on its internal
    accounting and administrative controls consistent with the requirements
    of the Federal Managers' Financial Integrity Act--FMFIA. The
    Corporation recently made its first attempt at a Corporation-wide
    assessment. However, the Corporation has yet to establish an effective
    risk-based assessment program. The Corporation's Action Plan indicates
    that by March 31, 1999, it will establish a formal management control
    plan.
        Second, the Corporation has not submitted its annual management
    report in a timely fashion and apparently will not meet the deadline
    this year. The Corporation is required by law to submit an annual
    management report 180 days after the end of its fiscal year. Its fiscal
    year 1998 report is due March 31, 1999. However, the Corporation's
    Action Plan indicates that it will not submit the report until April
    30, 1999.
        Equally important, the audit provided another benefit to the
    Corporation. Our procedures revealed that, as of September 30, 1998,
    the National Service Trust has a projected surplus of about $196
    million. The auditors performed extensive analytical procedures on the
    actual usage of education awards and determined that the Trust's
    liabilities totaled about $161 million, which is about $100 million
    less than the Corporation originally estimated. At September 30, 1998,
    the Corporation had $357 million in Trust investments to fund this
    liability, resulting in the projected $196 million surplus. Under the
    National and Community Service Act, as amended, this excess can only be
    used by the Corporation to fund education benefits, including payment
    of all or part of the attendance at an institution, repayment of
    student loans, certain student loan interest, and payment of expenses
    for approved school-to-work programs. The Corporation has requested
    that $93 million be appropriated to the Fund in fiscal year 2000.
        Mr. Chairman, this concludes my prepared statement. I will be
    pleased to answer any questions you or members of the subcommittee
    might have.

        Senator Bond. Ms. Molnar, would you care to--do you have
    any brief comments you wanted to make in addition to what was
    said?
        Ms. Molnar. No, I do not, Senator Bond. I will be happy to
    answer any questions you have.
        Senator Bond. I have had a little experience as an auditor.
    It did not really affect me that much and I did not learn that
    much but I do understand some of audit speak. But let me try to
    make this a little clearer.
        You talk about, I guess, your major finding is a lack of
    control at the top. For those of us who monthly fight the
    battle of the checkbooks--and I would have to say that in the
    last column I always get the cents mixed up, and I miss
    agreeing with the bank by a couple of dollars at the end of the
    month--now, are we talking about problems that are way over in
    the right-hand column, in the small figures? Or are you saying
    that the checks--some of the checks are not entered into the
    book, some of the bills are being paid twice? What, in layman's
    terms, what is the impact of what you say is this lack of
    control, and how serious is it?
        Ms. Jordan. The immediate impact on the financial
    statements has been adjustments in the millions of dollars. For
    example, when we held open for adjustment on the estimates of
    grants, advances and payables, the adjustments in the first
    round exceeded $40 million.
        The adjustments to the other accounts ranged from $5
    million, $10 million, in that type of range. Cash is the one
    that you refer to when you talk about the cents being different
    from the bank.
        There were differences from the Treasury records that
    exceeded about $2 million.
        Ms. Molnar. $2.4 million.
        Ms. Jordan. That is a significant difference for the
    Corporation, which is a small agency. More importantly, those
    differences are not reconciled on the appropriation level, on
    the gift account level or on the trust fund level. They are not
    tracked on a monthly basis. That increases the risk of fraud.
        Senator Bond. What is the risk of fraud? Is this a
    situation where somebody could be absconding with funds or mis-
    billing or committing fraud on the Corporation? What is the
    extent of the exposure? Are you talking about mis-accounting?
    What is the impact on the Corporation and on the taxpayers'
    dollars?
        Ms. Jordan. First of all, we do find fraud and most
    recently the court sent an executive director at one of our
    grantees to jail because of the fraud we found.
        Controls are designed to reduce risk and prevent or detect
    errors or irregularities. The Corporation's controls are so
    weak that they do not effectively detect. My investigators
    refer to the Corporation as a target-rich environment.
        Senator Bond. I think I understand that.
        Ms. Molnar would you explain the discovery in your analysis
    of the surplus of $196 million in the trust fund account?
        Ms. Molnar. Certainly. The analysis that we performed on
    the trust fund liability, which is what we were talking about,
    what you make reference to, is the fact that members do earn
    certain awards based on the service that they have provided.
    And until recently the Corporation has not had sufficient
    historical experience to actually figure out how many members
    will use their awards over the lifetime that they are available
    to be used.
        However, it is reasonable to expect that not everyone will
    use the awards that they have earned and that some of them will
    expire before the end of the 7-year period. But based on the
    information that has now been available in doing some cash flow
    modeling, we were able to determine that of those members who
    had earned awards and those members that are still earning
    awards, it is likely that only about 80 percent of those
    amounts will ultimately be used, even though we have not
    reached the end of a 7-year period.
        So based on those analyses and using statistical models, we
    computed a new amount based on that information and compared it
    to what the Corporation had recorded using a very conservative
    method, as you heard, expecting everyone to use their award.
    And the difference was approximately $100 million and that is
    what you have been referring to as a surplus.
        That amount cannot be used just for anything. It must be
    used for educational awards. And it is, therefore, available to
    both take care of any unexpected use and also to fund other
    awards.
        Senator Bond. Let me be clear on this. Taking a very
    conservative approach, if you had a program which potentially
    had $500 billion that could be spent, and you know from
    experience that 22 percent of it is not being used and you have
    a broad enough spectrum to make that a sound projection, the
    most conservative approach would be to say that you need to
    keep all $500 million even though you know from past experience
    that 22 percent will not be used at the end of the day.
        Do I understand you to say that based on experience that
    you believe is adequate, that $110 million would be surplus,
    because with only 78 percent being used, to the $500 million--
    if my math is correct--$110 million can reliably be predicted
    not to be used? Is that a fair assessment?
        Ms. Molnar. That is a fair assessment. And also, I guess,
    to expand on that a little bit, the trust fund itself, the
    money that is in there, the investments that are funding the
    trust fund are also earning interest that is also put into the
    trust fund. And that has not been taken into consideration in
    determining what the ultimate outflow or the availability is
    going to be in the most conservative approach.
        Senator Bond. Did you take into account the fact that all
    of a sudden people may get religion or perhaps more accurately
    may get education enthusiasm at the end of the 7 years and come
    running back in and say, whoops, before this expires, I want to
    get my education?
        Ms. Molnar. We made some assumptions of a certain
    percentage of youths every year until the entire 7 years is
    over. But we did not take into account the fact that everyone
    who had not used it would ultimately decide in the last hour,
    oh, my God, I have got to use this money. That just is not a
    reasonable assumption.
        Senator Bond. Senator Mikulski.
        Senator Mikulski. Thank you very much, Mr. Chairman. And
    really I am a very strong supporter of the IG's office not only
    to detect, as you said, mismanagement, but it often has
    provided very important managerial advice to the agency in
    which the IG functions, so that they could better improve their
    both management and fiscal accountability so we can do the
    mission. Accountability is really mission. And so we thank you.
        In terms of the use of the educational grant, I note that--
    I think there is a lot of lessons yet to be learned but I am
    going to come back to my question. What we see in VA now with
    the new kind of group coming out, that often young people do
    not take advantage of their educational grant until they gain a
    little bit more civilian insights into their life, which is
    usually now in their late twenties, and that is one of the
    reasons why I wanted the VA educational benefit to be used for
    lifetime earning. I am not advocating this here. But I think we
    will have a lot of lessons learned as we move along.
        Senator Mikulski. Ms. Molnar, I want to ask you a question
    because we then go to this. Obviously a great audit was done
    here. My question is does KPMG have a lot of experience in
    auditing nonprofits and community-based corporations?
        Ms. Molnar. Yes, we do, across the country.
        Senator Mikulski. That gives me confidence because this is
    not General Motors here. Nonprofits, as you know, are often big
    on idealism and they keep--and particularly at a very
    community, neighborhood-based level where I worked for so many
    years--essentially it is what I call the cigar box mentality.
    They just put everything in a box and say I will get to it
    because they were out either organizing or helping build the
    housing.
        Do you feel that part of the local accounting problems are
    based on those kinds of community groups that do a great job in
    the community, but do a terrible job or mediocre job in keeping
    their records? Or do you think this is far more systemic? You
    know the kind of group I am talking about.
        Ms. Molnar. I believe your assessment is probably correct
    in that there are a number of grantees and subgrantees that
    were referred to earlier that do concentrate more on mission,
    in getting the money out and not so much on administration and
    adhering to the guidelines that have been provided to them for
    doing things right. However, I do not think that that absolves
    them from complying with laws and regulations and for
    submitting their financial activity reports on time. If they do
    not, they need to accept the consequences, which may be that
    their funding will dry up.
        Senator Mikulski. I appreciate that, Ms. Molnar. It is by
    way of a temporary explanation. We have also within our
    portfolio here something called the Neighborhood Reinvestment
    Corporation which really teaches community groups how to both
    do a job in the community and be accountable for the funds they
    receive, which is often the groundwork for getting more funds
    to do even more, better work in the community.
        Do you think, as one of the mandated criteria for the
    awarding of a grant, is that a state commission have criteria
    in place that anyone who gets a grant from the National Service
    Corporation have sound accounting as part of their ability to
    get a grant?
        Ms. Molnar. Yes, I do. And I believe that those
    requirements are probably already in their grant agreements.
        Senator Mikulski. I think we should maybe take a look at
    that and then ensure that that really be an oversight, I mean,
    really a vigorous oversight because it is what I would say to
    community groups. You have got to get beyond the cigar box,
    because the more you can show wise stewardship over the funds,
    the more likely others will come in, like foundations, et
    cetera, whether it is literacy or low-income housing services
    or whatever.
        Let us go right to the audit. This is under--this checklist
    that you have here for us, it does not look like progress has
    been made. I want to clarify the chart. The chart that you have
    in your testimony, Ms. Jordan, says that 1994 to 1996 it was
    unauditable. Then when you move on you have materially weak,
    those little red checks and then you have four areas of
    reportable conditions. But then when we go over to 1998 the
    four reportables drop to two and the red checks increased,
    which were meaning materially weak.
        Are we making steady progress or are we losing ground here?
    If you are making progress, that is one track we are on. I am
    just looking at this chart.
        Ms. Jordan. As I said, progress has been slow. It has not
    always been steady. Some things that could have easily been
    fixed have not been fixed. Other things have worsened. The
    Corporation has become auditable because it does a better job
    in retaining records. We now can audit the Corporation because
    of that improvement. Improvements have occurred but not always
    evenly. I hope that this answers your question.
        However, one other question that has come up. There are
    nine conditions on that chart. The ninth area of weakness is
    procurement and results not from the KPMG audit but an audit
    that we did recently, which revealed material weaknesses in the
    Corporation's procurement activities.
        Senator Mikulski. I know our time is moving along and we
    have to go to the CDFI. First of all, I want to thank you for
    your report. And the question I asked you, Ms. Molnar, was more
    of a question of background and never a question of competency,
    and we thank you for your work.
        I find this report quite troubling. And I find it troubling
    in the sense--because it talks about leadership, and leadership
    is not only management but it is about creating a state of
    mind. And, therefore, if the state of mind is not present about
    stewardship, then that goes to the state commissions as well as
    then to local grantees. And I think that this will have to be
    addressed in a different forum about this.
        But you have given us excellent MRI here. I am looking at
    the epidemiology--you can see I am on Dr. Frisk's health
    committee. We are looking at the service that is rendered and
    what needs to be done here. So I am going to thank both of you.
        Senator Bond. Thank you, Senator. Thank you very much, Mrs.
    Jordan and Mrs. Molnar. Senator Wofford, do you have a brief
    comment on the pathologist's report?
        Mr. Wofford. Yes. Mr. Chairman, just a final brief word. We
    will take advantage of your offer to clarify in the record.
        Senator Bond. I appreciate that.
        Mr. Wofford. Our main response is going to be in action and
    we trust you are going to see it. We have a strong commitment
    to an all-out effort. My team and I have never worked as hard
    on anything, certainly in my life. And you are going to see
    continued progress.

                         Additional committee questions

        Senator Bond. Thank you. I know that we do want to give you
    that opportunity and we will look forward to hearing your
    response on that.
        [The following questions were not asked at the hearing, but
    were submitted to the Corporation for response subsequent to
    the hearing:]

                       Question Submitted by Senator Bond

        Question. For fiscal year 2000, the Corporation is requesting $93
    million for the National Service Trust account. The IG stated in her
    testimony that as of September 30, 1998 the Trust's liabilities totaled
    about $161 million but that the Corporation actually had $357 million
    in Trust investments to fund this liability. As a result, the trust has
    a projected surplus of about $196 million according to the auditors.
    This raises questions about the need for the $93 million request. Do
    you agree with the auditor's assessment? When were you first aware of
    any surplus in the Trust's account? Has the surplus been factored into
    your budget requests? If so, when did you first begin factoring in this
    surplus? Is the interest earned on the Trust investments factored into
    your budgeting estimate? How many members could be served with this
    surplus amount? How many members are you projecting to serve with the
    $93 million you requested for fiscal year 2000?
        Answer. The Trust liability reported in the financial statement as
    of September 30, 1998 is an incomplete picture of the full estimated
    liability. The liability reported in the financial statement does not
    include estimates for members who started service during the summer and
    for members whose service, funded with fiscal year 1998 appropriations,
    will start on or after October 1. These methodology used by the
    auditors to calculate the liability estimate for the purposes of the
    financial statements does not include these two factors; thus, the
    estimated liability is far greater than reported in the statement and
    the reserve maintained in the Trust is far less than described in the
    question. The methodology used to calculate the budget request
    considers the two factors referenced above as well as estimates
    education award utilization patterns. The Corporation does not believe
    there is an inappropriately large surplus in the National Service
    Trust. Rather, the amounts in the Trust represent a prudent reserve
    designed to ensure that all AmeriCorps members who have earned an
    educational award will actually receive them. The following fact sheet
    provides detailed information concerning the Trust, its funding
    history, and our estimates of the current liability.
        national service trust allocation and use of education awards:
                             background information
        The primary purpose of the National Service Trust is to serve as a
    secure financial repository in the Treasury for AmeriCorps education
    awards to be set aside for eligible participants in national service
    programs. The Trust makes education awards available to each individual
    who successfully completes a term of service in an approved national
    service position.
        Funds from the Trust may be expended for the purpose of providing
    an education award to a national service member who has earned such an
    award, and must always be paid directly to the qualified institution
    (college, university or other approved educational institution or a
    lending institution holding an existing qualified student loan)
    designated by the participant. Disbursements from the Trust may also be
    used to meet certain interest expenses that may accrue when an
    individual has obtained forbearance in the repayment of a qualified
    student loan during his or her term of service, and for other purposes
    specifically designated in appropriations statutes (scholarships for
    high school students).
        The amount of the education award for completing a full-time term
    of service is $4,725. By law, a member has up to seven years to use an
    education award that he or she has earned. That seven-year period
    expires for the first group of AmeriCorps members in 2002.
        Operationally, each year the Corporation allocates a specific
    number of AmeriCorps members to grantees based in part on the amounts
    available in the National Service Trust for education awards, funds
    appropriated by Congress for AmeriCorps grants, and the quality of
    applications received for funding. In their grant document, each
    grantee receives authorization for a certain number of full and part-
    time AmeriCorps members. These numbers represent ceilings beyond which
    a grantee cannot enroll members.
        If a program does not actually enroll a member, then grant funds
    may not be spent for the direct costs of that member and the slot held
    for the education award is available for future use.
        Under AmeriCorps*VISTA and AmeriCorps*NCCC, slots are reserved in
    the Trust based on the size of the program budget and the number of
    members serving in a given year.
        Since the very beginning of the National Service Trust, the
    Corporation's approach to managing was to be conservative to ensure we
    would have funds to honor all awards earned. The Corporation's
    authorizing legislation required an amount to be deposited equivalent
    to the value of a full-time national service educational award times
    the total number of approved national service positions. The
    legislation also restricts the Corporation from approving national
    service positions under this subtitle for a fiscal year in excess of
    the number of such positions for which the Corporation has sufficient
    funds available in the National Service Trust for that fiscal year.
    (See sections 121(c) and 129(f) of the National and Community Service
    Act of 1990, as amended.)
        In general, in fiscal years 1994 and 1995 based on budgetary
    requests, the Congress appropriated sufficient funds to pay members
    under the assumption that all members would enroll in full-time service
    positions, complete service, and then fully use the education award.
        In fiscal year 1996, the amounts appropriated were reduced from
    $115 million to $56 million, based on the consideration that not all
    members would complete service and that a reserve had been created in
    the first two years. Budget justifications provided to the Congress
    since then identified these factors, as well as the interest earned on
    Trust Fund investments, as having been considered in developing the
    Administration's budget requests.
        The Corporation has followed this approach in the development of
    the fiscal year 2000 budget. Our request for the Trust is $93 million.
    If everyone earning an award based on the fiscal year 2000 budget was
    to use the entire full or part-time award, the amount of budget
    authority needed to fund these awards (including the President's
    Student Service Scholarship Program) would be $167 million. This amount
    is not required because not all members enrolling will earn and use an
    award, and because of funds that remain available at the start of the
    year.
        In developing budgetary requirements, attention must also be paid
    to the need for a prudent reserve and the avoidance of major
    fluctuations in annual budget requirements. A prudent reserve
    guarantees that the Trust can adjust to changes in annual program
    funding levels, and changes in usage patterns, without having to
    present the Congress with a request for immediate funding needs or
    annual fluctuations in budget requirements. Historically, Congress has
    been critical of agencies that present major annual budget fluctuations
    in requirements based on changing estimates. Quite frankly, it is
    extremely difficult for the Congress to consider budgetary requests
    that could fluctuate significantly, given the appropriations process
    and spending caps.
        The budget estimates reflect, by necessity, insufficient experience
    with patterns of usage of the education award. The first class of Trust
    enrollees has yet to exhaust its 7 year availability period for using
    the award. We will not have a refined estimate until several classes of
    members have exhausted the availability period. Moreover, modest
    adjustments in assumptions over a multi-year period have a significant
    impact on estimated requirements.
        Finally, there are several major difficulties with using the
    liability estimate alone, as developed by the auditors in preparing the
    financial statements, for considering Trust Fund requirements in the
    2000 budget. Specifically, the liability estimate, being by design a
    snapshot as of September 30, 1998, does not reflect:
        1. Activity after September 30, 1998 for some of the members
    enrolled by that date.--The liability estimate in the financial
    statements does not include amounts for members who had not completed
    15 percent of their service by September 30, 1998. The amount required
    for these members is approximately $36 million.
        2. Enrollments after September 30, 1998.--The liability estimate in
    the financial statements does not include amounts for any members
    projected to enroll after that date and who are supported with fiscal
    year 1998 program funds, even though the program budgets and the Trust
    appropriation for fiscal year 1998 specifically support such members in
    this forward funded program. The amount is approximately $45 million.
        3. The fiscal year 1999 appropriation and projected program
    activity.--The Corporation's appropriation is less than the amount
    required to support the Trust activity in that year. In fact, under the
    assumption that all members earning an award would fully use it, the
    budget is $64 million less than Trust requirements for that year.
    Assuming that members use 78 percent of the amounts earned, our current
    estimate of Trust usage, the budget is $37 million less than Trust
    requirements for that year.
        4. The fiscal year 2000 budget and projected program activity.--As
    mentioned above, if everyone earning an award based on the fiscal year
    2000 budget was to use the entire award, the amount of budget authority
    needed to fund these awards (including the President's Student Service
    Scholarship Program) would be $167 million, or $74 million more than
    the request. Assuming that members use 78 percent of the amounts
    earned, the budget is $41 million less than Trust requirements for that
    year.
        Further Background Information on Members' Use of the Education
    Award:
        Those who served in program year 1994-95 had used 58 percent of the
    amount they earned by the end of fiscal year 1998 and have used about
    61 percent as of March of this year. A major unknown is whether there
    will be a significant increase in the use of the award by the first
    year class prior to the end of the seven-year period. Some argue that
    many members will use the award before it expires; others argue that
    former members are not likely to go to school several years after
    leaving AmeriCorps. Only the experience of the next several years will
    fully resolve this issue.
        Before this year, the Corporation did not have enough data to
    predict a percentage of awards earned that would not be used in full by
    the end of the seven-year period of availability. We predict that about
    78 percent of these funds will be used at the end of the seven-year
    period; however, for the reasons stated above this could increase. In
    formulating the fiscal year 2000 budget, we specifically estimated that
    22 percent of the awards earned would not be used.
        Question. I understand that the Corporation's current financial
    management system is not Y2K compliant. Under the Corporation's Action
    Plan, you plan to install a new financial management system, called
    ``Momentum,'' by the end of June 1999. However, some of the interim
    deadlines in the revised Action Plan have slipped. Are you confident
    that the new financial management system will be implemented on time?
    Does the Corporation have a contingency plan in case the new system
    does not operate correctly or its implementation is delayed?
        Answer. The Corporation continues to make good progress toward
    upgrading to the new core financial management system, ``Momentum.''
    The Department of Interior and AMS have been working closely with the
    Corporation's new financial management system team. There have been
    some adjustments to the original schedule and these are reported in the
    Corporation's bimonthly Action Plan, however, we remain confident that
    the new system will be implemented on time. The Corporation plans to go
    on-line with the new core system in July 1999.
        We do have a contingency plan. Should there be any unforeseen
    delays in Momentum implementation, the Corporation's contingency plan
    is to continue to operate the current accounting system, Federal
    Success, through September 30, 1999, and start the new fiscal year,
    October 1, by manually entering summary data into Momentum. Momentum,
    itself, is a certified Federal system. The basic workings of the
    software have been tested and meet Federal standards. The uncertainty
    is not Momentum software, but rather the Corporation's ability to
    convert the data from the old system into the new system. Our
    contingency plan is based on using the Momentum software.
        Question. I appreciate the work the Corporation has done on its
    performance plans in response to the Results Act. In your written
    statement, you indicated that the annual performance indicators measure
    aspects of program performance that are in the direct control of the
    Corporation and that they would be useful oversight and management of
    programs. Please explain in more detail how these indicators are being
    used for oversight and management.
        Answer. The Corporation's 1999 and 2000 performance measures are
    used in several ways and at many levels of activity by managers of
    national service programs. AmeriCorps*State and National enrollment
    data, as an important example, is used regularly by the Office of
    Recruitment to measure the results of targeted recruitment efforts and
    to identify areas for more emphasis. The Trust Office uses the
    enrollment data as part of its management of the rapidly growing Trust
    obligations. As our grantees come on-line this year with web-based
    reporting of enrollments and terminations, we will be able to use these
    data to respond more quickly to grantees' needs for training and
    technical assistance in areas like recruitment and member retention.
        In Learn and Serve America, customer satisfaction surveys are being
    designed now and data will be collected in the 4th quarter. Among Learn
    and Serve's primary customers are major educational institutions and
    organizations that are grantees and subgrantees, such as state
    education agencies, colleges and universities, and State Commissions on
    National Service. Our surveys will be asking representatives of these
    institutions how well their needs for promoting service-learning are
    enhanced by our grant awards and what we can do in the future to make
    our partnership a more productive one. We will be using the feedback
    from these surveys to improve the quality of our support for the
    national service-learning community.
        The National Senior Service Corps is using performance measurement
    to track implementation of its important Programming for Impact
    initiative. Senior Corps program officers and Corporation State Office
    staff, for example, are tracking the rate at which local programs shift
    to outcome-based assignments. Each state has target levels that have
    been set for this year, and State Offices are monitoring this closely,
    making regular reports to the national office.
        Question. I am a great believer in devolving program
    responsibilities to the local level. Under some of your programs, the
    States have a significant role in administering programs. Last year,
    Mr. Wofford, you stated that devolving responsibility to the State
    level has been a major emphasis of the Corporation and may be so even
    more in the future. Could you tell us in what specific areas the
    Corporation has increased roles and responsibilities of the States over
    the past year and what your plans are in the upcoming year?
        Answer. The Corporation continues to work with states on increasing
    their roles and responsibilities. Examples and major changes are
    described below.
        Grant Application Review and Recommendation Process.--The
    Corporation used to conduct a peer review consisting of panels of
    outside experts for all new applications followed by a full staff
    review. Staff then recommended which programs to fund. Since 1997 the
    Corporation no longer provides a peer review or full staff review of
    new applications that states plan to fund with their formula grants.
    States perform the peer and staff review, and the Corporation accepts
    the states' funding recommendations. Corporation staff checks
    applications for financial and programmatic compliance issues and until
    1999 provided states with documentation on both compliance and
    continuous improvement suggestions. In 1999 staff will simply review
    states' formula applications to check for compliance issues which will
    be noted and handled during negotiations with states. Corporation staff
    will no longer provide states with continuous improvement suggestions.
    Additionally, on a trial basis in 1999 the Corporation did not provide
    a peer review of new applications that states submitted for national
    competitive funds and instead relied on the states' peer review
    process.
        For fiscal year 2000 the Corporation is discussing the possibility
    of further devolution in which states would submit applications chosen
    for formula funding for the record but there would be no Corporation
    staff review. Instead states would certify that they have reviewed all
    applications for financial and programmatic compliance and will resolve
    all issues with programs before awarding funds.
        Statewide Initiatives.--Last year the Corporation gave states the
    option of submitting individual America Reads proposals or a statewide
    America Reads initiative. The statewide initiatives provided greater
    flexibility. They also allowed states to submit a plan delineating
    statewide needs, America Reads activities and types of partners states
    would engage rather than requiring states to run a competition and
    select programs ahead of time. State commissions responded favorably to
    this option. In 1999 the Corporation again offered the option of
    America Reads statewide initiatives and added a Governor's Initiative
    competition. This new statewide initiative enables states to develop a
    plan that is tied to a governor's priority. Funds requested from the
    Corporation must be related to a larger plan and effort by the state
    that would benefit by the inclusion of national service. The Governor's
    Initiative plan will include a substantial financial commitment from
    the state beyond the statutory matching fund requirements for
    AmeriCorps programs. Many states are pleased with this new initiative
    because it enables them to become partners in large statewide efforts
    and provides a great deal of flexibility.
        Program Development Assistance and Training Funds.--The Corporation
    has reduced the budget for national training and technical assistance
    providers and has increased the program development assistance and
    training funds available to states by 50 percent. In addition, by
    giving states greater flexibility in how these funds can be used,
    commissions are now able to provide training that fosters collaboration
    among programs in various streams of national service.
        Reporting Requirements and Site Visits.--The Corporation has been
    in discussion with states for some time concerning ways to reduce
    reporting requirements. Instead of quarterly progress reports states
    now submit reports three times a year. The Corporation is exploring the
    possibility of reducing this further and requiring semi-annual progress
    and financial status reports from state commissions. The purpose and
    number of program site visits has changed. Corporation staff visit far
    less program sites than before and are more focused on evaluating the
    performance of state commission staff's site visits.
        Fixed Price Grants.--In 1999 the Corporation awarded fixed amount
    grants to AmeriCorps Promise Fellow grantees. Using fixed amount
    grants, the Corporation awards a fixed amount of funding per AmeriCorps
    member and the grantee secures any additional financial support
    necessary to carry out the program. These grants eliminate the need for
    a detailed line item budget and various accounting and record keeping
    procedures by programs as well as state commissions. Beginning in 1999
    Education Awards Programs will also be issued fixed price grant awards.
        Question. Literacy is a very important priority for me. This
    subcommittee has provided funding for child literacy activities such as
    the America Reads and other initiatives. Could you please give me a
    status [report] on America Reads and other literacy efforts of this
    Corporation and what sort of impact these initiatives are having on
    child literacy rates?
        Answer. National service is actively engaged in supporting literacy
    programs across the country, an area that is of keen interest to this
    Subcommittee.
        Everywhere I go and talk with teachers, principals, and other
    education professionals, they tell me how it is extremely important
    that the entire community support efforts to teach young children to
    read. Volunteers do not substitute for the teacher's responsibility to
    teach a child to read. And, as first teachers, parents have a critical
    role to assure success.
        Most of what we do is to supplement the role of teachers by
    providing additional one-to-one support for children, including after-
    school, weekend, and summer programs. We are also heavily involved in
    programs providing support to parents to make them effective first
    teachers of children.
        I'd like to stress six points about our role in this literacy
    initiative, a goal shared by governors, school superintendents, and
    employers across the country:
        First, we have a long history in all of our programs--AmeriCorps,
    Learn and Serve America, and the National Senior Service Corps--of
    supporting local literacy efforts.
        Second, we provide resources, mostly in the form of people, to
    local programs. They determine the literacy approach, and we are there
    to support it. In states as diverse as Rhode Island and Washington,
    AmeriCorps, service-learning, and senior volunteers are supporting
    statewide literacy efforts.
        Third, we establish local relationships with programs that have
    expertise in literacy. Examples include school systems, state education
    agencies, Even Start programs, Head Start programs, volunteer literacy
    organizations, citywide reading programs, and universities and
    colleges. These entities have structured programs that make the best
    use of national service and volunteers.
        Fourth, we insist that all local programs provide quality training
    for those working with children. And we encourage the training to be
    done by experts--reading specialists, university professors, and
    others.
        Fifth, we have partnerships at the national level with key
    education organizations, including the Department of Education.
        Sixth, and finally, we believe in the bottom line--our efforts need
    to be evaluated as to whether we are helping local literacy programs
    meet an objective of having children read well and independently by the
    end of the third grade. There is much evidence that this one-to-one
    support for children, when it is well done, works. The recently
    released study by the National Academy of Sciences, on the issue of
    volunteer tutors, reached this conclusion: ``Volunteer tutors are
    effective in reading to children, for giving children supervised
    practice in oral reading, and for allowing opportunities for enriching
    conversation.'' They also said the role of volunteers should not be
    ``to provide primary or remedial instruction.'' That is, of course, the
    role of teachers.
        As I indicated in my testimony and in response to other questions,
    there is growing evidence of the effectiveness of these literacy
    programs. And we are supporting a nationwide evaluation to determine
    the effectiveness, in the aggregate, of national service efforts.
        Question. In response to congressional concerns about the costs of
    the Corporation's programs, the Corporation agreed to a number of cost-
    cutting steps such as reducing average participant costs. For the
    record, please give us a status and a description of the specific
    actions the Corporation has taken to reduce per-participant costs.
        Answer. Over the last several years, the Corporation has taken a
    series of steps to reduce the per member costs in the AmeriCorps
    program.
        In 1996, the Corporation entered into an agreement with Senator
    Grassley and others to reduce its average budgeted cost per AmeriCorps
    member to $17,000 in fiscal year 1997, $16,000 in fiscal year 1998, and
    $15,000 in fiscal year 1999. We are on target to achieve these goals.
        Meeting them has required a series of actions. Beginning in fiscal
    year 1996, AmeriCorps State and national grantees were informed that
    the cost per member had to be reduced by at least 10 percent in
    programs that averaged above $13,800 per member, excluding education
    awards. Subsequently, average Corporation budgeted costs per member in
    these grants was reduced to $11,750 in fiscal year 1997 and $11,250 in
    fiscal years 1998 and 1999. Further, a maximum Corporation contribution
    per project was set at $14,500.
        Beginning in fiscal year 1996, no Corporation funds were to be
    spent on the relocation of members under AmeriCorps grant programs.
    This prohibition has remained in effect to the present time.
        Grants to federal agencies were discontinued in program year 1996-
    97.
        Also since fiscal year 1996, certain items which were originally
    required to be part of the budget were made optional, thereby providing
    projects with greater flexibility to reduce budgets.
        The education award only program, introduced in the fall of 1996,
    has grown rapidly. Under this program, the Corporation provides the
    education award and a modest amount, averaging less than $500, for
    program support, while the project provides all other costs, including
    members' living allowances. When originally designed, the Corporation
    anticipated this program operating initially at a modest level of 2-
    3,000 members annually. The Corporation has actually achieved 3-4 times
    these levels in fiscal years 1997 and 1998, and expects continued high
    levels of participation in fiscal year 1999.
        Matching requirements were increased to from 25 percent to 33
    percent for non-member costs.
        Under the AmeriCorps*National Civilian Community Corps, specific
    cost reductions have included the closing of a large campus in 1995; a
    decrease in the member living allowance from $8,000 per annum in fiscal
    year 1994 to $6,000 per annum in 1995 and finally to $4,000 per annum
    in 1996 to date; and a reduction in staff from fiscal year 1995 to
    fiscal year 1998 of some 38 percent.
        Under AmeriCorps*VISTA, the Corporation has expanded its ``cost
    share program,'' where the majority of the costs of supporting a member
    is paid by non-Corporation sources.
        Question. Have your cost-cutting actions had any impact on program
    performance?
        Answer. Many of these measures are intended to increase support
    from state, local, and private sources, thereby decreasing the reliance
    on the amount per member provided by the Corporation. In general, as
    measured by the successes of efforts such as the education award
    program, this strategy has been successful. In projects where the
    mixture of support has changed to a reduced reliance on federal support
    and a greater share of non-federal support, we don't believe there is a
    negative effect on program performance. A recent review of the
    education award program did identify, however, a number of areas for
    improvement, and we intend to pursue such changes to assure program
    quality.
        In some instances, we have heard from projects that they are unable
    to increase the amount of non-Corporation support and will need to drop
    its AmeriCorps program. These organizations are typically smaller,
    less-well financed, community-based entities. To date, these have been
    relatively isolated cases; however, we intend to monitor this situation
    carefully as the continued involvement of such organizations in
    AmeriCorps is important to achieving its stated mission and goals.
        Other measures have reduced the total amount of support per member
    in a project. While some of these measures represent efficiencies
    following an initial start-up period, there is also some evidence that
    important support functions, such as training and evaluation, may
    suffer a disproportionate share of reduced budgets. We also continue to
    monitor this situation carefully, and are committed to assuring that
    projects not sacrifice quality in a manner that will affect AmeriCorps'
    ability to meet its long-term goals.
        While the Corporation continues to advocate greater state, local,
    and private support for AmeriCorps programs, there is also the reality
    that there is a basic amount necessary to enable an individual to
    provide a year of full-time service in a local community in a high
    quality program that meets community needs.
        Further, the National and Community Service Act sets forth a number
    of different programs that are to be supported in the areas of
    education, public safety, the environment, and health and other human
    needs. These different program models of national service are
    frequently delivered by varying types of local organizations, with
    significant differences in capacity and financial resources. If
    national service is to continue to be provided in a decentralized
    manner through these wide varieties of local service agencies, reaching
    out to community organizations, faith-based entities, and nonprofit
    organizations with limited financial resources, then any funding
    strategy must recognize the need for continuous, flexible support from
    the Corporation.
        Finally, we are initiating a study of this particular issue because
    of its importance to AmeriCorps' mission and goals, and will report its
    results to the Congress.
        Question. The Corporation has requested about $11 million in fiscal
    year 2000 to fund training and technical assistance. I understand that
    most of the grantees have a fairly long-term relationship with the
    Corporation. Given this long-term relationship, how long do you expect
    the Corporation to continue funding for training and technical
    assistance? How does the Corporation determine which programs/grantees
    are eligible for which training and technical assistance programs? Has
    the Corporation performed any analysis of which programs (newer versus
    older) are receiving which types and amounts of training and technical
    assistance?
        Answer. The Corporation's training and technical assistance system
    was designed not only to help develop high quality programs but also to
    help them maintain successful levels of operation. The commitment to
    the continuous improvement of national service programs is a
    fundamental concept of the Corporation's training and technical
    assistance approach. We believe that there is always something new to
    learn and room to improve; always new, higher levels of sophistication
    of operation and effectiveness to achieve. The Corporation provides
    training and technical assistance, customized to the experience and
    sophistication of the grantee, to address both immediate and long-term
    needs.
        The reality of operating non-profit service organizations includes
    managing high staff-turnover and addressing ever changing, compelling
    community needs. So while the Corporation assists national service
    organizations to develop and institutionalize good operational systems,
    there are many times when we receive repeat calls from the same program
    but different, new staff or to help address new problems. In addition,
    the number of requests is directly related to the number of grantees.
    Recent significant increases in national service programs have
    therefore caused an increase in the number of requests for training and
    technical assistance.
        Training and Technical Assistance strives to keep grantees abreast
    of tried and true effective practices, as well as the latest thinking,
    technology, practices and applications in the national service field.
    Corporation-provided training and technical assistance is relevant and
    useful in addressing grantees' needs as evidenced by a recent customer
    satisfaction survey where approximately 85 percent of the respondents
    indicated satisfaction with these services. National service program
    staff appreciate this resource and see the value of accessing it for
    their varied professional development and continuous improvement needs.
        Training and technical assistance--that is, ongoing or targeted
    project support and member or staff training--is available to
    Corporation programs at the local, state, regional and national levels.
    All Corporation funded programs are eligible for this assistance.
    Programs request assistance directly or are referred by their
    respective administrative entities (e.g., State Commissions) or
    Corporation staff based on needs of program. Most training and
    technical assistance occurs at local or state levels.
        We are committed to continuous program improvement. Programs'
    strengths and weaknesses are identified at local and state levels
    through program monitoring and formal and informal needs assessments.
    In addition, the Corporation regularly conducts nationwide needs
    assessments (in 1993, 1996, and 1999 respectively) which identify both
    effective practices and training needs of grantees and sub-grantees,
    especially those that cut across programs and states.
        The Corporation requires all its training and technical assistance
    providers to keep records of the number and types of programs to which
    they provide services, as well as the type of service provided. As we
    have reviewed both the performance of our providers and the progress of
    our programs, we have found that programs' needs for technical
    assistance are driven less by the length of time it has been in
    operation than by the needs of the staff operating the program.
        For example, the director of a program that has received an
    AmeriCorps grant for three years may leave to lead another program. The
    new program director may likely be hired from outside AmeriCorps,
    changing the needs of this ``old'' program to be more like those of a
    ``new'' program.
        We have found that centering our needs assessment on what is
    required by a program director and staff for the success of their
    program to be more useful for deciding how to deploy our training and
    technical assistance resources. While evaluation of our training and
    technical assistance services shows that 85 percent of recipients rate
    the service as good or very good, we are also mindful that programs'
    needs change with time, particularly as they branch out into new areas
    of service, such as the America Reads initiative or the increased
    emphasis on mentoring spurred by the Presidents' Summit and America's
    Promise.
        We are currently conducting our third national assessment of the
    needs of our programs. We will likely find that much of the type of
    assistance we've traditionally provided for newer programs will be
    replaced by new needs arising from the changing needs of our program
    directors, their staff and members.
        Question. The Corporation noted in its budget submission that it
    would ``share with the grantees the lessons learned across program for
    rigorous monitoring and evaluation.'' What lessons have been learned
    thus far from the monitoring effort? Please describe the Corporation's
    proposed use of Evaluation funds in its budget submission? Does the
    Corporation have a monitoring and evaluation office or division? Is
    there a site visit schedule? Is there a site visit protocol? Are there
    written site visit reports?
        Answer. Funds will be used to support the independent evaluation of
    National Service programs, to determine their impact on communities,
    recipients of services, and members/participants providing the service.
        The Corporation has an evaluation office within the Department of
    Evaluation and Effective Practices. As the Aguirre evaluation study
    reflects, much has been learned about the effects of AmeriCorps
    programs. We are also developing a means of disseminating ``effective/
    best'' practices to Corporation funded programs via electronic means
    (e.g., websites, listserves), in addition to our traditional
    distribution methods.
        Monitoring of grantees and sub-grantees is conducted by AmeriCorps
    program and grants staff as well as the State Commissions. The
    Corporation's AmeriCorps*State/National, as well as the Grants
    Management Office staff, have established protocols for conducting site
    visits. A schedule is developed at the beginning of each fiscal year
    based on an assessment of risk factors. The site visits focus on state
    commissions and direct grantees (national non-profits, tribes and
    territories) to review their fiscal and program management systems.
    These grantees are responsible for conducting site visits to the
    programs and operating sites. Each site visit, whether conducted by the
    Corporation, state commission, or national non-profit organization, has
    written documentation and results in a letter that is sent to the
    grantee/sub-grantee.
        Information gathered by the program staff during the monitoring
    process is employed in a variety of ways to promote continued
    improvement of grantee programs. Regular communication among grants and
    program staff permits our staff to detect and react to patterns in
    grantees' performance and/or needs. For example, when inadequacies in
    certain record-keeping practices were raised regarding several
    grantees, the monitoring protocol was modified to ensure that those
    systems were scrutinized for all grantees, thereby detecting and
    correcting any additional problems. When monitoring officers began to
    report concerns about certain grantees' financial systems, a mandatory
    financial management conference was held to ensure that grantees had
    the proper information. In the first years of the Corporation,
    information gained during monitoring was used to fine tune the grant
    application process so as to encourage successful program designs. In
    these ways, monitoring becomes part of the information loop that
    permits the Corporation to serve as well as guide its grantees.
        In addition, this spring and summer, we will be field testing a
    Commission administrative performance standards review process which
    will allow us to assess the overall administrative operation of State
    Commissions.
                                     ______

                     Questions Submitted by Senator Shelby

        Question. The Shelby County Commission and the Directors of the
    Shelby County Retired and Senior Volunteer Program (RSVP) have
    determined that the multi-county program that Positive Maturity now
    sponsors is insufficient for serving the needs of Shelby County given
    its population growth over the last decade. Given the surplus funds in
    the National Service Trust and the additional funds the President is
    requesting for the Corporation for National Service, how can you
    justify not supporting an independent program for senior citizens of
    Shelby County?
        Answer. We appreciate Senator Shelby's continued interest in the
    administration of the RSVP program in Shelby County.
        It is important to note that the Corporation for National Service
    does not believe there is a surplus in the National Service Trust.
    Rather, the funds in the Trust represent an appropriate reserve
    designed to ensure that AmeriCorps members who earn an education award
    receive that award. Even if a surplus existed in the Trust, the
    Corporation cannot transfer these funds to any other program, including
    the RSVP program. Not only is the National Service Trust funded in a
    different appropriations measure (the VA-HUD appropriations bill) than
    the RSVP program (the Labor-HHS-Education appropriations bill), but
    specific language contained in the VA-HUD appropriations bill prevents
    the Corporation from transferring Trust funds to any other use, even
    among the other national service programs funded by that appropriations
    measure.
        In addition, there have only been very limited funds for new RSVP
    programs in recent years. New funds are being used by the Corporation
    in accordance with the requirements of the Domestic Volunteer Service
    Act and the appropriations bill for fiscal year 1999. The Act requires
    the Corporation to direct one-third of any new funds to existing
    programs for programs of national significance. The appropriations bill
    also requires a 3 percent administrative cost increase before new
    programs can be funded. As a result, there is only a limited amount of
    funding for new programs.
        The decision on the reach of a local RSVP service area has
    purposefully been kept at the state and local level by the Corporation,
    since we believe that individuals at that level are in closer touch
    with the needs of the community. When the Corporation awards an RSVP
    grant, it approves a service area proposed by the grantee in which
    volunteers are recruited and placed. Subsequent changes in the service
    area must be requested by the local sponsor and approved by the
    Corporation. If Positive Maturity, Inc., the grantee in a five-county
    area that includes Shelby County, wishes to establish a different
    service area, our Alabama State Office will work closely with them to
    assess its impact on existing project operations.
        Should Positive Maturity decide to relinquish part of its grant in
    order to establish an independent project in the approved service area,
    we will conduct a competitive process for new sponsorship. Depending
    upon an analysis of current population and RSVP funding allocations,
    the Corporation designates the area(s) of competitive eligibility.
        Currently, 55 percent of U.S. counties lack any access to the RSVP
    program at all, and many of these counties have long expressed an
    interest in competing for new resources as they become available. As a
    result, the Corporation cannot justify establishing an independent
    program in Shelby County, which is currently being served, except
    through a competition available to these unserved areas as well.
        In order to facilitate the best possible outcome for all involved,
    the Corporation has taken the initiative of trying to encourage
    discussions between all interested parties at the state and local
    level. These parties are in the best position to make final decisions
    about the best service delivery structure in Shelby County and the
    surrounding areas in Alabama. We will continue to encourage that
    process and to support the decision of the community on this subject.
                                     ______

                       Questions Submitted by Senator Kyl

        Question. What is the total dollar value of all compensation and/or
    benefits provided to a typical AmeriCorps volunteer in exchange for a
    year of service--broken down by stipend, college tuition voucher or
    credit, health insurance, child care, or any other applicable benefit?
    What is the total average cost to taxpayers per volunteer?
        Answer. Under the National and Community Service Act, local
    programs have some flexibility in setting specific benefit levels for
    AmeriCorps members. A full-time member typically receives:
      --A stipend or living allowance set at levels minimally necessary to
            permit full-time service; the typical amount this year is
            $8,300, of which the Corporation pays no more than 85 percent
            of that amount.
      --Health care that averages between $900-$1,100 in annual costs,
            although the 1998 average cost for AmeriCorps*State and
            National is about $500 per member, because many members
            maintain existing coverage at their own cost.
      --Child care when necessary, which is needed by only a few members
            and therefore averages about $200-300 across all members.
      --An education award upon successful completion of service of $4,725.
        The Corporation's average budgeted cost per full-time AmeriCorps
    member, across all programs, is currently $15,300 for the program year
    1998-99. This average includes all AmeriCorps programs, including
    AmeriCorps*State, Ameri- Corps*National, AmeriCorps*Education Award,
    AmeriCorps*VISTA, AmeriCorps*NCCC, and the new AmeriCorps*Promise
    Fellows. By law and Corporation policy, organizations using AmeriCorps
    members are expected to provide a significant portion of the program's
    costs.
        Question. In your written testimony, you discussed the literacy
    programs supported by the Corporation and the results achieved for the
    1996-1997 program year. You mentioned on page 11 that 67 percent of
    youth tutored in grades 1-12 showed improvement. But these results were
    apparently self-reported, and you cite only a few independent
    evaluations of the progress that is actually being made. Has there been
    any attempt to incorporate regular independent review of the
    improvements made by students in each of the various programs in which
    AmeriCorps participants are involved--in terms of test scores, grades,
    or other measures of achievement?
        Answer. Local projects define objectives and measure their progress
    against those objectives. Many independent assessments are conducted of
    local programs. In many literacy projects, this information is in fact
    gathered by local school officials as part of their ongoing
    responsibilities for providing education.
        Summarizing this information across projects is extremely
    difficult, however, because they have different objectives and use a
    wide variety of techniques and measurement devices to assess progress.
    For example, a simple measure such as improved attendance may or may
    not be part of a program's objectives, and different school systems
    have different techniques for measuring attendance. The Corporation
    does not impose specific measures for all local literacy projects.
        There have been many independent evaluations of effective tutoring
    programs, and we have identified some of those in our written
    testimony. We specifically promote the adoption of the effective
    practices identified in the research by projects using AmeriCorps
    members to help them achieve their objectives.
        To obtain impact data across all projects, and as noted in response
    to an earlier question, the Corporation is engaged in a national study
    of literacy projects. The first phase of that study is a descriptive
    analysis that will permit us to characterize how these programs'
    practices compare to what is known about effective program models. Data
    from this study will be available in Fall 1999. The second phase of the
    study, to begin in September 1999, will collect outcome data on reading
    ability in a rigorous design intended to permit us to make definitive
    statements about the effects of Corporation-sponsored tutoring efforts.
    Results from that phase of the research will be available late in 2000.
        Question. In your testimony, you mention other activities in which
    AmeriCorps participants are involved, including after-school programs
    for at-risk youth (page 12). What are the specific after-school
    programs in which AmeriCorps participants are engaged? Has there been
    any independent evaluation of how successful these programs have been,
    in terms of academic achievement, youth crime rates, etc.?
        Answer. While there have been studies of various education related
    programs (e.g., tutoring, literacy), which may occur in-school or
    after-school, there have been no independent studies of AmeriCorps
    participants serving just in after-school programs. Please see the
    attached list of all after-school programs.

        Grantee: Alabama State Commission on National and Community Service
        Subgrantee: Birmingham Cultural and Heritage Foundation
        Program Name: AmeriCorps*In Tune
        Grant Type: State Program
        Full-time AmeriCorps members: 25
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps members provide tutoring and
    homework assistance, music instruction, and preparation for musical
    performance to increase the academic performance, improve attitude
    toward learning, and increase participation in school of 300 K-8
    students in Birmingham's Enterprise Community.

        Grantee: Alabama State Commission on National and Community Service
        Subgrantee: Family Healthcare of Alabama
        Program Name: Rural AmeriCorps Student Project
        Grant Type: State Program
        Full-time AmeriCorps members: 25
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps members tutor and mentor 400
    disadvantaged and predominantly African-American students in grades K-6
    to improve their academic performance and school attendance. Seventy-
    five percent of students are expected to increase by at least one
    letter grade in math or reading. Services are provided at ten schools
    during regular school hours, in after-school and weekend programs, as
    well as during the summer in rural Greene and Sumter Counties in west
    Alabama.

        Grantee: Alabama State Commission on National and Community Service
        Subgrantee: Butler Co. Board of Education
        Program Name: AmeriCorps Instructional Support Team
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps members tutor and mentor 250 K-3
    students in three rural Alabama schools. Members tutor students
    individually and in small groups, provide mentoring in after-school
    activities and provide homework assistance and enrichment activities.
    Member service will result in improved academic performance, improved
    attitude toward school, and improvement in attendance.

        Grantee: Alabama State Commission on National and Community Service
        Subgrantee: Calhoun Community College
        Program Name: Calhoun Community College AmeriCorps Program (CAP)
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps members tutor and mentor 300 K-3
    children in an America Reads initiative in ten north Alabama elementary
    schools. Eighty percent of students increase reading skills by at least
    one grade level. Members also conduct after-school and summer
    educational programs for children and youth. The program is endorsed by
    Decatur's Promise.

        Grantee: Alaska State Community Service Commission
        Subgrantee: Nine Star Enterprises, Inc.
        Program Name: AmAK Literacy Project
        Grant Type: State Program
        Full-time AmeriCorps members: 16
        Part-time AmeriCorps members: 2
        Program Descriptions: AmeriCorps Members serve in 16 community
    based organizations providing literacy and computer training to
    preschool and elementary school students and their families. Members
    serve in single site placements in rural communities in Alaska.

        Grantee: Arkansas Commission on National and Community Service
        Subgrantee: Southeast Arkansas Community Based Education Center
        Program Name: POP's Latchkey Program
        Grant Type: State Program
        Full-time AmeriCorps members: 6
        Part-time AmeriCorps members: 6
        Program Descriptions: AmeriCorps Members provide a safe haven and
    enrichment activities for children in Kindergarten through 6th grade,
    assist with Spanish translation for parents and students in schools,
    and offer life skills trainings to families. Members are placed in four
    elementary schools and two child care centers.

        Grantee: California Commission on Improving Life Through Service
        Subgrantee: Child Abuse Prevention Council of Sacramento, Inc. +
        Program Name: Child Abuse Prevention Council of Sacramento, Inc.
        Grant Type: State Program
        Full-time AmeriCorps members: 70
        Part-time AmeriCorps members:
        Program Descriptions: 70 AmeriCorps members serve a consortium of
    public and non profit organizations in three municipalities whose
    purpose is to provide a continuum of services to children at risk for
    neglect or abuse. Members are recruited from the communities
    surrounding three service centers to tutor/mentor children identified
    by child protective services or their teachers for participation in the
    program. Some members serve in the centers to assist with intake and
    make referrals to services for families. Members also serve as points
    of contact from the apartments and homes in which they live to serve
    members of the community in need. Many members are receiving temporary
    assistance to needy families. The program also provides training to 900
    elementary students in a child prevention curriculum and a summer
    recreation program which provides free lunches.

        Grantee: California Commission on Improving Life Through Service
        Subgrantee: California Conservation Corps--Cadre of Corps +
        Program Name: Cadre of Corps
        Grant Type: State Program
        Full-time AmeriCorps members: 130
        Part-time AmeriCorps members: 4
        Program Descriptions: Cadre of Corps is a statewide AmeriCorps
    program sponsored by the California Conservation Corps. 134 AmeriCorps
    members are assigned to one of nine sites, sponsored by a District
    Office of the California Conservation Corps or by a local conservation
    corps office. The areas served include Klamath, Shasta-Pacific, Marin,
    San Francisco, Pacific Bays, San Jose, Central Coast, Los Angeles, and
    Long Beach. Members provide tutoring for 1216 at risk youth,
    environmental education for 6,217 students in 89 schools, and community
    service activities for 7,332 youth in 49 communities or neighborhoods.

        Grantee: California Commission on Improving Life Through Service
        Subgrantee: California Conservation Corps--Watershed Project
        Program Name: Watershed Project
        Grant Type: State Program
        Full-time AmeriCorps members: 147
        Part-time AmeriCorps members:
        Program Descriptions: The Watershed Project engages 147 full time
    members to coordinate school and community partnerships that foster
    community responsibility for healthy watersheds. Members assist
    teachers in developing service-learning activities centered around
    watershed restoration and lead field trips for students to complete
    service projects. Members also complete watershed restoration projects
    such as protection against erosion or building trails. Members serve in
    11 regions of the California Conservation Corps system: Lassan/Plumas,
    Mendocino, Napa, San Diego, San Francisco, Shasta, Siskiyou, Sonoma,
    Tahoe/Placer, Tehama and Trinity.

        Grantee: California Commission on Improving Life Through Service
        Subgrantee: San Diego State Unv. Foundation +
        Program Name: CA YMCA/CSU PRYDE AmeriCorps Consortium
        Grant Type: State Program
        Full-time AmeriCorps members: 22
        Part-time AmeriCorps members: 85
        Program Descriptions: The YMCA PRYDE AmeriCorps program engages 22
    full-time and 88 part-time members to serve in five regions of
    California: San Diego, Long Beach, Los Angeles, Oakland/East Bay, and
    San Francisco. Within each region, members are placed at school or YMCA
    sites to conduct after school programming. Activities include academic/
    homework assistance, life skills development (conflict resolution,
    substance abuse prevention, pregnancy prevention, communication),
    recreation activities, and field trips. A partnership with the local
    California State University campuses provides training and technical
    assistance for members and staff.

        Grantee: California Commission on Improving Life Through Service
        Subgrantee: Los Angeles Unified School District +
        Program Name: AmeriLiteracy
        Grant Type: State Program
        Full-time AmeriCorps members: 50
        Part-time AmeriCorps members:
        Program Descriptions: AmeriLiteracy AmeriCorps members tutor
    elementary students in fifteen schools throughout the Los Angeles
    Unified School District. The program utilizes 5 distinct models for
    member involvement in the schools, ranging from involvement in
    intersession classes to sustained tutoring, in which the same group of
    children are tutored daily for 30 to 40 minutes.

        Grantee: California Commission On Improving Life Through Service
        Subgrantee: Los Angeles Conservation Corps +
        Program Name: Building Up Los Angeles
        Grant Type: State Program
        Full-time AmeriCorps members: 50
        Part-time AmeriCorps members: 60
        Program Descriptions: In the Building Up Los Angeles AmeriCorps
    program, 50 full-time and 80 part-time members serve in teams at one of
    7 clusters in the greater Los Angeles area: San Fernando Valley, South
    Central/Watts, Northeast, Hollywood, Pico Union, Central City, and East
    Los Angeles. Service objectives include: (1) providing in-class
    tutoring in specific subjects and skills for students in grades 1-12
    who are at risk of academic failure; (2) conducting after school and
    intersession programs that provide academic assistance/enrichment and
    recreation activities; and (3) holding seven 2 week Summerbridge
    Programs to prepare and mentor entering middle and high school students
    for academic and personal success.

        Grantee: California Commission on Improving Life Through Service
        Subgrantee: Lifespan Services Network, Inc. +
        Program Name: San Luis Obispo County AmeriCorps
        Grant Type: State Program
        Full-time AmeriCorps members: 40
        Part-time AmeriCorps members: 10
        Program Descriptions: The San Luis Obispo County AmeriCorps program
    engages 50 AmeriCorps members to serve at risk youth with goals of
    decreasing juvenile crime, substance abuse, and teen pregnancy and
    increasing school success and positive behavior. Fourteen AmeriCorps
    members serve as mentors to 120 juvenile offenders, helping them
    complete their probation contracts and resist new criminal activity.
    Six members assist youth who are enrolled in the county's substance
    abuse program. Members assist youth in developing an action plan to
    resist substance abuse and in learning positive decision making skills.
    Thirty members assist 240 youth who are at risk of academic failure.

        Grantee: California Commission on Improving Life Through Service
        Subgrantee: East Bay Conservation Corps
        Program Name: East Bay Conservation Corps
        Grant Type: State Program
        Full-time AmeriCorps members: 159
        Part-time AmeriCorps members:
        Program Descriptions: 143 AmeriCorps members serve as literacy
    tutors for 1,300 Oakland students in 13 elementary schools to improve
    reading scores by at least one grade level. Teams of 10-12 members
    provide in school and after school tutoring to 10 students each. 8
    AmeriCorps members serve in a school health program which involves
    children in the development and maintenance of the garden and
    introduces a healthy diet curriculum. 8 AmeriCorps members work with
    teachers at the elementary and middle school level to develop service
    learning curricula and activities.

        Grantee: California Commission on Improving Life Through Service
        Subgrantee: EYE Counseling and Crisis Services +
        Program Name: EYE Empowerment Corps
        Grant Type: State Program
        Full-time AmeriCorps members: 40
        Part-time AmeriCorps members: 20
        Program Descriptions: In the EYE Empowerment Corps, 40 full-time
    and 20 part-time AmeriCorps members provide services for youth in the
    greater Escondido area. Half of the members serve on the Community
    Services team and provide mentoring to first time youth offenders.
    Members and youth participate in community service activities as a
    means to: help students develop a service ethic, provide needed
    assistance to the community, and create an environment where mentoring
    can happen. The other group of members serve on the education team as
    mentors to children who have been identified as being at risk for
    school failure. Members provide an after school program where children
    receive academic assistance, participate in recreation activities, and
    develop a relationship with another caring adult.

        Grantee: California Commission on Improving Life Through Service
        Subgrantee: Chancellor's Office, CA Community Colleges +
        Program Name: Chancellor's Office, CA Community Colleges
        Grant Type: State Program
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 724
        Program Descriptions: 616 AmeriCorps Members recruited from the T-
    A-N-F and other student populations of 15 community colleges are
    trained in the ``rolling readers'' curriculum and tutor 7-9 children
    each in K-3 public schools and head start programs. A minimum of 2,168
    low-income and/or limited English proficiency children will complete 80
    percent of their individual student literacy development goals.

        Grantee: California Commission on Improving Life Through Service
        Subgrantee: City Year, Inc. +
        Program Name: City Year San Jose/Silicon Valley
        Grant Type: State Program
        Full-time AmeriCorps members: 69
        Part-time AmeriCorps members: 6
        Program Descriptions: AmeriCorps members in the City Year San Jose/
    Silicon Valley program are organized in diverse teams of 8 to 10
    members. The 75 members are involved in one or more of the following
    activities: tutoring youth to improve basic academic skills, mentoring
    youth in the development of an ethic of citizenship, providing
    assistance to low income families, seniors, and non profit
    organizations, and providing safe and supportive environments for
    youth.

        Grantee: California Commission on Improving Life Through Service
        Subgrantee: Bay Area Community Resources--San Jose
        Program Name: San Jose AmeriCorps Program
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members:
        Program Descriptions: The San Jose AmeriCorps program has 20
    members who serve in four schools in the Franklin McKinley Elementary
    School District. The members address the needs of students who have a
    low rate of academic success. Members tutor students in the classroom
    and after school, conduct intersession academic and recreation
    programs, and develop and implement activities to involve parents of
    the student participants. In addition, members implement a sunshine
    club intended to reduce truancy by having members meet with students
    before school to help prepare them for the day and to ensure
    participation in a nutrition program.

        Grantee: California Commission on Improving Life Through Service
        Subgrantee: California Conservation Corps Ambassador's Mentoring
    Project
        Program Name: Ambassador's Mentoring
        Grant Type: State Program
        Full-time AmeriCorps members: 23
        Part-time AmeriCorps members: 2
        Program Descriptions: The Ambassador's Mentoring Project supports
    25 AmeriCorps members who are placed with agencies around the state
    that provide mentoring services for youth and/or support mentoring
    initiatives. Members recruit, train, and support individuals who serve
    as mentors. Members also serve as mentors for at risk youth.

        Grantee: California Commission on Improving Life Through Service
        Subgrantee: Amador Tuolumne Community Action Agency
        Program Name: AmeriCorps Academic Mentoring
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members: 4
        Program Descriptions: Members in the AmeriCorps Academic Mentoring
    program tutor 200 at-risk K-8 grade students at 10 schools in Amador
    and Tuolumne counties. The goal of the program is to increase the
    students' reading and math skills and comprehension in other academic
    topics. Tutoring occurs before, during and after school; in and out of
    the classroom; one on one and in small groups. Improvement will be
    measured against an individual academic plan created for each student
    and through standardized state test results (Stan 9). The 24 members
    also mentor 100 at-risk youth to increase positive personal growth and
    citizenship skills and to reduce negative risk-taking behaviors such as
    truancy and disruptive behavior.

        Grantee: California Commission on Improving Life Through Service
        Subgrantee: Bay Area Community Resources--Larkspur
        Program Name: BAYAC AmeriCorps
        Grant Type: State Program
        Full-time AmeriCorps members: 79
        Part-time AmeriCorps members: 10
        Program Descriptions: AmeriCorps Members provide tutoring and
    mentoring to at risk youth in Bay Area communities, so that they can
    achieve school success and realize their potential. Members work in
    small teams with twenty collaborating community based organizations to
    provide tutoring and mentoring to 2,155 young people.

        Grantee: California Commission on Improving Life Through Service
        Subgrantee: California Human Development Corporation +
        Program Name: Rural AmeriCorps Partnership
        Grant Type: State Program
        Full-time AmeriCorps members: 18
        Part-time AmeriCorps members: 4
        Program Descriptions: AmeriCorps members tutor and mentor middle
    school Limited English Speaking (LEP) students considered to be
    educationally at risk in order to reduce the number of drop outs during
    high school. Members serve in teams of two in middle schools in rural
    Sonoma, Yolo, and San Joaquin Counties and serve a largely Latino
    population.

        Grantee: California Commission on Improving Life Through Service
        Subgrantee: Feather River Community College +
        Program Name: AC Academic Mentoring Program of Plumas County
        Grant Type: State Program
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 40
        Program Descriptions: AmeriCorps members mentor five educationally
    at risk high school or college students to increase academic success,
    encourage attendance in higher education, and prevent drop out. Each
    beneficiary will develop an individual development plan.

        Grantee: California Commission on Improving Life Through Service
        Subgrantee: Volunteer Center of San Francisco +
        Program Name: San Francisco AmeriCorps Collaborative
        Grant Type: State Program
        Full-time AmeriCorps members: 46
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps members serve in public schools
    and community based organizations in the Bay area to engage youth in
    service learning activities, mobilize adult volunteers and build
    sustainable school and community partnerships. Members serve in one of
    the four teams. One team's activities focus on developing service
    learning activities, one is engaged in healthy start activities, one
    team focuses on volunteer generation; and one team serves in child
    development centers to increase literacy of pre-K to third grade.

        Grantee: California Commission on Improving Life Through Service
        Subgrantee: Partners in School Innovation +
        Program Name: Partners/ACT
        Grant Type: State Program
        Full-time AmeriCorps members: 30
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps members serve in small teams at
    schools serving K-12 students. Members support whole-system change
    efforts of schools. Activities are designed to increase literacy and
    reading comprehension and increase parent and community involvement in
    the school.

        Grantee: Catholic Network of Volunteer Service
        Subgrantee: Catholic Network of Vol. Service
        Program Name: CNVS AmeriCorps Program
        Grant Type: Ed Award Only
        Full-time AmeriCorps members: 750
        Part-time AmeriCorps members: 286
        Program Descriptions: Members will serve in areas of child care,
    school counseling, tutoring, literacy, elderly outreach, social
    services, counseling and civic responsibility.

        Grantee: City Year, Inc.
        Subgrantee: City Year--Columbia
        Program Name:
        Grant Type: National Direct Central
        Full-time AmeriCorps members: 48
        Part-time AmeriCorps members: 4
        Program Descriptions: City Year is a national non-profit with
    strong public-private partnerships, devoted solely to full time
    national service and the development of a diverse and well-trained
    corps. AmeriCorps Members serve in classrooms, run after school and
    school break programs, teach violence and HIV/AIDS prevention,
    rehabilitate public housing units and build parks and playgrounds.
    Members increase academic success through in school tutoring,
    increasing parental involvement and promoting conflict resolution. They
    increase civic responsibility by engaging children and youth in out-of-
    school activities and meet needs of local organizations through short
    term physical and human needs projects.

        Grantee: City Year, Inc.
        Subgrantee: City Year--Cleveland
        Program Name: City Year--Cleveland
        Grant Type: National Direct Central
        Full-time AmeriCorps members: 95
    Part-time AmeriCorps members: 10
        Program Descriptions: City Year is a national non-profit with
    strong public-private partnerships, devoted solely to full time
    national service and the development of a diverse and well-trained
    corps. AmeriCorps Members serve in classrooms, run after school and
    school break programs, teach violence and HIV/AIDS prevention,
    rehabilitate public housing units and build parks and playgrounds.
    Members increase academic success through in school tutoring,
    increasing parental involvement and promoting conflict resolution. They
    increase civic responsibility by engaging children and youth in out-of-
    school activities and meet needs of local organizations through short
    term physical and human needs projects.

        Grantee: City Year, Inc.
        Subgrantee: City Year--Columbus
        Program Name: City Year Columbus
        Grant Type: National Direct Central
        Full-time AmeriCorps members: 57
        Part-time AmeriCorps members: 6
        Program Descriptions: City Year is a national non-profit with
    strong public-private partnerships, devoted solely to full time
    national service and the development of a diverse and well-trained
    corps. AmeriCorps Members serve in classrooms, run after school and
    school break programs, teach violence and HIV/AIDS prevention,
    rehabilitate public housing units and build parks and playgrounds.
    Members increase academic success through in school tutoring,
    increasing parental involvement and promoting conflict resolution. They
    increase civic responsibility by engaging children and youth in out-of-
    school activities and meet needs of local organizations through short
    term physical and human needs projects.

        Grantee: City Year, Inc.
        Subgrantee: City Year, Inc.--Parent
        Program Name:
        Grant Type: National Direct Central
        Full-time AmeriCorps members:
        Part-time AmeriCorps members:
        Program Descriptions: City Year is a national non-profit with
    strong public-private partnerships, devoted solely to full time
    national service and the development of a diverse and well-trained
    corps. AmeriCorps Members serve in classrooms, run after school and
    school break programs, teach violence and HIV/AIDS prevention,
    rehabilitate public housing units and build parks and playgrounds.
    Members increase academic success through in school tutoring,
    increasing parental involvement and promoting conflict resolution. They
    increase civic responsibility by engaging children and youth in out-of-
    school activities and meet needs of local organizations through short
    term physical and human needs projects.

        Grantee: Colorado Governor's Commission on Nat'l & Community
    Service
        Subgrantee: Adams County School District 14
        Program Name: Community Action on Reading and Education
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members: 4
        Program Descriptions: Members serve as literacy instructors and
    tutors for children in grades 1, 2, 3, 6, and 9. They also launch a
    family literacy program, and provide instruction and tutoring to out-
    of-school youth. This program provides team based services in an urban
    community.

        Grantee: Colorado Governor's Commission on Nat'l & Community
    Service
        Subgrantee: Sheridan School District # 2
        Program Name: Sheridan Family Res. Center AmeriCorps
        Grant Type: State Program
        Full-time AmeriCorps members: 29
        Part-time AmeriCorps members: 1
        Program Descriptions: AmeriCorps Members tutor and mentor at-risk
    youth in the Sheridan School District. Members also implement
    interactive educational after-school and summer camp programs for
    students. Additionally, Members coordinate health promotion activities
    in the Sheridan School-Based Clinic.

        Grantee: Colorado Governor's Commission on Nat'l & Community
    Service
        Subgrantee: St. Andrew's Episcopal Church
        Program Name: The Children's Center for Arts and Learning
        Grant Type: Ed Award Only
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 2
        Program Descriptions: Members offer a free afterschool and summer
    program of arts instruction and tutoring for at-risk children.

        Grantee: Connecticut Commission on National and Community Service
        Subgrantee: Bridgeport Police Dept. Regional Youth/Adult Substance
    Abuse
        Project Program Name: Safe Neighborhood AmeriCorps Partnership,
    Year I
        Grant Type: State Program
        Full-time AmeriCorps members: 44
        Part-time AmeriCorps members: 96
        Program Descriptions: Members provide tutoring, mentoring, and
    community service projects through after-school programs for 100 youth
    in the East End, East Side and South End neighborhoods of Bridgeport.
    Members conduct home security assessments and installations for 200
    elderly residents, individuals with disabilities, and other vulnerable
    populations in 6 Bridgeport neighborhoods. Members also engage in
    community revitalization projects including planting community gardens,
    boarding up abandoned buildings, and installing ramps for physically
    challenged residents.

        Grantee: Connecticut Commission on National and Community Service
        Subgrantee: City of Meriden, Connecticut
        Program Name: City SERVE! AmeriCorps
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members:
        Program Descriptions: Members provide in-class support and after-
    school enrichment activities for 400 elementary school children.
    Members work one-on-one with the students to improve their reading and
    writing abilities. Members also provide enrichment activities for 8
    preschool classes to prepare them to succeed in school. In addition,
    Members provide after-school tutoring and mentoring for K-12 youth to
    help improve their academic achievement and improve their behavior.

        Grantee: Connecticut Commission on National and Community Service
        Subgrantee: Leadership, Education and Athletics in Partnership
        Program Name: LEAP
        Grant Type: State Program
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 280
        Program Descriptions: AmeriCorps Members tutor and mentor over
    1,100 inner-city children ages 7 through 16 in after-school programs.
    During the Summer months Members live in the housing developments where
    the children reside and provide structured activities throughout the
    day. The intensive tutoring and mentoring provided by the Members
    result in improved reading skills, increased self-esteem and better
    social behavior for 80 percent of the participating school-aged
    children. In addition, Members organize 300 community service
    activities for the children, their families and neighbors to
    participate in during the program year.

        Grantee: Connecticut Commission on National and Community Service
        Subgrantee: Volunteer Center of Greater Bridgeport (BIRA)
        Program Name: Bridgeport InterRegional AmeriCorps
        Grant Type: State Program
        Full-time AmeriCorps members: 30
        Part-time AmeriCorps members: 5
        Program Descriptions: AmeriCorps Members coordinate community
    volunteer programs at high schools and community-based organizations
    throughout the city of Bridgeport and its neighboring communities.
    Through their scattered-site placements Members provide in-school and
    after-school activities for K-12 children to increase math, reading and
    computer skills. Members also provide mentoring and after-school
    enrichment activities for youth ages 6-14 to improve academic and
    social skills, literacy skills training for adult learners and their
    children, and health and parenting education classes.

        Grantee: Connecticut Commission on National and Community Service
        Subgrantee: Community Action for Greater Middlesex County, Inc.
        Program Name: CAGMC AmeriCorps
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members: 8
        Program Descriptions: AmeriCorps members serve in 15 rural
    communities in Middlesex County where they tutor and mentor children in
    before, during, and after-school programs. Members also work with
    parents of young children providing them with assistance in accessing
    health care, and other services to help ensure a healthy start for
    their children.

        Grantee: Connecticut Commission on National and Community Service
        Subgrantee: Southend Community Services, Inc.
        Program Name: Hartford AmeriCorps
        Grant Type: State Program
        Full-time AmeriCorps members: 30
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps members serve in public elementary
    and middle schools in Hartford. They tutor children in English language
    arts, and provide assistance in after-school programs like homework
    clubs. Members also engage youth in service learning projects and
    recruit community volunteers to participate.

        Grantee: Delaware Community Service Commission
        Subgrantee: University of Delaware
        Program Name: First State Mentor Corps, CHEP
        Grant Type: State Program
        Full-time AmeriCorps members: 3
        Part-time AmeriCorps members: 63
        Program Descriptions: AmeriCorps Members participate in the state-
    wide initiative to enlist citizens to serve as one-on-one mentors.
    Members collaborate with RSVP participants to recruit and train
    volunteers to serve as mentors to 800 pre-kindergarten through middle
    school students. In addition, Members engage Delaware businesses in
    Adopt-A-School mentoring programs.

        Grantee: Educational Service District 112/Northwest Service
    Academy, Inc.
        Subgrantee: Northwest Service Academy/ESD112--Parent
        Program Name: Northwest Service Academy/ESD 112
        Grant Type: National Direct
        Full-time AmeriCorps members:
        Part-time AmeriCorps members:
        Program Descriptions: Educational Service District 112 serves
    largely as financial overseer of the three sites, provides in-kind
    staff support, and acts as an advisor on program-related decisions. The
    major responsibilities for program design, accomplishing objectives,
    day-to-day management and strategic planning rest with the Northwest
    Service Academy executive director and the site directors. AmeriCorps
    members at one residential and two non-residential sites restore
    Northwest watersheds, provide environmental education and academic
    reinforcement to schools, and help rebuild communities.

        Grantee: Florida Commission on Community Service
        Subgrantee: Centro Campesino
        Program Name: AmeriCorps Youth Pride
        Grant Type: State Program
        Full-time AmeriCorps members: 22
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps members tutor and mentor 250 low
    income youth ages 6 to 18 to ensure that 80 percent achieve grade level
    as measured by the Basic Reading Inventory. Members also provide after-
    school activities to 350 students to decrease school suspensions and
    detention among 90 percent of those served. Students' parents are
    encouraged to attend a Parent Club. Members serve in one of four school
    and two community-based sites. AmeriCorps YouthPride involves over 20
    adult mentors who volunteer 2,000 hours.

        Grantee: Florida Commission on Community Service
        Subgrantee: Academy for Better Communities--Barry University School
    of Social Work
        Program Name: Americorps Barry University
        Grant Type: State Program
        Full-time AmeriCorps members: 18
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps members provide individual and
    group social services to 900 elementary school children in order to
    decrease school absenteeism, detentions and suspensions by 24 percent,
    improve grades by 20 percent, and improve classroom behavior by 25
    percent. Members also provide to 450 parents classes and counseling
    sessions to improve parenting skills by 33 percent. Members serve in
    small teams at six elementary schools and middle schools in Dade
    County.

        Grantee: Florida Commission on Community Service
        Subgrantee: College of Fine Arts, USF
        Program Name: AmeriCorps Arts, USF
        Grant Type: State Program
        Full-time AmeriCorps members: 6
        Part-time AmeriCorps members: 18
        Program Descriptions: AmeriCorps members teach arts skills (dance,
    visual arts, theater, music, singing, etc.) in after-school programs to
    500 low income children ages 6 to 14. Members are assigned to one of
    nine Boys & Girls Club sites throughout Hillsborough County and serve
    in teams. Small teams of volunteers are utilized to support program
    activities through fund raising and assisting with service projects.
    There is a 10 week summer component.

        Grantee: Florida Commission on Community Service
        Subgrantee: Eckerd Family Youth Alternatives, Inc.
        Program Name: Americorps Hi-Five
        Grant Type: State Program
        Full-time AmeriCorps members: 14
        Part-time AmeriCorps members: 10
        Program Descriptions: AmeriCorps members tutor 90 elementary school
    students so that 75 percent will increase one grade level in the
    targeted subject area. Another 90 students will be provided conflict
    resolution training to reduce disciplinary referrals by 30 percent.
    Selected Members work with parents of students with chronic behavioral
    problems, students who are struggling academically, and students who
    are chronically absent from school so that 75 percent of the families
    will report increased knowledge of their child's academic progress and
    behavior in school. Members serve in one of three elementary schools
    and four after-school locations. Volunteers are also recruited to serve
    as mentors to at-risk students.

        Grantee: Florida Commission on Community Service
        Subgrantee: Lake County Board of Commissioners
        Program Name: Partners For Success
        Grant Type: State Program
        Full-time AmeriCorps members: 15
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps members tutor 200 K-2 academically
    at risk and under-achieving students to increase the reading ability by
    two grade levels of 80 percent of those participating. Members also
    provide out-of-school programs to 200 students to increase by 25
    percent the study skills of at least 60 of those students. Members
    serve at one of three elementary schools. AmeriCorps Partners for
    Success recruits and utilizes 50 community volunteers to collect books
    and read to students.

        Grantee: Frostburg State University
        Subgrantee: Frostburg State
        Program Name: Allen HallSTARS!
        Grant Type: Ed Award Only
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 80
        Program Descriptions: Members will tutor, mentor, and lead
    environmental activities for youth. Some member activities include
    taking part in the America Reads Challenge.

        Grantee: Georgia Commission for National and Community Service
        Subgrantee: Fannin County Family Connection (NPPSIS/Fiscal Agent)
        Program Name: AmeriCorps Service to Families in Fannin County
        Grant Type: State Program
        Full-time AmeriCorps members: 18
        Part-time AmeriCorps members: 4
        Program Descriptions: AmeriCorps members tutor 250 children in pre-
    school through middle school during school hours and after school to
    improve reading and math skills by \1/2\ grade level in 80 percent of
    students served. In addition, members mentor 30 middle-school students
    to increase school attendance and decrease behavior problems. Members
    also recruit community volunteers to deliver additional services to
    children.

        Grantee: Georgia Commission for National and Community Service
        Subgrantee: Southwest Georgia Easter Seal Society, Inc.
        Program Name: Easter Seal-AmeriCorps After School & Summer
    Enrichment
        Grant Type: State Program
        Full-time AmeriCorps members: 8
        Part-time AmeriCorps members: 20
        Program Descriptions: AmeriCorps members provide in-school and
    after-school tutoring, homework assistance, and supervised recreation
    for children with disabilities, their families, and their non-disabled
    peers in five southwest Georgia counties. In pre-school settings
    members develop and provide activities that support the growth and
    early development of children with disabilities from low-income
    families, and conduct parenting classes for these families. Members
    also assist program participants with daily living functions and
    provide them with opportunities for community service.

        Grantee: Georgia Commission for National and Community Service
        Subgrantee: City of Macon/Macon Police Department
        Program Name: MPD/AmeriCorps Cadet Program
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members: 5
        Program Descriptions: AmeriCorps members conduct bicycle patrols
    within five low-income/high crime neighborhoods in this community
    policing program. In addition, members conduct crime prevention
    activities and operate police athletic leagues and other enrichment
    services for at-risk youth. All activities are undertaken to reduce the
    fear of crime within targeted neighborhood and increase civic
    responsibility among neighborhood residents.

        Grantee: I Have A Dream Foundation, Inc.
        Subgrantee: I Have A Dream Foundation--New York
        Program Name: ``I Have a Dream'' Foundation-New York/AmeriCorps
        Grant Type: National Direct Sub
        Full-time AmeriCorps members: 3
        Part-time AmeriCorps members: 16
        Program Descriptions: The I Have a Dream Foundation (IHAD) model
    connects individuals who want to sponsor a group of children with
    neighborhood in need. An entire elementary school class or an age group
    in a housing project become ``Dreamers'' and receive academic and
    social support designed to see them through high school and into
    productive lives. Those Dreamers who graduate from high school are
    eligible for college or vocational school tuition assistance. Members
    enable (IHAD) sites to intensify their outreach to Dreamers, their
    families and the community. In addition to tutoring and mentoring,
    providing academic and social enrichment, members recruit and train
    community volunteers, organize family involvement activities and lead
    Dreamers in community service projects.

        Grantee: I Have A Dream Foundation, Inc.
        Subgrantee: I Have a Dream/AmeriCorps--Parent
        Program Name: ``I Have a Dream'' Foundation/AmeriCorps
        Grant Type: National Direct Sub
        Full-time AmeriCorps members:
        Part-time AmeriCorps members:
        Program Descriptions: The I Have a Dream Foundation (IHAD) model
    connects individuals who want to sponsor a group of children with
    neighborhood in need. An entire elementary school class or an age group
    in a housing project become ``Dreamers'' and receive academic and
    social support designed to see them through high school and into
    productive lives. Those Dreamers who graduate from high school are
    eligible for college or vocational school tuition assistance. Members
    enable (IHAD) sites to intensify their outreach to Dreamers, their
    families and the community. In addition to tutoring and mentoring,
    providing academic and social enrichment, members recruit and train
    community volunteers, organize family involvement activities and lead
    Dreamers in community service projects.

    Grantee: Iowa Commission on Community Service
        Subgrantee: Des Moines Public Schools--New Horizons Program
        Program Name: AmeriCorps Enterprise Community Service Project
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members:
        Program Descriptions: The AmeriCorps Enterprise Community Service
    Project utilizes 20 members to tutor more than 100 youth, renovate low-
    income houses, create community green spaces and organize neighborhood
    safety patrols. The program maintains a diverse member base and
    partnerships with government and community-based organizations.

        Grantee: Kentucky Commission for Community Volunteerism and Service
        Subgrantee: The City of Leitchfield
        Program Name: Tri-City Link
        Grant Type: State Program
        Full-time AmeriCorps members: 3
        Part-time AmeriCorps members: 14
        Program Descriptions: AmeriCorps members tutor and mentor students
    in grades 1-12 and engage classes in service-learning activities
    focused on environmental awareness. Individual tutoring decreases the
    high school drop-out rate of 125 students participating in the program
    hosted at Family Youth and Resource Centers in three counties. Members
    with Tri-City Link also provide community enrichment activities through
    structured quality after-school programs for youth, from recreation to
    cultural arts.

        Grantee: Lincoln University
        Subgrantee: Lincoln University
        Program Name: You Can Institute on Family Values & Rites of Passage
        Grant Type: Ed Award Only
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 20
        Program Descriptions: Members will launch a program to assist at-
    risk youth in the transition from adolescence to adulthood through a
    year long program including an after-school enrichment program.

        Grantee: Local Initiatives Support Corporation
        Subgrantee: New York LISC
        Program Name: New York City LISC AmeriCorps
        Grant Type: National Direct
        Full-time AmeriCorps members: 10
        Part-time AmeriCorps members:
        Program Descriptions: The Local Initiatives Support Corporation is
    a national non profit organization that provides funding and technical
    guidance to local Community Development Corporations (CDC's) which are
    rebuilding neighborhoods across the nation. Members engage in community
    revitalization activities including housing outreach and education, job
    training, youth education programs, neighborhood planning, and human
    services planning.

    Grantee: Louisiana Serve Commission
        Subgrantee: St. Mark's Community Center
        Program Name: AmeriCorps of New Orleans
        Grant Type: State Program
        Full-time AmeriCorps members: 45
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps Members tutor and mentor at-risk
    children, perform home repairs on a minimum of 30 low income homes,
    board up a minimum of 90 abandoned houses and help revitalize
    neighborhood green spaces and parks. In addition, the program works
    with local organizations to address the needs of children. These
    include working with homeless youth, teen parents and youth crisis
    services. Most Members serve in teams, although a few are single-site
    placements. Potential impacts of the program include, 80 percent of
    participating students will advance a minimum of one grade level in
    mathematics and reading skills, increased sense of security by
    residents and reduction in illegal activities, and allowing homeowners
    to remain in their homes and prevent further deterioration of the
    housing stock. This is an urban program.

        Grantee: Lower Mississippi Delta Service Corps
    Subgrantee: Center for Community Development, Delta State University
        Program Name: Mississippi Delta Service Corps
        Grant Type: National Direct
        Full-time AmeriCorps members: 70
        Part-time AmeriCorps members:
        Program Descriptions: The Lower Mississippi Delta Service Corps,
    Inc. (LMDSC) is a national non-profit, tri-state collaboration with
    partners in Louisiana, Arkansas, and Mississippi, whose mission is to
    provide effective management and governance of a regional national
    service corps. The Lower Mississippi Delta Service Corps, Inc., is
    committed to meeting the unique needs of the people of the Delta.
    AmeriCorps Members perform a variety of functions in the areas of
    education and human service. Activities include tutoring children and
    adults in literacy skills, serving in food banks, locating shelter and
    affordable housing for low income residents, and facilitating
    independent living for homebound. Members are placed individually or in
    small groups in host agencies throughout the Delta.

        Grantee: Lower Mississippi Delta Service Corps
    Subgrantee: Good Neighbor Center
        Program Name: Delta Service Corps
        Grant Type: National Direct
        Full-time AmeriCorps members: 60
        Part-time AmeriCorps members: 20
        Program Descriptions: The Lower Mississippi Delta Service Corps,
    Inc. (LMDSC) is a national non-profit, tri-state collaboration with
    partners in Louisiana, Arkansas, and Mississippi, whose mission is to
    provide effective management and governance of a regional national
    service corps. The Lower Mississippi Delta Service Corps, Inc., is
    committed to meeting the unique needs of the people of the Delta.
    AmeriCorps Members perform a variety of functions in the areas of
    education and human service. Activities include tutoring children and
    adults in literacy skills, serving in food banks, locating shelter and
    affordable housing for low income residents, and facilitating
    independent living for homebound. Members are placed individually or in
    small groups in host agencies throughout the Delta.

        Grantee: Lower Mississippi Delta Service Corps
        Subgrantee: Louisiana Delta Service Corps Inc.
        Program Name: Louisiana Delta Service Corps
        Grant Type: National Direct
        Full-time AmeriCorps members: 57
        Part-time AmeriCorps members: 20
        Program Descriptions: The Lower Mississippi Delta Service Corps,
    Inc. (LMDSC) is a national non-profit, tri-state collaboration with
    partners in Louisiana, Arkansas, and Mississippi, whose mission is to
    provide effective management and governance of a regional national
    service corps. The Lower Mississippi Delta Service Corps, Inc., is
    committed to meeting the unique needs of the people of the Delta.
    AmeriCorps Members perform a variety of functions in the areas of
    education and human service. Activities include tutoring children and
    adults in literacy skills, serving in food banks, locating shelter and
    affordable housing for low income residents, and facilitating
    independent living for homebound. Members are placed individually or in
    small groups in host agencies throughout the Delta.

        Grantee: Lower Mississippi Delta Service Corps
        Subgrantee: Lower Mississippi Delta Service Corps, Inc.--Parent
        Program Name: Lower Mississippi Delta Svc Corps, Inc
        Grant Type: National Direct
        Full-time AmeriCorps members:
        Part-time AmeriCorps members:
        Program Descriptions: The Lower Mississippi Delta Service Corps,
    Inc. (LMDSC) is a national non-profit, tri-state collaboration with
    partners in Louisiana, Arkansas, and Mississippi, whose mission is to
    provide effective management and governance of a regional national
    service corps. The Lower Mississippi Delta Service Corps, Inc., is
    committed to meeting the unique needs of the people of the Delta.
    AmeriCorps Members perform a variety of functions in the areas of
    education and human service. Activities include tutoring children and
    adults in literacy skills, serving in food banks, locating shelter and
    affordable housing for low income residents, and facilitating
    independent living for homebound. Members are placed individually or in
    small groups in host agencies throughout the Delta.

        Grantee: Maryland Governor's Office on Service & Volunteerism
        Subgrantee: University of Maryland at Baltimore
        Program Name: Enhancing Neighborhood Action By Local Empowerment
        Grant Type: State Program
        Full-time AmeriCorps members: 38
        Part-time AmeriCorps members: 240
        Program Descriptions: AmeriCorps Members, conduct health
    assessments and monitor clinical symptoms for persons with chronic
    illnesses, and provide the HIPPY (Home Instruction Program for
    Preschool Youngsters) and other pre-school readiness programs. In
    addition, Members provide after-school literacy tutoring for 500 2nd
    and 3rd grade students, and reduce environmental risks for children and
    families by educating residents about reducing lead hazards in their
    homes and establishing recycling programs. Members serve in teams
    organized around the 4 separate initiatives: Community Health, Early
    Childhood Development, Reading Edge, and Healthy Environment. Through
    the Reading Edge initiative, Members also provide literacy tutoring to
    1000 K-3 children in summer camps.

        Grantee: Maryland Governor's Office on Service & Volunteerism
        Subgrantee: Frostburg State University (A STAR in Western MD)
        Program Name: A STAR! in Western MD (Appalachian Service Through
    Action & Resource)
        Grant Type: State Program
        Full-time AmeriCorps members: 32
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps Members provide independent living
    assistance, with a focus on preventive health, shelter and housing
    support, to families, children, and the elderly, create and implement
    youth literacy programs and other after-school educational programs,
    and conduct environmental preservation projects. Members create green
    spaces, implement recycling programs, partner with Habitat for Humanity
    to construct low-income housing, and reduce environmental risks in
    homes by conducting home safety assessments including tests for water
    contamination and radon. Through an alliance of community-based
    organizations in Western Maryland, Members are scattered throughout the
    region performing a wide-variety of services.

        Grantee: Maryland Governor's Office on Service & Volunteerism
        Subgrantee: Salisbury State University
        Program Name: Partnership for Adolescents on the Lower Shore
        Grant Type: State Program
        Full-time AmeriCorps members: 23
        Part-time AmeriCorps members: 9
        Program Descriptions: AmeriCorps Members tutor and mentor at-risk
    adolescents on the Lower Eastern Shore of Maryland. In addition,
    Members improve the life and parenting skills of pregnant and parenting
    teens through health education. Members also conduct health screenings
    and health education events, and provide conflict resolution training
    for adolescents. Members will help improve the educational achievement
    and school success of adolescents as measured by an increase in grade
    point average and a reduction of school reports of violence,
    expulsions, and suspensions.

        Grantee: Maryland Governor's Office on Service & Volunteerism
    Subgrantee: Dept. of Natural Resources--Maryland Conservation Corps
        Program Name: United Youth Corps of MD (UCOM)
        Grant Type: State Program
        Full-time AmeriCorps members: 142
        Part-time AmeriCorps members: 100
        Program Descriptions: AmeriCorps Members maintain and restore state
    forests, parks, and wildlife management areas. Members rehabilitate
    abandoned houses, construct community parks and gardens in low-income
    Baltimore neighborhoods, and tutor students with special needs. In
    addition, Members develop after-school programs where middle school
    students perform community service and participate in environmental
    education activities.

        Grantee: Maryland Governor's Office on Service & Volunteerism
        Subgrantee: Action for the Homeless, Inc.
        Program Name:
        Grant Type: State Program
        Full-time AmeriCorps members: 35
        Part-time AmeriCorps members: 26
        Program Descriptions: AmeriCorps Members help 5,000 homeless and
    near homeless households obtain access to service providers. Members
    also help 1,250 homeless and near homeless families to obtain permanent
    housing or to prevent from being evicted. In addition, Members operate
    a Summer camp program for 320 at-risk homeless youth in Baltimore and
    coordinate after-school service-learning clubs for 10,000 students. The
    Adopt-A-Shelter program is one example of the partnerships forged
    between local schools and shelters.

        Grantee: Maryland Governor's Office on Service & Volunteerism
        Subgrantee: Governor's Office--Volunteer Maryland
    Program Name: Volunteer Maryland
        Grant Type: State Program
    Full-time AmeriCorps members: 40
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps Members develop volunteer programs
    and management systems in community-based organizations and public
    agencies. They mobilize and supervise volunteers who provide direct
    service to communities in need. Sample projects include rehabilitating
    low-income housing for families, tutoring programs for school-age
    children, and preserving public land along Maryland's rivers.

        Grantee: Maryland Governor's Office on Service & Volunteerism
        Subgrantee: Anne Arundel Community College--# 2
        Program Name: Campus Corps
        Grant Type: State Program
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 48
        Program Descriptions: AmeriCorps Members coordinate service
    learning activities at 15 community colleges for 1500 community college
    students. Each of the students will engage in an average of 15 hours of
    service to benefit their communities. In addition, Members create
    cascading volunteer programs in which community college students train
    high students to tutor elementary school students.

        Grantee: Massachusetts Service Alliance
        Subgrantee: Cambridge Community Services
        Program Name: Cambridge Community Service, Inc.
        Grant Type: State Program
        Full-time AmeriCorps members: 2
        Part-time AmeriCorps members: 18
        Program Descriptions: AmeriCorps members run academic enrichment
    programs, focusing on literacy and the use of technology, for 200 pre-
    teens (grades 3-8) and new immigrant high school youth. Members serve
    in teams at 8 after-school and summer enrichment programs. Members also
    coordinate service-learning projects for the youth at each of the 8
    sites. At least 75 percent of the students involved will demonstrate
    improved academic skills and knowledge as measured by pre-post tests.

        Grantee: Massachusetts Service Alliance
        Subgrantee: Lawrence Family Development and Education Fund, Inc.
        Program Name: City C.O.R.E.
        Grant Type: State Program
        Full-time AmeriCorps members: 35
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps Members serve as teachers'
    assistants and tutors for elementary school children in an effort to
    improve teacher capacity and increase academic performance. Members
    also provide in-school and after-school literacy programs for K-3
    students reading below grade level, and coordinate after-school
    service-learning activities for school students. School and community
    volunteers are generated to help run the literacy programs and service-
    learning activities focusing on healthy living, the environment and
    watershed revitalization. As a result of these services more students
    will reach grade level in reading skills and demonstrate an increased
    knowledge of issues relating to the service projects they perform.

        Grantee: Massachusetts Service Alliance
        Subgrantee: City Year Boston
        Program Name: City Year Boston
        Grant Type: State Program
        Full-time AmeriCorps members: 249
        Part-time AmeriCorps members: 32
        Program Descriptions: AmeriCorps Members tutor and mentor inner-
    city children in public elementary and middle schools throughout
    Boston. Members serve over 10,000 young people by providing in-class
    assistance, after-school and weekend programs, camps during school
    vacations and the Young Heroes program. Members coordinate 25
    ``legacy'' service projects, including vacant lot clean-ups, community
    gardens and rehabilitating low-income housing. Over 1000 community
    volunteers participate in these projects. In addition, Members partner
    with local organizations such as the American Red Cross and Peace at
    Home to conduct health awareness, HIV/AIDS prevention, and violence
    prevention workshops for young people.

        Grantee: Massachusetts Service Alliance
        Subgrantee: Franklin County DIAL/SELF
        Program Name: GAP Youth-Corps
        Grant Type: State Program
        Full-time AmeriCorps members: 11
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps Members provide support services
    to at least 60 homeless, runaway, and other at-risk youth. Members work
    with the participating youth to develop individual working plans and
    track progress made toward those plans. Members also facilitate
    prevention and support groups for at least 150 youth focusing on issues
    such as HIV/AIDS, drug use, smoking, self esteem, and parenting skills,
    and provide after-school programs for school-aged youth which provide
    tutoring academic enrichment, and recreational activities.

        Grantee: Massachusetts Service Alliance
        Subgrantee: Greater Holyoke Foundation, Inc.
        Program Name: Greater Holyoke Youth Services
        Grant Type: State Program
        Full-time AmeriCorps members: 24
        Part-time AmeriCorps members:
        Program Descriptions: Members serve in 6 Community Policing
    Substations in targeted neighborhoods. They coordinate crime prevention
    initiatives including crime watches, open houses, gang and drug
    awareness training, and personal safety training. Members operate
    after-school service programs for 60 8-15 year olds providing them with
    structured activities and a safe place during out-of-school time.
    Members also coordinate service activities for 40 first-time juvenile
    offenders through the Juvenile Diversion Progam.

        Grantee: Massachusetts Service Alliance
        Subgrantee: University of Massachusetts Boston, (CAPAY) Institute
    for Asian American Studies
        Program Name: CAPAY Community YouthLearn AmeriCorps Program
        Grant Type: State Program
        Full-time AmeriCorps members: 1
        Part-time AmeriCorps members: 17
        Program Descriptions: AmeriCorps Members tutor and mentor 350 Asian
    Pacific American youth in after-school programs. In addition, Members
    tutor adults in ESL and serve as reading tutors in a family literacy
    program. Members also recruit youth to volunteer in community and
    school success service projects.

        Grantee: Massachusetts Service Alliance
        Subgrantee: B.E.L.L. Foundation/BASICS
        Program Name: BASIC's
        Grant Type: State Program
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 50
        Program Descriptions: Fifty part-time AmeriCorps Members tutor and
    mentor elementary school children during the school year and the summer
    holidays. Members use the BASICS curriculum to increase children's
    knowledge and mastery of reading, writing, and arithmetic skills,
    enhance self-esteem, and strengthen communication between parents and
    teachers. Members engage children in a 6-week summer camp where the
    skills learned during the school year are reinforced and built upon.

        Grantee: Massachusetts Service Alliance
        Subgrantee: YouthBuild Boston, Inc.
        Program Name: YouthBuild Boston
        Grant Type: State Program
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 50
        Program Descriptions: Members rehabilitate 6 units of previously
    abandoned housing so that 6 low-income and/or homeless families have
    access to affordable housing and the opportunity to be first time
    homeowners. Members also operate an after school and summer enrichment
    program for at-risk youth. Up to 300 youth receive tutoring an
    mentoring so that 80 percent demonstrate an increase in academic
    success and self-esteem, as measured by parent and teacher feedback.
    Members also engage in community service projects where they work in
    partnership with local non-profits to rehabilitate and repair
    facilities where community based organizations are based.

        Grantee: Massachusetts Service Alliance
        Subgrantee: Worcester Community Action Council
        Program Name: CITYWORKS
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps Members serve as school-based
    literacy tutors for 40 public school students in grades K through 4.
    Members also operate ESL programs and adult basic education sessions at
    low income housing developments for adults. In addition, Members
    increase the usage of city parks by removing safety hazards and
    conducting community watch programs.

        Grantee: Massachusetts Service Alliance
        Subgrantee: Health and Education Services, Inc.
        Program Name: AmeriCorps Victim Assistance Linkages & Enhancements
        Grant Type: State Program
        Full-time AmeriCorps members: 6
        Part-time AmeriCorps members: 8
        Program Descriptions: AmeriCorps Members provide crisis
    intervention, information and referral services to victims of crime.
    Member referrals result in 400 linkages to regional health care
    organizations. In addition, Members provide hotline and in-person
    counseling to residents of the North Shore communities. Members conduct
    presentations to school children and community members to increase
    awareness about issues such as physical and sexual abuse and the wide
    range of services that are available. Members also work with
    established community partners to build a coordinated approach to
    victim assistance.

        Grantee: Massachusetts Service Alliance
        Subgrantee: Just A Start Corporation
        Program Name: YouthBuild Just A Start Program
        Grant Type: State Program
        Full-time AmeriCorps members: 1
        Part-time AmeriCorps members: 40
        Program Descriptions: AmeriCorps Members serve in teams to renovate
    and rehabilitate 10 to 15 affordable housing units for low income
    families, provide major renovations to 3 to 5 units for sale to first-
    time home buyers, and upgrade public hallways and exterior painting to
    185 units of public housing. In addition, Members tutor, mentor, and
    provide after-school activities to at least 100 6-14 year old low-
    income children.

        Grantee: Massachusetts Service Alliance
        Subgrantee: People Acting in Community Endeavors, Inc.
        Program Name: YouthBuild New Bedford
        Grant Type: State Program
        Full-time AmeriCorps members: 10
        Part-time AmeriCorps members: 20
        Program Descriptions: AmeriCorps Members rehabilitate two community
    centers and renovate an abandoned home for a low-income family. In
    addition, Members mentor 75 elementary school students during in-school
    and after-school programs. The students participate in academic and
    recreational activities.

        Grantee: Massachusetts Service Alliance
        Subgrantee: The Student Conservation Association
        Program Name: c/o SCA, Inc.
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps Members, based at a rustic
    residential camp in Western Massachusetts, revitalize neighborhoods by
    restoring green spaces, creating community gardens and other community
    recreational areas, and assist in revitalizing and protecting natural
    resource areas, state and local parks and riverways. In addition,
    Members assist community organizations with the elimination of
    environmental hazards and reduce environmental risks for youth. During
    the winter months, Members serve as in-school assistants, providing
    environmental and conservation instruction and service learning
    activities, and mentors to 400 to 800 school-aged youth.

        Grantee: Michigan Community Service Commission
        Subgrantee: Oakland University
        Program Name: Oakland University
        Grant Type: State Program
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 40
        Program Descriptions: The Oakland University AmeriCorps program
    provides reading/literacy and life skills training for youth and
    families. The program provides year-round support for youth through
    educational programs including a Character Education curriculum that
    focuses on topics such as respect, trustworthiness, responsibility and
    citizenship. Members conduct workshops with parents to encourage
    parents to read with their children at home. Members serve on teams in
    elementary and junior high schools. This program serves an urban
    population.

        Grantee: Michigan Community Service Commission
        Subgrantee: The Regents of The University of Michigan
        Program Name: The Michigan Neighborhood AmeriCorps Program
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members: 50
        Program Descriptions: The Michigan Neighborhood AmeriCorps program
    strengthens the social development of children and families in Detroit
    neighborhoods through violence prevention workshops, after-school and
    summer programs, and increased access to health education and health
    promotion services. Members will serve in teams. This program serves an
    urban population.

        Grantee: Michigan Community Service Commission
        Subgrantee: United Way Community Services
        Program Name: Detroit's Academic Success Project
        Grant Type: State Program
        Full-time AmeriCorps members: 25
        Part-time AmeriCorps members:
        Program Descriptions: The Detroit Academic Success Program
    increases the academic achievement and reading comprehension of youth
    in kindergarten through fifth grade in Detroit's Empowerment Zone. The
    program infuses service learning as an instructional method, while
    building lasting partnerships between schools and communities to create
    an educational environment supportive of academic excellence.
    AmeriCorps members placed in five elementary schools located in
    Detroit's Empowerment Zone provide tutoring to low achieving students,
    enrichment and academic support workshops to parents, and develop
    service learning curriculum in math English and science. This program
    plans to serve 3,000 students.

        Grantee: Mid-Atlantic Network of Youth & Family Services, Inc.
        Subgrantee: Mid-Atlantic Network of Youth & Family Services--Parent
        Program Name: Mid-Atlantic Network of Youth & Family Services
    (MANYCorps)
        Grant Type: National Direct Sub
        Full-time AmeriCorps members:
        Part-time AmeriCorps members:
        Program Descriptions: The Mid-Atlantic Network of Youth and Family
    Services (MANY) is a regional network of 50 community-based agencies
    providing services to runaway, homeless and other youth in high-risk
    situations. MANY provides coordination, training, and technical
    assistance to affiliates in six states. AmeriCorps Members tutor and
    mentor runaway, homeless and at-risk youth. They lead after school and
    summer education and enrichment programs, teach independent living,
    engage in intergenerational projects such as renovation of facilities
    for use by the elderly, build recreational facilities for adventure-
    based programming, conduct drug and alcohol prevention workshops, and
    organize volunteers for Big Brothers/Big Sisters.

        Grantee: Mississippi Commission for National and Community Service
        Subgrantee: North MidTown Community Development Corporation
        Program Name: AmeriCorps Assist
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members: 10
        Program Descriptions: AmeriCorps members serve the North Midtown
    community of Jackson through home renovations, adult education
    tutoring, after-school tutoring, and health care assistance. Divided in
    four teams, the housing renovation team rehabilitates 15 sub-standard
    homes, the child care team provides parent supportive services for 36
    children, the health care team assists the medical clinic in offering
    health education seminars, the adult education team recruits and tutors
    60 welfare recipients in attainment of their GED, and after-school team
    tutors children to increase their reading levels.

        Grantee: Mississippi Commission for National and Community Service
        Subgrantee: Campus Link--AmeriCorps formula
        Program Name: Campus Link
        Grant Type: State Program
        Full-time AmeriCorps members: 15
        Part-time AmeriCorps members: 20
        Program Descriptions: AmeriCorps members tutor 500 under-achieving
    elementary school students from fourteen partnering schools in order to
    increase the reading comprehension two levels for 75 percent of those
    students participating, as well as increase the students' self-esteem
    and motivation for reading. The fifteen full-time and twenty part-time
    members serve in pairs at 10 university campuses throughout Mississippi
    via existing or newly established Campus Service Centers. Volunteer
    generation is a key component of this program--members are certified as
    reading tutors and recruit and train 500 volunteers who contribute
    17,000 hours of tutoring through this program.

        Grantee: Mississippi Commission for National and Community Service
        Subgrantee: Mississippi Institutions of Higher Learning
        Program Name: Learning Experiences for Adults to Develop
    Employability Related Skills
        Grant Type: State Program
        Full-time AmeriCorps members: 8
        Part-time AmeriCorps members: 12
        Program Descriptions: AmeriCorps members assist 345 out-of-school,
    unemployed 16-25 year olds in their preparation for employment
    opportunities. Through skill building and experiential community
    problem solving, the LEYDERS program focuses on alternative methods to
    improving marketable key competencies, interpersonal social skills, and
    thinking skills such that 229 youth participate in community problem
    solving activities and 25 youth are placed in jobs related to their
    career education plan.

        Grantee: Mississippi Department of Education
        Subgrantee: Mississippi Department of Education
        Program Name: Volunteer Assistant Teachers Train to Become Teachers
        Grant Type: Ed Award Only
        Full-time AmeriCorps members: 200
        Part-time AmeriCorps members:
        Program Descriptions: Members will serve as assistant teachers,
    tutoring to raise literacy levels and receiving more training to better
    their abilities.

        Grantee: Missouri Community Service Commission
        Subgrantee: American Youth Foundation (Education Program)
        Program Name: St. Louis Partners AmeriCorps--Education
        Grant Type: State Program
        Full-time AmeriCorps members: 30
        Part-time AmeriCorps members: 12
        Program Descriptions: AmeriCorps Members tutor elementary and
    middle school children, and assist teachers in developing projects in
    literacy, the environment, first aid and personal safety, and substance
    abuse prevention. Activities are structured at six sites, continue into
    an extended literacy program, and lead into a Summer Literacy
    Institute. This is a team-based program which serves an urban community
    in St. Louis.

        Grantee: Montana Community Services Advisory Council
        Subgrantee: The University of Montana
        Program Name: The Montana Campus Corps
        Grant Type: State Program
        Full-time AmeriCorps members: 3
        Part-time AmeriCorps members: 32
        Program Descriptions: AmeriCorps members recruit and place students
    from Montana colleges to provide tutoring and mentoring to at-risk
    students.

        Grantee: National Assoc. of Child Care Resource & Referral
    Agencies, Inc.
        Subgrantee: National Association of Child Care Res Referral
    Agencies--Parent
    Program Name: National Association of Child Resource and Referral
    Agencies
        Grant Type: National Direct Central
        Full-time AmeriCorps members:
        Part-time AmeriCorps members:
        Program Descriptions: The National Association of Child Care
    Resource and Resource (NACCRRA) and Referral Agencies promotes the
    growth and development of high quality resource and referral services;
    and exercises national policy leadership to build a diverse, high
    quality child care system with parental choice and equal access for all
    families. AmeriCorps members build community stability by improving the
    quality and availability of infant/toddler and school age child care.
    Members work directly with families, children, child care providers and
    the community by serving in child care settings, provide trainings to
    child care providers, consult with child care centers on program
    improvements, provide resource materials to families, and help families
    obtain education, health care, and other services.

        Grantee: National Council of Churches of Christ
        Subgrantee: Ecumenical Program for Urban Service (EPRUS)--Parent
        Program Name:
        Grant Type: National Direct
        Full-time AmeriCorps members:
        Part-time AmeriCorps members:
        Program Descriptions: The National Council of the Churches of
    Christ is the nation's largest ecumenical organization. The Council's
    mission is to support its member denominations and churches in working
    toward social, economic and racial justice. The Council received a
    National Direct grant in 1994. AmeriCorps Members serve in schools and
    community organizations in low-income neighborhoods, primarily offering
    tutoring and mentoring support, leading after-school recreation and
    enrichment activities, assisting runaway and homeless youth, providing
    drug abuse prevention and other healthy lifestyle information, and
    delivering gang prevention and intervention assistance.

        Grantee: Nebraska Volunteer Service Commission
        Subgrantee: Community Action of Nebraska, Inc.
        Program Name: Community Action of Nebraska
        Grant Type: State Program
        Full-time AmeriCorps members: 33
        Part-time AmeriCorps members:
        Program Descriptions: Community Action of Nebraska is a statewide
    program that implements conflict resolution training for in-class
    training and for youth groups, enhances the educational performance of
    at-risk youth through tutoring, and works with Head Start programs to
    teach conflict resolution skills. Members also recruit and train
    volunteers. Most of the members serve in teams ranging from two to ten
    Members. Some Members serve at individual placement sites. Potential
    outcomes of the program are an increase in conflict resolution skills,
    a reduction of detentions, suspensions, fights and expulsions in
    schools establishing peer mediation programs, and an increase in the
    academic performance of students being tutored. This program serves
    both rural and urban youth.

        Grantee: Nebraska Volunteer Service Commission
        Subgrantee: Lincoln-Lancaster County Health Department
        Program Name: Lincoln-Lancaster County Health Dept.
        Grant Type: State Program
        Full-time AmeriCorps members: 18
        Part-time AmeriCorps members:
        Program Descriptions: The Comprehensive School Health Initiative
    integrates health education into academics. The program works directly
    with students, parents, educators, and community members to enrich
    educational opportunities, provide outreach and mentoring to encourage
    the adoption of healthy lifestyles, and cultivate the creation of
    school and community partnerships. Members will serve in teams and
    individually during the course of the program year. Potential impacts
    of the program include an increase in academic achievement by the
    students being tutored, the availability of after school programming
    for youth that will provide a safe and academically enriching
    environment, and increased parental involvement in school and community
    activities. This program serves an urban population.

        Grantee: New Hampshire College and University Council
        Subgrantee: NH College and University Council
        Program Name: Campus Compact for New Hampshire
        Grant Type: Ed Award Only
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 75
        Program Descriptions: Members enhance and expand service-learning
    programs at 15 Institutions of Higher Education to meet the needs of
    children and youth across NH. Coordinate 60 community service-learning
    partnerships which engage in appropriate activities, incl. America
    Reads.

        Grantee: New Hampshire Job Training Council
        Subgrantee: Tri-County Community Action Program, Inc.
        Program Name: Natural Resource Conservation & Development Area
    Council
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps members serve in single site
    placements throughout the North Country region of rural NH. Members
    target specific community needs in the areas of education and other
    human needs. Members develop and implement service-learning
    opportunities for 200-300 youth in grades K-14; tutor 200 youth and
    adults in basic academic skills; develop and provide well health
    services and programs to 500 families; and support community health
    agencies in such areas as coordinating cancer screenings, facilitating
    immunizations, disseminating preventative health literature, and
    securing pharmaceutical samples for low income clients. Members will
    strive to sustain this support by generating volunteers and by
    initiating collaborations among the various programs.

        Grantee: New Jersey Commission on National and Community Service
        Subgrantee: NJ Department of Education (Urban Schools Service
    Corps)
        Program Name: USSC Administrator
        Grant Type: State Program
        Full-time AmeriCorps members: 75
        Part-time AmeriCorps members: 10
        Program Descriptions: AmeriCorps Members serve community schools in
    eight New Jersey school districts. Members provide safe havens for
    children by extending the school day where they tutor children and run
    after-school programs. Members also provide in-class academic support
    and mentoring activities aimed at improving math, science and literacy
    skills. The program aims to improve the school success of 80 percent of
    600 students served in eight districts.

        Grantee: New Jersey Commission on National and Community Service
        Subgrantee: New Jersey Dept. of Human Services--Youth Corps
        Program Name:
        Grant Type: State Program
        Full-time AmeriCorps members: 80
        Part-time AmeriCorps members: 51
        Program Descriptions: AmeriCorps Members serve in five teams
    assigned to five sites that focus on a distinct issue area. One site
    emphasizes school success through teaching and motivating children at
    the Jersey Explorer Museum. Another site concentrates on violence
    prevention through mediation in public schools. A third site focuses on
    community revitalization by rebuilding neighborhoods and parks. At the
    last site, members provide meals to the homebound in an effort to
    increase independent living.

        Grantee: New Jersey Commission on National and Community Service
        Subgrantee: A+ for Kids Teacher Network, Inc.
        Program Name: Mercer County Reads Literacy Program
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members:
        Program Descriptions: Twenty AmeriCorps members provide literacy
    tutoring to 190 students at the district's most troubled school; they
    also provide after-school homework assistance and run a summer reading
    lab. Members provide tutoring and mentoring services to children and
    parents in transitional housing with an emphasis on employability
    skills for parents. The program brings at least 50 percent of the
    children who receive literacy tutoring up to grade level.

        Grantee: New Jersey Commission on National and Community Service
        Subgrantee: Catholic Community Services
        Program Name: C.C.S AmeriCorps
        Grant Type: State Program
        Full-time AmeriCorps members: 21
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps members tutor and mentor children
    who are homeless or in crisis. Members also provide case management
    services to clients living in shelters in the areas of public
    assistance, job readiness skills, health care and living skills. As a
    result, 80 students per shelter are tutored, 20 preschool children
    participate in school readiness activities, and 70 families are
    assisted.

        Grantee: New Jersey Commission on National and Community Service
        Subgrantee: International Institute of New Jersey
        Program Name: ``Bringing New Jersey Together''
        Grant Type: State Program
        Full-time AmeriCorps members: 9
        Part-time AmeriCorps members: 16
        Program Descriptions: AmeriCorps Members work with immigrants from
    seven nationalities to (1) improve the academic performance of
    children, (2) assist families to access mainstream human service and
    health care delivery systems, and (3) resolve problems experienced by
    victims of bias crime and housing related violations. Goals include
    improved grades for 450 of the tutored children and improved
    satisfaction by 675 people from the serviced populations.

        Grantee: New Jersey Commission on National and Community Service
        Subgrantee: Urban League of Hudson County
        Program Name: AmeriCorps Problem Solvers
        Grant Type: State Program
        Full-time AmeriCorps members: 5
        Part-time AmeriCorps members: 36
        Program Descriptions: AmeriCorps Members who are parents serve as
    teaching assistants in day care classes, deliver community outreach
    literacy programs, assist with recycling and beautification efforts and
    lead substance abuse prevention activities.

        Grantee: New Jersey Commission on National and Community Service
        Subgrantee: Red Bank Borough Board of Education
        Program Name:
        Grant Type: State Program
        Full-time AmeriCorps members: 10
        Part-time AmeriCorps members: 10
        Program Descriptions: AmeriCorps Members support the success and
    achievement of 150-200 school-aged children, particularly in math and
    reading. Members provide in-class support, after-school tutoring, group
    mentoring, and safe havens for youth. Additionally, Members increase
    the number of community volunteers who work with students. Goals
    include increasing math and reading scores by 10 percent, increasing
    attendance while decreasing the numbers of students suspended, and
    increasing volunteer participation.

        Grantee: New Jersey Commission on National and Community Service
        Subgrantee: St. Paul's Community Development Corp.
        Program Name: City SERVE AmeriCorps
        Grant Type: State Program
        Full-time AmeriCorps members: 15
        Part-time AmeriCorps members: 20
        Program Descriptions: AmeriCorps Members provide literacy and ESL
    training for low-income adults, reading improvement for homeless
    elementary school children, after-school and summer programming for
    teens, and family literacy activities that raise parents' awareness
    about the need for early literacy development. As a result of these
    efforts, 50 children will show an increase of 25 percent in reading
    improvement, low income adults will show a grade level improvement in
    their basic education skills, 50 teens will demonstrate increased
    motivation to stay in school, and parents will show increased self
    confidence in their work with children.

        Grantee: New Jersey Commission on National and Community Service
        Subgrantee: New Jersey Statewide Initiative
        Program Name: NJ Reads (America Reads)
        Grant Type: America Reads
        Full-time AmeriCorps members: 27
        Part-time AmeriCorps members: 18
        Program Descriptions: This is a statewide initiative where 45
    AmeriCorps members recruit and train 450 volunteers (10 per member) to
    assist with tutoring, mentoring and family literacy. Members and
    volunteers tutor and mentor 900 K-3 students to bring the reading
    abilities of 80 percent of the 900 students targeted up to or above
    grade level.

        Grantee: New Jersey Commission on National and Community Service
        Subgrantee: New Jersey Commission--PF
        Program Name:
        Grant Type: Promise Fellows
        Full-time AmeriCorps members: 15
        Part-time AmeriCorps members:
        Program Descriptions: Fellows will serve as coordinators of
    Communities of Promise projects in 21 New Jersey counties. Service
    activities will include expanding the KidCare program that provides
    health care coverage for every child, promoting service learning for
    inner city youth and K-12 students, and establishing after-school
    mentoring programs for children. Anticipated outcomes are 5,000
    children enrolled in heath care coverage, 2,500 youth participate in
    service learning projects, and 500 youth involved in mentoring
    programs. Fellows will be placed in Volunteer Centers across New
    Jersey.

        Grantee: New Mexico Commission for National and Community Service
        Subgrantee: National Indian Youth Leadership Development Project
    Inc.
        Program Name:
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members: 8
        Program Descriptions: 30 AmeriCorps members will serve in eight
    schools and two hospitals. Members will provide direct tutoring
    services, and will coordinate cross-age tutoring and mentoring
    activities for children K-8. Service activities will take place in
    eight schools and two hospitals, and will also take place on weekends
    and evenings. Additionally, members will host a four week summer
    literacy camp. In the schools, members will serve in teams of two or
    three.

        Grantee: New Mexico Commission for National and Community Service
        Subgrantee: Families and Youth
        Program Name: Families and Youth, Inc.--CARAS Program
        Grant Type: State Program
        Full-time AmeriCorps members: 25
        Part-time AmeriCorps members: 19
        Program Descriptions: AmeriCorps Members tutor and mentor at-risk
    students. Working in three teams, Members will provide an alternative
    education program to youth ages 11-17 who have been suspended or
    expelled from school, develop reading skills and parental reading
    support among elementary students grades K-3 who are reading below
    grade level, or provide homework assistance and mentoring in class and
    in an after-school homework club for middle school students who have a
    history of incomplete assignments. This program will operate in city of
    Las Cruces.

        Grantee: New York Office of National and Community Service
        Subgrantee: New York Restoration Project
        Program Name: Don't Trash New York
        Grant Type: State Program
        Full-time AmeriCorps members: 30
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps members focus on environmental
    clean-up in New York City. Members clean, create, restore and maintain
    350 acres of parkland; provide neighborhood ecology at 2 outdoor
    science learning facilities for 1000 students; build a boat with
    community students; engage community leaders in the creation of a plan
    for sustainability; and link public spaces to the public education
    system.

        Grantee: New York Office of National and Cummunity Service
        Subgrantee: Schenectady County Job Training Agency
        Program Name: The Schenectady Bridge Builders
        Grant Type: State Program
        Full-time AmeriCorps members: 29
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps Members serve in teams to tutor
    students in grades K-3; mentor youth in after school programs in
    conflict resolution, personal safety, and drug resistance; rehabilitate
    2 single family low income houses; and construct community paths and
    revitalize nature trails. As a result of the tutoring services provided
    to 2000 students and family members, ninety five percent of the
    participating students will be able to read independently by age 8.
    Additionally, forty percent of parents will complete activities at home
    to strengthen student reading skills. Three hundred youth will learn
    new skills improve their attitudes and behavior. Two low or moderate
    income families will own newly renovated homes, not otherwise available
    to them. The community parks will be more accessible to the public as
    well as to the disabled community. Volunteers will contribute 100 hours
    to a greenhouse and community gardens.

        Grantee: New York Office of National and Community Service
        Subgrantee: Phoenix House Foundation, Inc.
        Program Name: New York State Substance Abuse Service Program
        Grant Type: State Program
        Full-time AmeriCorps members: 85
        Part-time AmeriCorps members:
        Program Descriptions: The Phoenix House AmeriCorps program expands
    and improves the network of substance abuse and alcohol treatment/
    prevention services available to New Yorkers. Members assist various
    communities by developing linkages between treatment providers,
    organizations, and schools. Members provide substance abuse prevention
    counseling and education to community residents, including individuals
    in recovery, educators, school-aged youth and parents.

        Grantee: New York Office of National and Community Service
        Subgrantee: Grand Street Settlement
        Program Name: AmeriCorps
        Grant Type: State Program
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 40
        Program Descriptions: 40 part time AmeriCorps members serve in
    various sites throughout the lower east side of Manhattan. Members
    address school safety, school readiness and school success issues of
    community residents. By escorting youth to after school activities,
    program attendance has increased. Service in the Early Head Start
    Program and work with parents support family literacy and school
    readiness. Members also provide homework assistance, computer training,
    and one to one tutoring to promote school success.

        Grantee: New York Office of National and Community Service
        Subgrantee: YMCA of Greater New York
        Program Name: YMCA AmeriCorps School Success Program
        Grant Type: State Program
        Full-time AmeriCorps members: 72
        Part-time AmeriCorps members:
        Program Descriptions: YMCA School Success program is an extended
    day youth-based program where 72 AmeriCorps Members facilitate
    classroom-based service activities and enrichment activities in 12 Low-
    performing schools. Members also lead physical fitness and health
    awareness activities and provide community service-learning activities.
    Expected impact includes, 120 service projects, a 5-percent increase in
    student reading and math scores, and a 15-percent increase in student
    fitness levels.

        Grantee: New York Office of National and Community Service
        Subgrantee: Monroe Community College
        Program Name:
        Grant Type: State Program
        Full-time AmeriCorps members: 94
        Part-time AmeriCorps members:
        Program Descriptions: 94 full-time AmeriCorps Members serve in 25
    community-based organizations in Rochester, New York's Enterprise
    Community. The purpose of this program is to increase the reality and
    perception of public safety in the community. Members provide
    assistance to police substations, prevention and intervention education
    to youth around issues of substance abuse and conflict resolution, and
    implement positive developmental and community service activities with
    neighborhood youth. Expected impacts include: a 20 percent increase in
    geographic area covered by Neighborhood Watch and block clubs; a 20
    percent increase in contacts at police substations; a reported increase
    in intervention/prevention services offered to youth; and a 10 percent
    increase in numbers of youths participating in targeted activities.

        Grantee: New York Office of National and Community Service
        Subgrantee: Bank Street College of Education
        Program Name: AmeriCorps Community Service Internship
        Grant Type: Ed Award Only
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 25
        Program Descriptions: Members provide classroom and after-school
    literacy training and reading/tutoring support for 700+ elementary
    school students who do not perform at grade level.

        Grantee: New York Office of National and Community Service
        Subgrantee: Research Foundation of SUNY--New Paltz
        Program Name: AmeriCorps Education Awards Program
        Grant Type: Ed Award Only
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 100
        Program Descriptions: Members provide tutoring and literacy
    assistance to 500+ youth; after school, weekend, and summer activities
    in 4 community centers; and involve youth in community service efforts.

        Grantee: New York Office of National and Community Service
        Subgrantee: Albany Service Corps
        Program Name: Albany School Success AmeriCorps Program
        Grant Type: State Program
        Full-time AmeriCorps members: 16
        Part-time AmeriCorps members: 16
        Program Descriptions: AmeriCorps members support school success
    through three principal initiatives: (1) to improve the literacy of 500
    students, (2) to provide extended day programming for 500 youth, and
    (3) to improve school attendance of 300 students. The program goals are
    to improve the achievement poential of at-risk youth.

        Grantee: New York Office of National and Community Service
        Subgrantee: Buffalo Place Foundation
        Program Name: AmeriCorps Ranger Escort Program
        Grant Type: State Program
        Full-time AmeriCorps members: 12
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps Members increase public safety
    visibility and effectiveness through identifying potential crimes and
    patrolling the streets of downtown Buffalo. Expected impacts include a
    10 percent decrease in crime and a 20 percent increase in the
    perception of a safer downtown area. Additionally, members provide
    safety escorts for 500 people and distribute safety tips to 3000
    people.

        Grantee: New York Office of National and Community Service
        Subgrantee: Syracuse Area Catholic Charities
        Program Name: Syracuse Area Catholic Charities AmeriCorps Program
        Grant Type: State Program
        Full-time AmeriCorps members: 15
        Part-time AmeriCorps members: 1
        Program Descriptions: AmeriCorps members serve in seven centers in
    the greater Syracuse, NY region with attention in three areas: (1) to
    assist with the early childhood education of 150 3-5 year olds to
    foster school readiness and school success, (2) to teach and model
    prosocial skills to 1200 children 5-18 years and (3) to transport 800
    low income children and women to medical appointments to improve
    compliance with medical treatment. Members work with children in
    schools and in after school programs. Additionally, members will expand
    their service to support the needs of refugee youth in the area, which
    includes providing them an orientation to the community and to the
    schools, providing support with the adjustment to a new culture, and
    teaching ESL and assisting with citizenship classes.

        Grantee: New York Office of National and Community Service
        Subgrantee: Oswego City-County Youth Bureau
        Program Name: Oswego AmeriCorps Program
        Grant Type: State Program
        Full-time AmeriCorps members: 17
        Part-time AmeriCorps members: 48
        Program Descriptions: AmeriCorps members serve in multiple agencies
    throughout Oswego County to provide positive prevention services to
    youth and families. Members assist youth and families with basic needs
    that permit self-sufficiency such as with food, clothing, shelter,
    child care and safety. Additionally members provide school readiness,
    literacy readiness and tutoring opportunities by supporting parents of
    preschoolers, assisting with in-school and after school activities, and
    establishing a summer reading program for elementary students. Members
    also provide positive alternatives and relationships for youth and
    their families by developing a youth leadership program, establishing
    parent support groups and developing meaningful community service
    projects. Members will serve at least 2000 youth and their families.

        Grantee: New York Office of National and Community Service
        Subgrantee: West Seneca Youth Bureau--Share the Word
        Program Name: Sharing the Words, America Reads
        Grant Type: State Program
    Full-time AmeriCorps members: 38
        Part-time AmeriCorps members: 80
        Program Descriptions: In partnership with Universities at Buffalo,
    Buffalo State College and the King Urban Center, 38 full-time
    AmeriCorps Members provide one-on-one tutoring to 2500 at-risk children
    in Buffalo, New York. Members will ``adopt'' elementary and secondary
    schools with low retention rates in order to increase retention through
    tutoring and providing public awards for the students' work. Members
    also design and implement service projects with these students.
    Expected impacts include: a 75 percent improvement in test scores of
    students tutored; a 75 percent satisfaction rate among service
    recipients; and a 75 percent improvement in student retention rate.

        Grantee: New York Office of National and Community Service
        Subgrantee: The Institute for Human Services, Inc.
        Program Name: AmeriCorps Kids First Initiative/Steuben County
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members:
        Program Descriptions: Twenty AmeriCorps members serve in single
    site placements throughout rural Steuben County supporting various
    goals of the Summit. Members provide 3750 of the county's youth with
    positive role models and alternative activities through tutoring,
    mentoring, and planned activities. Members ensure that youth and their
    families receive the support needed to succeed in and stay in school.
    Additionally, members provide support to ensure that children have safe
    and healthy home environments and behaviors. Specific member services
    include providing safe places, substance abuse prevention counseling,
    adolescent pregnancy training, health care counseling, and alternative
    after school activities.

        Grantee: New York Office of National and Community Service
        Subgrantee: Pace University
        Program Name: Lower East Side/Chinatown AmeriCorps
        Grant Type: State Program
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 57
        Program Descriptions: 11 part-time and 46 reduced part-time members
    serve the primarily Asian community in Lower Eastside NYC. Members
    tutor and mentor low achieving junior high students to improve their
    grades and attendance; provide college and career counseling to high
    school students and their parents to increase the rate of h.s.
    graduation, college matriculation and career/employment options; and
    provide service-learning opportunities to students to help them
    increase their problem solving skills.

        Grantee: New York Office of National and Community Service
        Subgrantee: City College of the City University of New York
        Program Name: City College's Empowering Communities Program
        Grant Type: State Program
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 30
        Program Descriptions: AmeriCorps Members from the City College of
    New York facilitate a community service learning program that increases
    community members' computer skills and school success. Members train
    community members in computer skills, tutor students after-school, and
    work with parents to involve them more in their child's education.
    Expected impacts include: Community members will be trained in computer
    skills and targeted youth will show an improvement in college
    preparatory skills.

        Grantee: New York Office of National and Community Service
        Subgrantee: SUNY Oneonta Research Foundation
        Program Name: Oneonta Rural School Empowerment Program
        Grant Type: State Program
        Full-time AmeriCorps members: 30
        Part-time AmeriCorps members: 30
        Program Descriptions: AmeriCorps members improve the school success
    of youth in Oneonta County. Focusing on reading and math, members tutor
    and mentor 900 students in school and engage 450 students in after
    school and evening programs. Additionally, through the development of
    15 Youth Leaders in Action service clubs, members provide leadership
    training for 225 youth.

        Grantee: New York Office of National and Community Service
        Subgrantee: Latino Pastoral Action Center
        Program Name: Latino Pastoral Action Center
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps Members improve the literacy of
    150 5-7 year old students through a comprehensive school day and
    extended day program. Additionally, members improve the academic
    performance of 150 6-14 year olds through an after school program.
    Members also serve to increase the access and use of community services
    by 100 youth and their family members.

        Grantee: New York Office of National and Community Service
        Subgrantee: Families First in Essex County
        Program Name: Families First in Essex County
        Grant Type: State Program
        Full-time AmeriCorps members: 12
        Part-time AmeriCorps members: 14
        Program Descriptions: AmeriCorps Members serve in eleven agencies
    throughout Essex County to address all five goals of the Summit as well
    as the human needs of its citizens. Members tutor, mentor, and counsel
    youth, train parents of youth with disabilities and provide educational
    support to older adolescents. Program goals are to improve the academic
    and behavioral performance of students in schools and to increase the
    numbers of community agencies and businesses that collaborate.

        Grantee: New York Office of National and Community Service
        Subgrantee: Student Conservation Association NY
        Program Name: NY Adirondack Youth Conservation AmeriCorps
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps members serve in a residential
    environmental conservation program in the Adirondacks region. Members
    build, repair, refurbish and restore recreational and natural areas
    such as hiking trails, camp grounds, recreational and historic
    buildings. Additionally, members use service learning models to provide
    environmental and ecological education for 400-800 in-school, after
    school, and out of school youth. 60-100 volunteers will be recruited
    and trained to assist with these activities.

        Grantee: North Carolina Commission on National & Community Service
        Subgrantee: Children First of Buncombe County
        Program Name: Project POWER
        Grant Type: State Program
        Full-time AmeriCorps members: 16
        Part-time AmeriCorps members: 6
        Program Descriptions: AmeriCorps members serve as reading coaches
    to K-8th grade children performing below grade level in Asheville/
    Buncombe County schools. In addition, members set up mediation programs
    to teach conflict resolution to children in grades 5 and 6 and lead
    small groups of students in service learning projects.

        Grantee: North Carolina Commission on National & Community Service
        Subgrantee: Communities in Schools of North Carolina, Inc.
        Program Name: Project REACH
        Grant Type: State Program
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 30
        Program Descriptions: AmeriCorps members tutor 400 elementary
    school children who read below grade level, utilizing the Great Leaps
    curriculum to increase reading proficiency and comprehension. Members
    also train parents to better support their children's learning and
    recruit 90 community volunteers to tutor in the schools.

        Grantee: North Carolina Commission on National & Community Service
        Subgrantee: Warren Family Institute
        Program Name: Warren Service Corps
        Grant Type: State Program
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 40
        Program Descriptions: AmeriCorps members provide one-on-one
    instructional Support to K-12 students and GED students; literacy
    development with pre-schoolers in day care; and provide homework
    assistance and enrichment activities in after-school and Saturday
    academies.

        Grantee: North Carolina Commission on National & Community Service
        Subgrantee: Southeastern Community College
        Program Name: Steps to Success
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps members tutor and mentor 400 3rd-
    5th grade students to increase reading proficiency and school
    attendance. Members serve in four schools in Columbus County.

        Grantee: Northeastern University
        Subgrantee: Athletes in Service to America--Parent
        Program Name: NE University/Athletes in Service
        Grant Type: National Direct
        Full-time AmeriCorps members:
        Part-time AmeriCorps members:
        Program Descriptions: The Northeastern University Center for Sport
    in Society increases awareness of sport's relation to society and
    develops programs that identify current problems and offer solutions
    promoting the benefit of sport. The Center, founded in 1984, designed
    the program models used by sites: Project TEAMWORK (conflict
    resolution) and Mentors in Violence Prevention (MVP) concerning gender-
    based violence. President Clinton recognized TEAMWORK as a national
    model in 1994. AmeriCorps Members recruit college and high school
    students to tutor and mentor school-age youth during full-time summer
    and year-round after school programs. The full-time Members train part-
    time Members and community volunteers in curriculum development and
    tutoring skills and all Members expand the program's partnership with
    families, schools and community agencies.

        Grantee: Notre Dame Mission Volunteer Program, Inc.
        Subgrantee: Notre Dame Mission Volunteer Program, Inc.--Parent
        Program Name: Notre Dame Mission Volunteers, Inc.
        Grant Type: National Direct Central
        Full-time AmeriCorps members:
        Part-time AmeriCorps members:
        Program Descriptions: The Notre Dame Mission Volunteers, Inc., is a
    non-profit organization founded by the Sisters of Notre Dame, a
    religious institution which has been serving communities in need for
    over 150 years. Among other social issues which the organization
    addresses, the Notre Dame volunteers target the educational needs of
    the disadvantaged youth and their families. AmeriCorps Members tutor
    low income children, teach ESL to immigrants and GED and literacy
    skills to adults such as single mothers and high school drop-outs, and
    operate after school programs. Members also recruit volunteer parents
    for enrichment programs, teach conflict resolution skills, and provide
    school-to-work transition support for migrant farmworkers.

        Grantee: Oregon Community Service Commission
        Subgrantee: Central Oregon Community College Foundation
        Program Name: COCC/AmeriCorps Service to Community
        Grant Type: State Program
        Full-time AmeriCorps members: 9
        Part-time AmeriCorps members: 58
        Program Descriptions: 9 full-time and 36 part-time AmeriCorps
    members serve in an urban and several rural communities in central
    Oregon in small teams or individual placements. These members provide
    tutoring in elementary schools to increase literacy and life skills;
    provide community service projects in middle schools; and develop
    leadership training and opportunities for high school.

        Grantee: Oregon Community Service Commission
        Subgrantee: Forest Grove School District
        Program Name: Partnerships For Student Achievement
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members: 10
        Program Descriptions: AmeriCorps members serve in eleven schools in
    the Forest Grove school district in K-12 grades to improve literacy
    among low achieving and at risk students, and generate parental
    involvement in the schools. As a result five hundred school students
    will increase reading scores and parental involvement will increase by
    15 percent in targeted schools.

        Grantee: PennSERVE: The Governor's Office of Citizen Service
        Subgrantee: City Year, Inc. PA
        Program Name:
        Grant Type: America Reads
        Full-time AmeriCorps members: 12
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps Members deliver a specialized
    literacy curriculum to children with physical, emotional, and cognitive
    disabilities and to children for whom English is a second language.
    Through a partnership with City Year Philadelphia and the Institute on
    Disabilities, Members serve in 2 public elementary schools where they
    provide one-on-one tutoring to 60 children in grades K-3. Members help
    improve reading ability and interest levels for the children they serve
    in addition to integrating children with disabilities into normal
    classroom activities.

        Grantee: PennSERVE: The Governor's Office of Citizen Service
        Subgrantee: Keystone School District
        Program Name: Keystone SMILES
        Grant Type: State Program
        Full-time AmeriCorps members: 27
        Part-time AmeriCorps members: 59
        Program Descriptions: AmeriCorps members tutor and mentor K-12
    school aged children. Their primary focus is on students at risk of not
    completing school. They accomplish their goal by expanding learning
    environments, recreational and health facilities. As a result of
    Members' efforts, 281 students are tutored and 1,282 students
    participate in the Computer Lab.

    Grantee: PennSERVE: The Governor's Office of Citizen Service
        Subgrantee: Appalachia Intermediate Unit 8: Pennsylvania Mountain
    Service Corps
        Program Name: Pennsylvania Mountain Service Corps
        Grant Type: State Program
        Full-time AmeriCorps members: 56
        Part-time AmeriCorps members: 4
        Program Descriptions: AmeriCorps Members serve in teams where they
    institute violence prevention programs for students, provide health
    care and education to the elderly and preschoolers. Members also design
    and implement watershed projects in a vast 10 county rural area through
    the cooperative use of volunteers. Members' efforts result in the
    increase of school readiness and parental involvement for 2,000
    individuals.

        Grantee: PennSERVE: The Governor's Office of Citizen Service
        Subgrantee: Family Services of Butler Memorial Hospital
        Program Name: Family Services of Butler Memorial Hospital
        Grant Type: State Program
        Full-time AmeriCorps members: 30
        Part-time AmeriCorps members: 16
        Program Descriptions: Members provide family support services in
    the areas of counseling, child development, parenting classes, violence
    prevention, and personal development. Members support needs identified
    by the community to reduce isolation; increase access to health,
    education and recreation programs; and increase volunteerism. Members
    also assist 30 new programs, expand or enhance the services of existing
    programs by 10 percent, and increase local volunteerism by 10 percent.

    Grantee: PennSERVE: The Governor's Office of Citizen Service
        Subgrantee: County of Allegheny DFP (KEYS to Success)
        Program Name: KEYS PUBLIC SAFETY INITIATIVE
        Grant Type: State Program
        Full-time AmeriCorps members: 22
        Part-time AmeriCorps members: 7
        Program Descriptions: AmeriCorps members improve the rate of
    academic success by tutoring 175 economically disadvantaged and high
    risk students. They broaden the horizons of these students though
    engagement in 16 service-learning/community service projects and the
    development of individual career plans. To assist with these efforts,
    parents provide 100 hours and other volunteers provide 650 hours of
    additional support.

        Grantee: PennSERVE: The Governor's Office of Citizens Service
        Subgrantee: County of Allegheny DFP (Public Safety)
        Program Name: Knowledge to Empower Youths to Success (KEYS) Service
    Corps
        Grant Type: State Program
        Full-time AmeriCorps members: 19
        Part-time AmeriCorps members: 8
        Program Descriptions: AmeriCorps Members serve in sites throughout
    Allegheny County to develop and implement crime prevention strategies,
    including community policing. Members also develop and implement youth
    mentoring programs. Members' efforts result in the implementation of
    six neighborhood watches or block clubs.

        Grantee: Puerto Rico State Commission on Community Service
        Subgrantee: University of the Sacred Heart
        Program Name: USH AmeriCorps Program: Public Safety Through School
    and Community Empowerment
        Grant Type: State Program
        Full-time AmeriCorps members: 10
        Part-time AmeriCorps members: 20
        Program Descriptions: AmeriCorps members work with 100-160 students
    at each of five schools (elementary, intermediate, and high schools) to
    increase school success and reduce at-risk behavior. Members serve to
    reduce the use of alcohol, tobacco, and other drugs; prevent the crime
    and violence that often accompanies this behavior; and improve the
    school success of the students. Program strategies include the use of
    fine arts and the development of student groups at each school.
    Additionally, the program emphasizes the training of teachers and
    parents in the management of high risk youth and violence for the
    improvement of public safety.

        Grantee: Rhode Island Commission on National and Community Service
        Subgrantee: Children's Museum of Rhode Island
        Program Name: Providence Children's Museum AmeriCorps Program
        Grant Type: State Program
        Full-time AmeriCorps members: 15
        Part-time AmeriCorps members:
        Program Descriptions: Fifteen AmeriCorps Members provide community
    service opportunities through the Children's Museum of Rhode Island for
    low-income high-risk families. Members serve in three teams--after
    school learning club, community service learning, and Head Start. In
    the After School Learning Clubs, five members encourage students to
    increase independent learning and serve as a resource for parents. The
    community service team involves four members and at least 500 children
    who participate in ``Community Quest'' a program that explores the
    meaning and importance of serving the community. The Head Start team is
    made up of three members and serves 886 children in 44 classes. With
    Head Start teachers and parents, members develop enriched museum visits
    for Head Start students. These classes visit the Children's Museum
    where they explore exhibits and participate in art activities.

        Grantee: Rhode Island Commission on National and Community Service
        Subgrantee: Rhode Island Children's Crusade for Higher Education
        Program Name: Rhode Island Children's Crusade for Higher Education
        Grant Type: State Program
        Full-time AmeriCorps members: 40
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps Members support the educational
    success of participating students in the sixth through ninth grades.
    Additionally, members provide direct service to strengthen schools,
    families, and communities in order to support poor children at risk of
    dropping out of school. The Crusade assists children to graduate and
    take advantage of a scholarship for higher education. Members complete
    assessments and assist the progress of 80 percent of the at-risk
    children identified as Crusaders and make appropriate referrals to
    service agencies to help students and their families. Approximately
    3270 sixth-ninth grade children will be profiled, followed, and aided
    in staying in school and maintaining satisfactory academic performance.

        Grantee: Rhode Island Commission on National and Community Service
        Subgrantee: Public Education Fund (Parents Making a Difference)
        Program Name: Parents Making A Difference
        Grant Type: State Program
        Full-time AmeriCorps members: 35
        Part-time AmeriCorps members: 14
        Program Descriptions: AmeriCorps members create and operate family
    centers in 21 Providence elementary, middle and high schools as part of
    a state-wide effort at school reform. In the family centers, members
    provide GED, ESL, and parenting education classes as well as Domestic
    Violence Prevention training for 3,000 adults in the community. Members
    also plan to tutor and mentor 14,600 students in those participating
    schools. This program addresses the America Reads challenge by
    launching Providence Reads where they collaborate with Learn and Serve
    America. Members are actively recruited from the local welfare to work
    program.

        Grantee: Rhode Island Commission on National and Community Service
        Subgrantee: City Year, Inc.
        Program Name: City Year Rhode Island
        Grant Type: State Program
        Full-time AmeriCorps members: 100
        Part-time AmeriCorps members: 10
        Program Descriptions: One hundred and seven full-time and 6 part-
    time AmeriCorps Members tutor and mentor elementary school children,
    implement an after school program, and present special issues
    workshops. In middle schools, members teach a six week Creating
    Community Curriculum and operate Young Heroes which is a junior service
    and service-learning program. Finally, members work to revitalize 6
    urban neighborhoods. These members serve in three teams and are placed
    at six high need urban elementary and middle schools. Impact includes:
    improved learning environment for 2,870 children; enriched middle
    school environment for 1,200 children; and improved urban habitat for
    children and families in 6 urban neighborhoods.

        Grantee: Rhode Island Commission on National and Community Service
        Subgrantee: City of Pawtucket
        Program Name: Partners in Learning/AmeriCorps
        Grant Type: State Program
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 21
        Program Descriptions: AmeriCorps Members provide educational
    assistance for at-risk children grades K-2 from the diverse Cities of
    Pawtucket and Central Falls. Members also tutor adults enrolled in GED,
    ESL and literacy programs and involve children in community based
    academic enrichment programs during the summer months. Expected impacts
    include, 60 percent of those who receive tutoring support will show
    progress in reading skills; 70 percent of those parents involved in
    these programs will report involvement in their child's schooling; and
    80 percent of those enrolled in summer enrichment programs will report
    improved attitudes and interest in the sciences as career options.

        Grantee: Rhode Island Commission on National and Community Service
        Subgrantee: Community College of Rhode Island
        Program Name: CRRI--AmeriCorps
        Grant Type: State Program
        Full-time AmeriCorps members: 30
        Part-time AmeriCorps members: 4
        Program Descriptions: AmeriCorps Members serve in three sites in
    the Providence area, to provide educational support, bridge community
    needs through service learning, and encourage civic responsibility.
    Members specifically provide school readiness activities for limited
    English proficient children, tutor and mentor low-income elementary
    school students, and assist parents in skills to enhance child
    development. Expected impacts include, 75 percent of children who
    participate will increase their school readiness by 75 percent; 75
    percent of children participating will increase their English language
    skills; and 75 percent of parents participating will report a 50
    percent increase in their parenting skills.

        Grantee: Rhode Island Commission on National and Community Service
        Subgrantee: Rhode Island Commission--PF
        Program Name: AmeriCorps Promise--Rhode Island
        Grant Type: Promise Fellows
        Full-time AmeriCorps members: 5
        Part-time AmeriCorps members:
        Program Descriptions: Fellows will serve in several capacities led
    by the United Way in order to focus on all five resources of the
    Summit. Service activities will include establishing 50 neighborhood
    homework safe places, encouraging 100 Employers to allow employees paid
    time off for community service, and organizing an interactive Youth
    Resource Bank where people can contribute skills and talents to the
    community. Expected results include increased volunteerism and
    resources across Rhode Island. Fellows will serve in sites to be
    selected in a competitive process.

        Grantee: Robert F. Kennedy Memorial
        Subgrantee: RFK Fellows AmeriCorps Program--Parent
        Program Name:
        Grant Type: National Direct
        Full-time AmeriCorps members:
        Part-time AmeriCorps members:
        Program Descriptions: The Robert F. Kennedy (RFK) Memorial works
    across the county and around the world to carry forward Robert
    Kennedy's mission for social justice by helping disadvantaged and
    oppressed people and recognizing, training, and supporting upcoming
    leaders. It currently sponsors the RFK Fellows program, which is
    designed to train young people and provides them with public-service
    placements. AmeriCorps Members, placed at community-based
    organizations, will assist at-risk youth to gain leadership skills
    through provision of solutions to neighborhood violence and out-of-
    school learning activities. Members will serve as mentors and tutors,
    organize out-of-school activities, teach conflict resolution and
    violence prevention, youth case management, and integrate community
    members in service.

        Grantee: Round Rock Chapter
        Subgrantee: Round Rock Chapter
        Program Name: Round Rock AmeriCorps
        Grant Type: Tribe Territory
        Full-time AmeriCorps members: 15
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps Members tutor 85 K-5 students to
    bring them up to grade level in reading on this remote chapter of the
    Navajo Nation in Arizona. Members are also constructing 2 homes and a
    teen center, building 8 bathrooms for houses that lack them, and
    producing a community newsletter. Members will recruit 115 community
    members including local teens, to assist them in providing youth
    recreational activities and culture camps after school and in the
    summer. Members serve in two teams in a isolated, rural area.

        Grantee: South Carolina Commission on National and Community
    Service
        Subgrantee: Winthrop University
        Program Name: Winthrop AmeriCorps: Empowerment Through Literacy
        Grant Type: State Program
        Full-time AmeriCorps members: 8
        Part-time AmeriCorps members: 24
        Program Descriptions: AmeriCorps members tutor 225 low performing
    students in grade 2-6 and 9-12 to raise 90 percent of their reading
    scores above the 50th percentile or pass the state competency for
    reading and literacy. Members also tutor 30 special needs students in
    grades 2-6 to increase their standardized test scores by one grade.
    Additionally members tutor 100 students in grade 2-5 to increase their
    reading comprehension scores by one grade level. Members serve at one
    of four sites. The program will recruit and utilize 40 community
    volunteers in support of this literacy effort.

        Grantee: South Carolina Commission on National and Community
    Service
        Subgrantee: Benedict College
        Program Name: Benedict College AmeriCorps Program
        Grant Type: State Program
        Full-time AmeriCorps members: 12
        Part-time AmeriCorps members:
    Program Descriptions: AmeriCorps members tutor 150 K-6 low-achieving
    students (both in-school and after-school) so that 85 percent increase
    reading and math scores one grade level. Members also tutor 75-
    achieving students in a summer enrichment program so that 85 percent
    increase math and reading scores one grade level. Members serve in one
    of three elementary school. This program recruits and utilizes 30
    volunteers to provide 1,500 hours of service.

        Grantee: Summerbridge National, Inc.
        Subgrantee: Summerbridge National--Parent
        Program Name: Summerbridge ACorps Teaching Program
        Grant Type: National Direct Central
        Full-time AmeriCorps members.
        Part-time AmeriCorps members:
        Program Descriptions: Summerbridge National promotes school success
    while preparing students for high-school programs and developing high
    school and college students as future educators. Summerbridge National
    AmeriCorps Members provided tutoring and mentoring support in after-
    school, weekend, and summer settings, provided enrichment class
    instruction, provided service and service-learning opportunities for
    elementary, middle, secondary school and college students, and
    cultivated young educators.

        Grantee: Teach For America, Inc.
        Subgrantee: Baltimore/Teach For America, Inc.
    Program Name: Teach for America--Baltimore
        Grant Type: National Direct Central
        Full-time AmeriCorps members: 63
        Part-time AmeriCorps members:
        Program Descriptions: Teach for America (TFA) is a national teacher
    corps dedicated to improving educational achievement of under-served
    school age youth. TFA places a diverse group of recent college
    graduates as teachers in urban and rural school districts facing
    critical teacher shortages. AmeriCorps Members teach under-served youth
    at inner-city and rural public schools. Members assume leadership roles
    on school committees, sponsoring after school enrichment and
    recreational opportunities. Members also coordinate and implement
    service projects addressing specific community needs.

        Grantee: Teach For America, Inc.
        Subgrantee: Houston/Teach For America, Inc.
        Program Name: Teach for America
        Grant Type: National Direct Central
        Full-time AmeriCorps members: 37
    Part-time AmeriCorps members:
        Program Descriptions: Teach for America (TFA) is a national teacher
    corps dedicated to improving educational achievement of under-served
    school age youth. TFA places a diverse group of recent college
    graduates as teachers in urban and rural school districts facing
    critical teacher shortages. AmeriCorps Members teach under-served youth
    at inner-city and rural public schools. Members assume leadership roles
    on school committees, sponsoring after school enrichment and
    recreational opportunities. Members also coordinate and implement
    service projects addressing specific community needs.

        Grantee: Teach For America, Inc.
        Subgrantee: Enfield/Teach For America, Inc.
        Program Name: Teach for America
        Grant Type: National Direct Central
        Full-time AmeriCorps members: 60
        Part-time AmeriCorps members:
        Program Descriptions: Teach for America (TFA) is a national teacher
    corps dedicated to improving educational achievement of under-served
    school age youth. TFA places a diverse group of recent college
    graduates as teachers in urban and rural school districts facing
    critical teacher shortages. AmeriCorps Members teach under-served youth
    at inner-city and rural public schools. Members assume leadership roles
    on school committees, sponsoring after school enrichment and
    recreational opportunities. Members also coordinate and implement
    service projects addressing specific community needs.

        Grantee: Teach For America, Inc.
        Subgrantee: McAllen/Teach For America, Inc.
        Program Name: Teach for America--McAllen
        Grant Type: National Direct Central
        Full-time AmeriCorps members: 78
        Part-time AmeriCorps members:
        Program Descriptions: Teach for America (TFA) is a national teacher
    corps dedicated to improving educational achievement of under-served
    school age youth. TFA places a diverse group of recent college
    graduates as teachers in urban and rural school districts facing
    critical teacher shortages. AmeriCorps Members teach under-served youth
    at inner-city and rural public schools. Members assume leadership roles
    on school committees, sponsoring after school enrichment and
    recreational opportunities. Members also coordinate and implement
    service projects addressing specific community needs.

        Grantee: Tennessee State Commission on National and Community
    Service
    Subgrantee: The University of Tennessee at Chattanooga
        Program Name: Chattanooga Family Service Corps
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members: 16
        Program Descriptions: AmeriCorps members provide mentoring, in-
    school and after-school tutoring, and summer learning opportunities to
    more than 250 children, of which 75 percent will reach their individual
    reading learning goal. Chattanooga Family Service Corps aims to improve
    the academic success of low-income children from south Chattanooga who
    have been identified as at-risk of school failure and encourages
    parental participation in school activities by involving more than 100
    parents of the children tutored. Members also coordinate service-
    learning at 4 area schools with children in grades K-3 and involve
    parents to participate in school activities.

        Grantee: Tennessee State Commission on National and Community
    Service
        Subgrantee: Upper Cumberland County Community Health Agency
        Program Name: School Achievement Partnership Project
        Grant Type: State Program
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 30
        Program Descriptions: AmeriCorps members tutor children and make
    family contacts in an effort to promote regular attendance of children
    identified as truant and to involve the parent in the children's
    academic achievements. The School Achievement Partnership Project is
    increasing attendance by 15 percent of at least 70 percent of the 450
    students served. Of the 300 elementary school children tutored in four
    participating rural counties of the Upper Cumberland region of Middle
    Tennessee, 70 percent will demonstrate academic success with an
    increase of one or more letter grade(s). In the summer, corps members
    organize Youth Power Teams to engage 4th-6th graders in service-
    learning activities.

        Grantee: Tennessee State Commission on National and Community
    Service
        Subgrantee: Emerald Avenue Urban Youth
        Program Name: Emerald Avenue AmeriCorps Urban Youth Initiative
        Grant Type: State Program
        Full-time AmeriCorps members: 12
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps members tutor at-risk students in
    grades 2-5, as well as teach computer skills through newsletter
    production in an after-school program and summer day camp for 6th-8th
    grade students. Of 75 children tutored, 65 percent demonstrate an
    increase in academic achievement. Members also lead nonviolent learning
    sessions to 100 students in grades 2-8, resulting in a 30 percent
    decrease of violent/aggressive behavior by the end of the year and 75
    percent decrease in nonviolent classroom behavior. Members are assigned
    to three community centers in the Knoxville area.

        Grantee: The Arc of The United States
        Subgrantee: The Arc of Montgomery County
        Program Name: The ARC of Montgomery County--C.O.N.N.E.C.T.S.
        Grant Type: National Direct
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members:
        Program Descriptions: The Arc of the United States is the nation's
    largest volunteer organization solely devoted to improving the welfare
    of Americans with mental retardation and their families, working
    through 1200 chapters across the nation. AmeriCorps Members mentor
    individuals with mental retardation on a one-to-one basis, teach
    independent living skills, and assist integration into community life.
    Members serve as liaisons between the community and disabled persons
    and educate community groups, local businesses and the general public
    about the needs of developmentally disabled.

        Grantee: The ASPIRA Association Inc.
        Subgrantee: Aspira (Washington)--Parent
        Program Name: ASPIRA/AmeriCorps Community Service Program
        Grant Type: National Direct
        Full-time AmeriCorps members:
        Part-time AmeriCorps members:
        Program Descriptions: Aspira Association, Inc. is a national non-
    profit organization devoted solely to serving Puerto Rican and other
    Latino youth through leadership development and education. AmeriCorps
    Members teach Latino youth literacy, language and mathematical skills
    through tutoring and mentoring in school and after school. Members
    develop and facilitate programs providing leadership development,
    service learning, and enrichment activities. Members also conduct
    outreach to parents individually and through group programming.

        Grantee: The Houston READ Commission
        Subgrantee: The Houston READ Commission--Parent
        Program Name: National Direct Sub
        Grant Type:
        Full-time AmeriCorps members:
        Part-time AmeriCorps members:
        Program Descriptions: The Houston READ Commission is a non-profit
    created in 1988 by the City of Houston to coordinate, promote and
    expand adult and family literacy services in the greater Houston area.
    It has been instrumental in raising an additional million dollars to
    support local community-based literacy efforts. It enjoys strong
    relationships with the Houston Community College System and the Texas
    State Commission. Literacy*AmeriCorps Members provide literacy
    instruction for children and adults and target the specific need of
    increasing children's literacy skills. AmeriCorps Members increase
    literacy for families by providing English as a Second Language
    courses, basic skills, pre-GED and GED classes, homework assistance to
    school-age children, family and parent literacy programs. America Reads
    activities include recruiting and training volunteers as tutors for
    young children.

        Grantee: University of Maryland Baltimore County
        Subgrantee: UMBC/Shriver-Choice
        Program Name: The Choice Program
        Grant Type: Ed Award Only
        Full-time AmeriCorps members: 131
        Part-time AmeriCorps members: 11
        Program Descriptions: Members work in round-the-clock service
    designed to curb delinquency and reduce school dropout among the most
    troubled youth in the area.

        Grantee: University of St. Thomas
        Subgrantee: Minnesota Campus Compact
        Program Name: STAND and Deliver
        Grant Type: Ed Award Only
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 100
        Program Descriptions: Members will organize and lead service-
    learning projects--tutoring, building homes, researching, and cleaning
    streams.

        Grantee: Utah Commission on Volunteers
        Subgrantee: Salt Lake County Reads and Promotes Service
        Program Name: Salt Lake County Reads and Promotes Services (SLORPS)
        Grant Type: Ed Award Only
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 85
        Program Descriptions: Members provide small group instruction for
    youth who need additional help after-school.

        Grantee: Vermont Commission on National and Community Service
        Subgrantee: Lyndon State College
        Program Name: Northeast Kingdom Initiative
        Grant Type: State Program
        Full-time AmeriCorps members: 14
        Part-time AmeriCorps members: 10
        Program Descriptions: Members tutor 300 Northeast Kingdom youth.
    Also, members operate resource centers that provide 400 residents of
    rural Vermont with computer resources, educational material, and
    courses on adult literacy and parenting skills. These members
    effectively impact 150-220 children and adults by increasing reading
    skills by a grade level; assisting 125 victims of domestic violence
    resulting in 70 percent of the families choosing healthy behavior; and
    mentoring 200 youth in order to increase their academic success by 40-
    55 percent.

        Grantee: Vermont Commission on National and Community Service
        Subgrantee: Lyndon State College
        Program Name: Literacy in the Kingdom (Northeast Kindgom Initiative
    AmeriCorps)
        Grant Type: Ed Award Only
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 20
        Program Descriptions: Members provide tutoring, reading, and
    mentoring to young children and at-risk youth. Members also provide
    needed support for unemployed or underemployed adults and welfare
    recipients.

        Grantee: Vermont Commission on National and Community Service
        Subgrantee: Vermont Commission--PF
        Program Name: Vermont America's Promise Fellowship Program
        Grant Type: Promise Fellows
        Full-time AmeriCorps members: 8
        Part-time AmeriCorps members:
        Program Descriptions: Fellows will serve in non-profit and state
    agencies to help private and public agencies focus on the goal of
    serving 15,000 additional Vermont Children by 2000. Service activities
    will include identifying and working with community partners to develop
    service learning programs, developing a T/TA Needs Assessment tool and
    organizing a statewide conference to disseminate information, and
    coordinating a process to recruit mentors. Anticipated outcomes are an
    increase in students participating in service learning, a system to
    recruit mentors and volunteers, and the creation of afterschool
    programs and out of school programs. Fellows will serve in eight
    organizations across the state.

        Grantee: Virginia Commission on National & Community Service
        Subgrantee: Fredericksburg City Public Schools
        Program Name: Rappahannock AmeriCorps
        Grant Type: State Program
        Full-time AmeriCorps members: 14
        Part-time AmeriCorps members: 20
        Program Descriptions: AmeriCorps members provide in-class support
    to educationally at-risk students in grades K-8 to increase K-5 grade
    children to ``satisfactory'' performance and to improve middle
    schoolers' grade point average at least one letter grade. Members also
    provide individual tutoring for students at risk of failing state-
    mandated achievement tests, and mentor truant students in after-school
    programs. A total of 500 students are served.

        Grantee: Virginia Commission on National & Community
        Subgrantee: Virginia Cooperative Extension Americorps Program
        Program Name: VCE AmeriCorps
        Grant Type: State Program
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 40
        Program Descriptions: AmeriCorps members deliver educational
    activities at 4-H after-school and summer programs for youth ages 5-14.
    Members plan and conduct training sessions for workforce preparation
    for 13- to 19-year-old teens. Members serve in one of three northern
    Virginia communities.

        Grantee: Virginia Commission on National & Community
        Subgrantee: Northern Virginia Urban League--2
        Program Name: Alex Can Read Initiative
        Grant Type: State Program
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 24
        Program Descriptions: AmeriCorps members provide tutoring in
    reading to 100 K-3rd grade children in four elementary schools to
    increase student reading ability by \1/2\ grade level. Members also
    lead and support learning activities for 3- to 5-year-olds in Head
    Start classrooms, and coordinate the reading tutorial services of
    community volunteers in the schools served by members.

        Grantee: Virginia Commission on National & Community
        Subgrantee: Virginia Commonwealth University Americorps
        Program Name: VCU AmeriCorps
        Grant Type: State Program
        Full-time AmeriCorps members: 15
        Part-time AmeriCorps members: 40
        Program Descriptions: AmeriCorps members assist families
    transitioning from welfare to work in three impoverished inner-city
    neighborhoods. Services include job readiness training, job search
    assistance, and quality care and academic enrichment to pre-school and
    school-aged children during the school day and after school.

        Grantee: Washington Commission on National and Community Service
        Subgrantee: Washington Dept. of Social and Health Services
        Program Name: Fostering Youth and Community Partnerships
        Grant Type: Ed Award Only
        Full-time AmeriCorps members: 5
        Part-time AmeriCorps members: 20
        Program Descriptions: Members recruit, select, train and support
    mentors for adolescents in foster care.

        Grantee: West Virginia Commission for National and Community
    Service
        Subgrantee: Regional Family Resource Network
        Program Name: Regional Family Resource Network
        Grant Type: State Program
        Full-time AmeriCorps members: 20
        Part-time AmeriCorps members: 3
        Program Descriptions: AmeriCorps members tutor and mentor 575
    children to improve academic and behavioral problems, coordinate
    immunizations and health clinics for more than 7,200 children resulting
    in a 10 percent increase in the area's immunization rate, and assist in
    the development of pre-school programs that enrich parent/child
    interactions and school preparedness for more than 200 families.
    Members are assigned to one of 8 participating Family Resource Center
    sites in rural and urban communities of West Virginia and, in addition
    to their direct services, they recruit and train more than 250 parents
    and community volunteers to assist in service activities.

        Grantee: West Virginia Commission for National and Community
    Service
        Subgrantee: North Central Regional Education Service Agency
        Program Name: The Challenge Club
        Grant Type: State Program
        Full-time AmeriCorps members: 10
        Part-time AmeriCorps members:
        Program Descriptions: AmeriCorps members tutor and mentor 600
    elementary-aged school children in-and after-school, and as part of a
    summer program. Through a balance of educational and recreational
    activities, more than 80 percent of the 600 students participating
    improve one letter grade in one subject tutored and demonstrate marked
    improvements in their social and life-coping skills. Members with The
    Challenge Club are serving two communities of north central West
    Virginia.

        Grantee: Western Washington University/WA Campus Compact
        Subgrantee: Western Washington University /WA Campus Compact
        Program Name: Campus Reads Education Awards Program
        Grant Type: Ed Award Only
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 210
        Program Descriptions: Members tutor K-6 youth using resources from
    WA Institutions of Higher Education to improve reading skills.

    Grantee: Wisconsin National & Community Service Board
        Subgrantee: North Central Community Action Program
        Program Name: AmeriCorps Team-Greater Wausau Area
        Grant Type: State Program
        Full-time AmeriCorps members: 9
        Part-time AmeriCorps members: 16
        Program Descriptions: AmeriCorps members provide direct service to
    youth to increase their level developmental assets in order to reduce
    youth involvement in at- risk behaviors. Members activities include
    literacy tutoring, mentoring, after-school activities, and volunteer
    generation.

        Grantee: Woodrow Wilson National Fellowship Fnd.
        Subgrantee: National School and Community Corps (Princeton)--Parent
        Program Name:
        Grant Type: National Direct
        Full-time AmeriCorps members:
        Part-time AmeriCorps members:
        Program Descriptions: The Woodrow Wilson National Fellowship
    Foundation identifies critical education needs and develops programs to
    address those needs, including fellowships and programs for students,
    minorities and teachers. The National School & Community Corps (NSCC)
    was established in 1994. Its AmeriCorps Members provide services in
    literacy, the arts, and service learning to children and adults.
    Members also provide mentoring, homework assistance, club activities,
    youth leadership, conflict resolution, and other programs as identified
    by local communities and schools.

        Grantee: Youth Volunteer Corps of America, Inc.
        Subgrantee: Youth Volunteer Corps of America--Parent
        Program Name: Youth Volunteer Corps of America
        Grant Type: National Direct Central
        Full-time AmeriCorps members:
        Part-time AmeriCorps members:
        Program Descriptions: Youth Volunteer Corps of America (YVCA)
    creates and increases volunteer opportunities to enrich America's
    youth, addresses community needs, and develops a lifetime commitment to
    service. There are currently Youth Volunteer Corps programs in over 50
    communities in the United States. AmeriCorps Members act as service
    learning coordinators, recruiting and training school-age youth to
    recognize and address community problems, and provide tutoring,
    mentoring, and reading support. Members also recruit, lead, and
    supervise volunteers in youth-generated service projects, while
    encouraging each volunteer to commit to a lifetime of service.

        Grantee: Youth Volunteer Corps of America, Inc.
        Subgrantee:
        Program Name:
        Grant Type:
        Full-time AmeriCorps members:
        Part-time AmeriCorps members:
        Program Descriptions:

        Grantee: Youth Volunteer Corps of America, Inc.
        Subgrantee: YVCA
        Program Name: YVCA AmeriCorps Education Awards Program
        Grant Type: Ed Award Only
        Full-time AmeriCorps members:
        Part-time AmeriCorps members: 70
        Program Descriptions: Members will recruit, organize, and lead
    youth volunteers to engage in community service projects--tutoring,
    mentoring, after-school and summer programming.

        Grantee: Youth Volunteer Corps of America, Inc.
        Subgrantee:
        Program Name.
        Grant Type:
        Full-time AmeriCorps members:
        Part-time AmeriCorps members:
        Program Descriptions:

        Grantee: YouthBuild USA, Inc.
        Subgrantee: YouthBuild USA--Parent
        Program Name: Youthbuild USA
        Grant Type: National Direct
        Full-time AmeriCorps members:
        Part-time AmeriCorps members:
        Program Descriptions: YouthBuild USA, Inc., is a national non-
    profit organization that engages educationally at risk youth in a
    combination of service and youth development activities. The service
    activities focus primarily on renovating houses and buildings for the
    homeless and low income families. YouthBuild USA has a substantial
    number of affiliate organizations across the country. Members serve
    directly with community based organizations to rehabilitate abandoned
    housing and build new homes for homeless people, persons with HIV/AIDS,
    the physically challenges, and low income families. They build
    awareness of community issues and generate volunteers for local service
    projects.

        Question. A news report on December 31, 1998 indicated that
    AmeriCorps participants have engaged in partisan political activities
    and so-called ``AmeriRallies'' to solicit money for political purposes
    and to hand out political literature for partisan causes. The report
    even mentions rallies for Members of Congress. I will provide you with
    a copy of the report. Can you tell me if AmeriCorps workers are indeed
    engaged in these kinds of activities, and if so, what the justification
    is for it? What rules are in place to guard against misuse of
    AmeriCorps participants for partisan political causes?
        Answer. The report essentially repeats concerns expressed several
    years ago by the House Education and the Workforce Subcommittee on
    Oversight and Investigations. At that time, the Corporation reviewed
    each matter and determined either that the allegations were not
    supported in fact or had been appropriately addressed by the
    responsible oversight agency.
        For example, on June 7, 1995, the Corporation explained to the
    Subcommittee that the ``Maxine Waters Day of Caring'' was a service
    event sponsored by a local non-profit foundation, which occasionally
    names service events after well-known citizens of Los Angeles.
    Representative Waters did not attend the event; her staff did not
    attend the event; and no political activity occurred on that day.
    Instead, community volunteers and AmeriCorps members gave food and
    other assistance to homeless veterans in Los Angeles. When questions
    were raised about this event, the Corporation provided supporting
    documentation to the committee from the Los Angeles Veterans Education
    and Training Service, the Los Angeles Veterans Initiative, and the
    Kenny Nickelson Memorial Foundation for Homeless Veterans.
        The Corporation takes such concerns seriously. We have adopted
    strict rules prohibiting partisan political activities by AmeriCorps
    members. The grant agreement for every AmeriCorps program contain very
    detailed restrictions, including the following:
        While charging time to the AmeriCorps Program, accumulating
    service/training hours or otherwise engaging in activities associated
    with the AmeriCorps program or the Corporation, staff and Members may
    not engage in the following activities:
      --a. Any effort to influence legislation.
      --b. Organizing or engaging in protests, petitions, boycotts or
            strikes.
      --c. Assisting, promoting or deterring union organizing.
      --d. Impairing existing contracts for services or collective
            bargaining agreements.
      --e. Engaging in partisan political activities or other activities
            designed to influence the outcome of an election to any public
            office.
      --f. Participating in, or endorsing, events or activities which are
            likely to include advocacy for or against political parties,
            political platforms, political candidates, proposed
            legislation, or elected officials--.
      --g. Voter registration drives by AmeriCorps Members.
        These prohibitions on political activities are in place to guard
    against misuse of AmeriCorps members for partisan political causes.
    Should any instance of violation be brought to our attention, we will
    take swift action to enforce the prohibitions.
                                     ______

                    Questions Submitted by Senator Mikulski

        Question. How many AmeriCorps members have completed their term of
    service?
        Answer. As of March 17, 1999, 77,514 have earned an education
    award. Most members in program years 1994 through 1997 have completed
    their service. Most members funded in program year 1998 are still
    serving.
        Question. How many AmeriCorps members have used their education
    awards?
        Answer. Of the awards earned, 43,793 have been used in whole or in
    part. Members have seven years after completion of their service to use
    the education award. About 70 percent of the awards earned in the first
    year of the program have been used in whole or in part. Members in that
    first year have until 2002 to use their awards. See attached fact sheet
    entitled ``AmeriCorps and the National Service Trust: Enrollment Data
    and Use of the Education Award'' for more information.
        Question. How many volunteers were recruited? What have they done
    in their communities?
        Answer. Most AmeriCorps programs recruit, train, and/or supervise
    uncompensated members of their local community to assist in their
    service activities. These so-called leveraged volunteers substantially
    increase the amount of service AmeriCorps can provide to communities.
    In addition, the volunteers benefit from the opportunity to give back
    to their communities through meaningful, well-planned activities.
        We estimate that during the period 1994 through 1999, AmeriCorps
    programs recruited, trained or supervised about 1.7 million community
    volunteers. This averages out to about 12 leveraged volunteers per
    member since 1994.
        The recently released evaluation of AmeriCorps State/National
    Direct sheds some light on the roles, contributions and experiences of
    leveraged volunteers in AmeriCorps programs. The report notes that the
    leveraged volunteers ``varied greatly in education, age, demographics
    and socioeconomic backgrounds.'' They were involved in a range of
    service activities, including `` * * * holding one day events, for
    example, health fair, tutoring students, constructing houses, cleaning
    up trash, and other labor intensive environmental projects.'' The
    researchers drew a clear distinction between the roles of the
    AmeriCorps members and those of the community volunteers. Members
    tended to be engaged in activities that traditional volunteers could
    not perform because they required full-time or extensive part-time
    effort. Community volunteers were used in roles more appropriate to
    their available time, usually a few hours per week at most. The
    programs and the communities appear to have benefited from the
    relationships, however. The volunteers were interested in what
    AmeriCorps programs were doing, and often benefited from the overall
    impact of the program on their community. The AmeriCorps programs, in
    turn, used the knowledge gained from volunteers to more quickly tailor
    the programs to community needs, to reduce resistance toward new
    community initiatives, and to more deeply engage their members.
        The report points out that for volunteers to be used to greatest
    advantage, and to ensure that they have a positive experience, certain
    conditions need to be met, for example, programs must be well-
    organized, be able to solicit community members to become involved.
    Some programs during the startup years of AmeriCorps struggled to meet
    these conditions. Others were hampered by the realities of their
    program locations; community members were too economically pressed to
    have spare time to volunteers or, in other cases, had concern for their
    personal safety.
        Overall, however, AmeriCorps' efforts with community volunteers
    have been of great value to the programs, the volunteers, and their
    communities. To better understand AmeriCorps' use of community
    volunteers, their value to the programs, and their experiences, the
    Corporation's Office of Evaluation will be initiating a study during
    this fiscal year to study volunteer leveraging in detail.
        Question. What happened in the communities where members served?
        Answer. Aguirre International's evaluation of AmeriCorps during
    1994-1996 documents many of the significant contributions that
    AmeriCorps made to communities during its first years. Perhaps first
    among them is the tremendous volume of service accomplishments achieved
    by the local AmeriCorps programs. The report describes a detailed
    investigation of randomly selected programs and concludes that,
    overall, the accomplishments resulted in positive impact on the service
    recipients. The report is also encouraging in its depiction of the role
    of AmeriCorps in strengthening the institutions and communities in
    which it serves. The report concludes:

              ``The institutional impacts of AmeriCorps were far stronger
            than expected * * *. Often as a result of partnership with
            AmeriCorps, institutions were able to streamline their service
            delivery within communities * * *. New relationships between
            agencies were made [that permitted agencies to] pool
            resources--and provide communities with more cohesive,
            comprehensive services. In some instances, AmeriCorps was a
            catalyst for change [among community agencies].
              ``In almost all cases (95 percent), involved institutions
            felt that AmeriCorps had a positive impact on their
            organizations. Only 2 percent said that they did not want to
            continue their AmeriCorps collaborations. Involved institution
            representatives stated that AmeriCorps had infused their
            organizations with new resources, helped them achieve their
            goals, made their jobs easier, and helped their clients.
            Schools that were host sites to members were particularly
            grateful to AmeriCorps programs for easing teachers' burdens,
            expanding the quality of education, and increasing contacts
            between students and adults. Businesses that began by providing
            resources often became involved in direct service over time.''

        As the report details, community representatives nationwide gave
    AmeriCorps high marks for the impact of its services and for the role
    it is playing in the community. The authors note that ``The impact of
    AmeriCorps in terms of mobilizing communities and infusing hope into
    depressed communities cannot be understated.''
        In addition to results for communities and service recipients, the
    report provides data on the positive short-term outcomes of service for
    AmeriCorps members themselves. Members achieved statistically
    significant gains in so-called SCANS skills (life skills, general
    employment skills) over comparison groups of non-members. These skills
    permit members to better help themselves, as well as their communities,
    long after their service ends.
        Question. What is the sustainability of the impact of AmeriCorps on
    local communities?
        Answer. The Aguirre International report provides clear indication
    AmeriCorps programs are providing the services whose impact will be
    sustained. As the following table, taken from the Aguirre report,
    indicates, programs are having the type of impact likely to be
    sustained in communities. Community members value the program services,
    perceive the program to have a very positive impact on their
    communities and view them as strengthening their communities. All of
    these indicators are critical to the sustainability of the service
    impact.

                   COMMUNITY REPRESENTATIVE RATINGS OF AMERICORPS' COMMUNITY STRENGTHENING INDICATORS
                                                      [Percentages]
    ----------------------------------------------------------------------------------------------------------------
                                                                                                     Unsatisfactory/
                             Measure                          Outstanding  Excellent/  Satisfactory    Development
                                                                            Very Good                     Needed
    ----------------------------------------------------------------------------------------------------------------
    Overall project impact..................................          14           69           13               3
    Impact on the community.................................          11           71           17               2
    Strengthen communities..................................          12           56           25               7
    Overall project quality.................................          20           65           11               4
    Provide support to the community........................          20           63           14               3
    Working with other groups/agencies......................          23           63           18               4
    Understanding clients...................................          29           61           15               1
    Understanding community politics........................          10           53           21              16
    Community mobilization..................................          15           45           28              12
    Reach goals/objectives..................................          24           59           15               2
    Make communities more aware of issues...................           8           46           27               2
    Help organizations work better w/each other.............           4           53           36               8
    Provide sense of community leadership...................          15           47           25              13
    Change ways CBOs work together..........................          10           54           32               5
    Encourage civic responsibility among groups.............          12           57           24              6
    ----------------------------------------------------------------------------------------------------------------
    Source: Community representative interviews.

        For several reasons there is, at present, no more direct evidence
    about the sustainability of the impacts of AmeriCorps service on local
    communities. For the most part, successful AmeriCorps programs continue
    to receive Corporation funding. A study being initiated this year will
    attempt to assess the sustainability of the institutional networks and
    community building effects of AmeriCorps.
        Question. What have participants done once they have left programs?
        Answer. Although the Corporation has not conducted a specific
    survey of all former AmeriCorps members to determine what they do
    following AmeriCorps service, we do know several things.
        First, after leaving service members enter or continue schooling.
    Of those members earning education awards in the first program year,
    approximately 50 percent have used all or a portion of their award to
    attend institutions of higher education. (Others have used their
    education award to pay off loans, and still others have several years
    remaining in which to use the award.)
        Second, many members continue their service activities. A study of
    the alumni in the AmeriCorps Leader program concluded the following:
      --92 percent volunteered in their community.
      --96 percent contributed monies to nonprofit organizations and
            charities.
      --87 percent provided labor, training, grant writing and consulting
            assistance to local projects.
      --87 percent continued in service as a profession.
        A national study of all AmeriCorps members conducted by Aguirre
    International found strong interest in community service careers among
    AmeriCorps members. Two-thirds of those leaving said they would
    probably or definitely become involved in community service as staff
    members. In terms of actions taken, one in eight had already taken
    steps to secure a staff position in a community service agency.
        This same study found that by the end of the AmeriCorps service
    term, almost all members (99 percent) reported plans of engaging in
    future community service.
        Third, we know from the experience of Peace Corps and
    AmeriCorps*VISTA that many former members will go on to be among the
    political, civic, and education leaders of our communities. There are
    already many individual stories of remarkable career successes by
    former members.
        Beginning this fiscal year we are considering initiating a
    longitudinal study of AmeriCorps members that will provide a detailed
    analysis of the post-program life and career paths of former members.
    Alternatively, we are considering conducting a retrospective study of
    AmeriCorps members who have graduated.
        Question. Is there an AmeriCorps alumni association?
        Answer. Yes. Please see the attached information.

                            Letter From Katie Floyd

                                         Americorps Alums, Inc.
                                        Washington, DC, April 14, 1999.
    Senator Barbara Mikulski,
    Senate Office Building,
    Washington, DC.
        Dear Senator Mikulski: Greetings from AmeriCorps Alums, Inc., the
    national alumni association for AmeriCorps graduates. I am aware that
    at the Senate hearing for the Corporation for National Service in early
    March, you inquired about the existence of an alumni association for
    AmeriCorps. I would like to take this opportunity to introduce you to
    our small but growing organization.
        Our history dates back to the fall of 1995. That year, AmeriCorps
    Alums was launched as a program of the Partnership for National
    Service, a non-profit organization which raised private sector support
    for AmeriCorps programs. In April 1997, the weekend of the Presidents'
    Summit in Philadelphia, roughly 70 alumni convened for the first-ever
    reunion of AmeriCorps graduates. During the weekend, AmeriCorps Alums
    officially incorporated as an independent 501(c)(3) non-profit
    association. Our three-fold mission is to meet the needs of AmeriCorps
    graduates, to support AmeriCorps, and to uphold the ethic and practice
    of community service.
        Currently, the organization serves almost 1,600 active members.
    Though we have limited resources at this point, I am proud to note that
    through our programs, we have been able to keep alumni informed about
    legislative updates; direct alumni to post-AmeriCorps career
    opportunities; deliver transitional training to a few thousand
    graduating corps members; and start the development of local alumni
    chapters in 13 cities across the U.S.
        An October 1997 survey of AmeriCorps Alums' membership shows that
    almost 40 percent are working in the non-profit field, and over 60
    percent continue to volunteer in their communities at least 10 hours a
    month. Given the civic-mindedness that many AmeriCorps members possess
    and develop upon entering the program, coupled with the skills they
    acquire while in AmeriCorps, I am confident that there are thousands of
    AmeriCorps alumni who continue to touch the communities in which they
    live.
        The enclosed flyer, list of achievements, and newsletters should
    give you a greater understanding of the organization. If you have any
    other questions about AmeriCorps Alums, Inc., please do not hesitate to
    contact me at (202) 729-8180 or Acorpalums@aol.com. Thank you for your
    interest.
                In service,
                                                   Katie Floyd,
                                           Member Services Coordinator.
               americorps alums, inc. accomplishments: 1997-1998
    Meeting the Needs of AmeriCorps alumni
        Developing partnerships which provide association members with over
    1,800 jobs each year.
        Preparing 2,500 members of the AmeriCorps Class of 1998 for the
    post-AmeriCorps transition through career development training.
        Improving communication with alumni by launching two e-mail
    listservs for networking and job searching, and by doubling the size of
    Alum Action, the association newsletter.
        Raising the awareness of the education awrd tax with the help of an
    AmeriCorps graduate who relayed statistics and hardship stories to 15
    congressional offices and two leading publications: The Chronicle of
    Higher Education (July 31, 1998) and the Christian Science Monitor
    (September 22, 1998).
    Building a national network of AmeriCorps graduates
        Increasing current association membership by 225 percent.
        Establishing affiliate networks with local alumni leaders in
    Baltimore, Philadelphia, and Washington.
        Instituting partnerships with fifteen state community service
    commissions, which provides AmeriCorps Alums, Inc. memberships to over
    one-third of all AmeriCorps programs (providing our career development
    resources to over 5,500 current AmeriCorps members).
        Creating an official website (http://www.americorpsalums.org) into
    a one-stop shopping place for graduates by linking them to the
    association, one another, service opportunities, job postings,
    financial and education award tips, higher education resources, and
    information on the AmeriCorps reauthorization process. Over 8,000 hits
    to date.
    Strengthening Organizational Capacity
        Hiring a full-time member services coordinator.
        Developing training capacity so that AmeriCorps Alums, Inc. can
    assist AmeriCorps grantees in increasing the likelihood of success of
    the AmeriCorps graduate.
        Raising $25,000 and $32,000 in the first two annual ``Friends of
    AmeriCorps'' fundraisers, with honored guest First Lady Hillary Rodham
    Clinton attending the second celebration.
        Collaborating with nationally-recognized membership organizations
    (NAACP, Child Welfare League, National Peace Corps Association) and
    higher education institutions (College of William and Mary, University
    of Notre Dame) to implement a national network of AmeriCorps alumni
    chapters.
        [Clerk's note.--Additional background on AmeriCorps Alums can be
    found in the VA-HUD subcommittee's files.]
        Question. How many education awards are used to pay off loans? What
    percentage of those awards are for full-time participants?
        Answer. Of the awards that have been used, 44 percent have been
    used in whole or in part to pay off existing student loans. Of those,
    82 percent were full time awards.
        Question. What percentage of participants use their vouchers to
    begin higher education?
        Answer. Approximately one-fourth of all AmeriCorps members have a
    high school education or less, and use their voucher to begin higher
    education. The other 75 percent of AmeriCorps members use their voucher
    to continue higher education or pay off qualified student loans.
        Question. Of the participants who use their education award to
    begin higher education, how many went to two-year schools and how many
    went to four-year schools?
        Answer. The Corporation does not routinely collect data on the
    types of institutions attended by AmeriCorps members, including a
    breakdown of two- and four-year institutions. If the Committee wishes a
    separate study to be done on this matter, the Corporation can do so.
        Question. Have AmeriCorps participants used their education awards
    to further higher education?
        Answer. Yes. Please see the attached information.

                   AmeriCorps and the National Service Trust

             enrollment data and the use of the education award \1\
    Education awards earned
        To date, over 77,000 awards have been earned. Of those, full-time
    members have earned 70 percent of the awards, and part-time members
    have earned 30 percent.
    ---------------------------------------------------------------------------
        \1\ As of March 16, 1999.
    ---------------------------------------------------------------------------
    Part-time members
        Since the beginning, State Commissions and local programs have
    enrolled a significant number of part-time members, including those
    serving in summer programs. The following table summarizes actual full-
    time and part-time Trust enrollments by program year:

    ----------------------------------------------------------------------------------------------------------------
                                                               Full-time  Full-time  Part-time  Part-time     All
                           Program year                         members    percent    members    percent    members
    ----------------------------------------------------------------------------------------------------------------
    1994.....................................................     16,054         64      9,163         36     25,217
    1995.....................................................     17,844         71      7,338         29     25,182
    1996.....................................................     17,608         70      7,520         30     25,128
    1997.....................................................     22,963         61     14,586         39     37,549
                                                              ------------------------------------------------------
          Total..............................................     74,469         66     38,607         34    113,076
    ----------------------------------------------------------------------------------------------------------------

    Use of education awards
        Members have used over 40,000 awards to:
      --Pay for the cost of going on to school (56 percent);
      --Pay education loans for previous schooling (34 percent); and
      --Pay for both going on to school and for loans for previous
            schooling (9 percent).
        Of those members enrolled in the first year class (94) who earned
    awards, 70 percent have used all or a portion of their award.
        Of the dollar value of the education awards earned by members in
    the first year class (94), 61 percent has been used to date. First-year
    members have three more years to use their awards. The Corporation's
    budget estimates that 78 percent of awards earned will be used before
    the seven-year expiration date.
        There is no substantial difference in the use of awards between
    full-time and part-time members, except that those serving only in
    summer programs tend to use their award, which is smaller, more quickly
    than those serving in full-year programs.
        Question. What has been the impact of literacy programs?
        Answer. Since fiscal year 1994, education programs, including
    literacy activities for young children, have been a high priority for
    national service. Governor-appointed state commissions on national and
    community service have focused national service resources on unmet
    needs in education. In addition, AmeriCorps*National and Education
    Award programs, as well as service-learning programs at the K-12 and
    higher education levels, and senior programs have targeted service
    activities on the education needs of youth.
        I summarized some of these impacts in my written statement for the
    record. We will provide copies of all literacy evaluations to the
    Committee.
        Literacy programs supported by the Corporation under the
    AmeriCorps*State and National category reported the following results
    for the 1996-97 program year:
        1. In all programs, 5,700 members at 305 sites supported the
    tutoring of youth in grades 1-12. Sixty-seven percent of youth tutored
    in grades 1-12 (of 128,000 measured) showed improvement during the
    program year.
        2. In all programs, 4,700 members supported academic mentoring at
    258 sites. Seventy-six percent (of 53,000 mentored students measured)
    showed improvement during the program year.
        3. In all programs, over 2,000 members taught in grades 1-12.
    Sixty-nine percent (of 70,000 students measured) showed improvement
    during the program year.
        An independent analysis of these project reports and program
    generated evaluation materials, noted:

              `` * * * programs are using measures [evaluation] that are
            appropriate for the individuals they are serving and the type
            of tutoring they are providing.
              `` * * * tutoring programs investigated in this study
            reported positive changes for the students who receive
            tutoring.''

        In a 1999 study of the Corporation for National Service's Seniors
    for Schools pilot program, principals and teachers indicated the
    following: 90 percent reported an increased positive attitude in
    students toward reading; 85 percent reported improved self-esteem among
    students; 84 percent reported increased self-confidence in reading; 82
    percent reported increased reading skills; and 79 percent reported
    general academic improvement. Of the teachers reporting in that same
    study, 79 percent reported improved student attitudes, 60 percent
    reported improved overall student performance levels; and 58 percent
    reported an increased number of students keeping up with the class.
        In the District of Columbia, low achieving children, tutored by
    Federal Work Study students and other volunteers in a program managed
    by AmeriCorps*VISTA members, improved reading scores to the national
    average at the end of the first year of the program.
        Other Senior Corps evaluations have produced similar results. The
    recent evaluation of Foster Grandparents in Head Start centers (1998)
    found volunteers exhibiting well-researched positive caregiver
    behaviors. It also concluded that consistent with previous research,
    these effective practices were observed to contribute to the emotional,
    social, behavioral, and cognitive development of the pre school
    children as well as to classrooms and centers.
        In addition to these recent studies done by the Corporation,
    independent evaluations of individual projects have produced comparable
    results. Several examples are provided below:
        Professor George Farkas of the University of Texas documented gains
    for a Reading One-to-One program of 0.4 to 0.7 grade equivalents above
    what students would have attained without tutoring. This significant
    improvement will help assure that these children become literate. The
    program uses college students, AmeriCorps members, and community
    residents to tutor more than 6,000 students in more than 70 schools
    across ten school districts.
        In New Haven Connecticut, the Leadership, Education, Athletics in
    Partnership program helped produce increases in children's reading test
    scores; children read an average of 24 books during the summer in the
    program.
        In West Virginia, a summer project that uses AmeriCorps members
    documented the following results:

              ``Energy Express, through a print-rich environment, increases
            children's reading scores. An intensive evaluation to measure
            impact was conducted for last summer's project by West Virginia
            University faculty members and graduate students. Six hundred
            four children were tested in matched pairs pre to post using
            the Woodcock Johnson (revised 1989). Data indicates significant
            increases in reading comprehension (p<.0001) and word
            recognition (p<.0001). Seventy-one percent of all children
            increased in reading comprehension and 67.6 percent in word
            identification.''

        An independent researcher who examined Jumpstart, a pre-school
    program noted:

              ``The results of the analyses on the first 2 Cohorts of
            children over their first year in the Jumpstart program suggest
            that the program has positive effects on at-risk children's
            school readiness, and suggest that, as the program is developed
            further and more children participate in the evaluation, there
            is real potential for showing stronger and positive program
            effects.''

        University of Delaware researchers concluded:

              ``Tutoring, that is, periodic meetings of a student with a
            tutor as a supplement to classroom instruction, can increase
            reading achievement, improve self-confidence in one's reading
            skills, and increase motivation for reading. Positive results
            for reading have been obtained with volunteers, peers, and
            cross-age tutors, as well as with professionals.''

        Finally, the Corporation is engaged in a national study of
    Corporation-sponsored tutoring programs funded by AmeriCorps State/
    National and America Reads. The first phase of that study is a
    descriptive analysis that will permit us to characterize how these
    programs' practices compare to what is known about effective program
    models. Data from this study will be available in Fall, 1999. The
    second phase of the study, to begin in September, 1999, will collect
    outcome data on reading ability in a rigorous design intended to permit
    us to make definitive statements about the effects of Corporation-
    sponsored tutoring efforts. Results from that phase of the research
    will be available late in 2000.
        [Clerk's note.--Further information concerning the literacy
    question can be found in the VA-HUD subcommittee files.
        Reports included with Literacy Questions:
      --Seniors for Schools Content Analysis of 1997-98 Project Evaluation
            Reports
      --Effective Practices of Foster Grandparents in Head Start Centers
      --Evaluation of DC Reads Book Partners Program Year 1 Final Report
      --Foster Grandparent Program Accomplishment Summary July 1, 1997-June
            30, 1998 National Senior Service Corps
      --Retired and Senior Volunteer Program Accomplishment Summary July 1,
            1997-June 30, 1998 National Senior Service Corps.]
        Question. With the exception of immunizations, what accomplishments
    have occurred in the Health care area?
        Answer. AmeriCorps programs are involved in providing a variety of
    health care related services in local communities. Data taken from the
    Aguirre evaluation report indicates AmeriCorps programs, in addition to
    immunizations, provided the following health care related services:
      --Made independent living easier for disabled, elderly, or
            hospitalized individuals by providing independent living
            assistance to over 15,000 people;
      --Provided emergency medical services, as well as health training and
            education;
      --Provided access to health care, diagnosis, and/or follow-up to over
            57,000 individuals and/or screened for needed care;
      --Provided access to pre-natal care, screening or actual health
            services, and/or taught about children's health or development,
            * * * to over 21,000 pregnant women or families with young;
      --Distributed health related informational material to over 973,000
            people.
        Question. What is AmeriCorps doing to help seniors live
    independently?
        Answer. There are currently fifteen programs that focus
    specifically on working with seniors to assist them in living
    independently. Programs are located in the Atlantic region (Maryland);
    the Northeast (New York, Massachusetts, New Jersey, Vermont); the
    Southeast (Florida, North Carolina, Mississippi, Georgia, South
    Carolina, Alabama); and the Southwest (Texas).
                           DEPARTMENT OF THE TREASURY

                Community Development Financial Institutes Fund

    STATEMENT OF ELLEN W. LAZAR, DIRECTOR
    ACCOMPANIED BY:
            MAURICE A. JONES, DEPUTY DIRECTOR, PROGRAM AND POLICY
            PAUL R. GENTILLE, DEPUTY DIRECTOR, MANAGEMENT AND CHIEF
                FINANCIAL OFFICER

                                opening remarks

        Senator Bond. Now I want to call on a final panel, Ellen
    Lazar, the Director of the CDFI program, accompanied by her
    Deputy Director Mr. Maurice Jones and Deputy Director for
    Management and the CFO Mr. Gentille.
        The administration's budget requests for CDFI asks for an
    increase of $30 million from $95 million to $125 million for
    the year 2000. I understand that $15 million of the request
    would be to fund the new microenterprise program. I am very
    much concerned about the amount and purposes of the CDFI
    funding request, especially as we prioritize the funding needs
    of some of the primary programs and activities. It is a
    relatively new operation and its track record is still unclear.
    And it does seem that some of its activities overlap with those
    of other programs designed to revitalize distressed
    communities. I do want to congratulate the director of the
    fund, Ms. Lazar and her staff, for correcting the management
    deficiencies identified in the past.
        KPMG, the Fund's independent auditors, has provided an
    unqualified or clean opinion on its financial statements and
    further reported no new material weaknesses. We all know the
    CDFI had a rocky beginning. I am interested to hear the
    specific steps taken to address the program management.
        Second, we are interested in how well the performance goals
    and objectives are being met. GAO had a report last July and
    had some questions about emphasis on outputs rather than
    outcomes. A particular concern was in the area of external
    factors that the Fund's strategic plan only partially meets the
    requirements to describe the external factors. I think it is
    critical that we look at the Fund's activities where they may
    be overlapping.
        And finally, I have some real questions about the Program
    for Investment in Microentrepreneurs or PRIME. I happen to
    chair the Committee on Small Business Administration and the
    SBA has programs in that area, as does the Economic Development
    Administration and many states in their welfare-to-work
    programs.
        I would also say that I will ask unanimous consent to
    include in the record a statement by Senator Shelby, a member
    of the committee, raising serious questions about some of the
    CDFI activities, challenging whether the Fund has received the
    necessary authorization from the authorizing committee, the
    Committee on Banking, Housing and Urban Affairs. And he also
    raises questions about the new so-called PRIME program in the
    Banking Committee's letter to the Budget Committee on which I
    also serve, transmitting the views and estimates of the Banking
    Committee.
        The Banking Committee notes that it opposes any increase in
    funding for CDFI. The Committee has not received adequate
    assurances that CDFI's current operations are fully consistent
    with congressional intent and void of any form of misuse of
    public moneys.
        Senator Bond. With those opening comments, any opening
    comments you wish to make, Senator Mikulski?

                     statement of senator barbara mikulski

        Senator Mikulski. Just a very few, Mr. Chairman, one to Ms.
    Lazar and to her team. Thank you for really strengthening the
    management so that we could get to the ability to evaluate the
    programmatic impacts and where best to target our resources.
    Second, I have to leave at about 11:20 a.m. So if I am not
    here, it is not because of a lack of interest.
        I note the Maryland programs. I think groups like the
    Enterprise Foundation working with you have always, from what I
    know, leveraged other funds. So we look forward to it. Some
    programs I am not familiar with, but others I am. So I look
    forward to your testimony.
        I just want to say this generally. We are in the world of
    the mega-merger of the bank, so we have big banks buying each
    other and big banks then being bought internationally. And then
    what happens at the local community, whether it is to the
    community or the Small Business Administration, whether it is
    the farmer or the business person trying to get started in a
    multi-ethnic community, goes to how do we stay local while we
    go global?
        I think that is one of the big challenges for both the
    Banking Committee--knowing we have to reform and change, but
    all I see is us going global. The more global--I know right now
    a couple of organizations are merging in Maryland. And Alex
    Brown was sold to Bankers Trust, which is now in line to be
    bought in Deutsche Bank; and where I used to go downtown to the
    Center Club to talk things over, I might now have to go to
    Berlin. And what I am interested in is the neighborhoods in
    Baltimore. So any insights you could provide to us would be
    very helpful.
        Senator Bond. Ms. Lazar.

                            statement of ellen lazar

        Ms. Lazar. Good morning. Thank you, Chairman Bond and
    Ranking Member Mikulski. I am happy to be here today. I am
    Ellen Lazar. I am the director of the Community Development
    Financial Institution's Fund at the Treasury Department. I am
    here today with my two deputies, Paul Gentille our deputy
    director for management and CFO and Maurice Jones our deputy
    director for program and policy. I would ask the chair to
    submit my written statement for the record and for the purposes
    of time I will abbreviate my testimony.
        Senator Bond. We appreciate that. And we will accept your
    full written statement and give you 5 minutes.
        Ms. Lazar. Thank you, Senator.

                                  major points

        I will talk about four major points today: management,
    programs activity, our evaluation and impact work, and our
    fiscal year 2000 budget request.
        We have, at the front, have taken key steps over the past
    year to develop and implement necessary improvement to the
    Fund's financial and program management. I am happy to report,
    as you had so observed, that this year we received for our
    second year in a row a clean audit from KPMG Peat Marwick. All
    the material weaknesses identified in 1997 have been corrected
    and no new material weaknesses have been found for 1998. We
    have worked hard to build an infrastructure and have hired a
    staff at the Fund to serve. We are disbursing our funds more
    expeditiously and we have developed a strategic plan that has
    been delivered to the Hill for consultation and consideration.

                                     cdfi's

        On the program side, the Fund's mission is to promote
    access to capital and local economic growth by directly
    investing in and supporting community development financial
    organizations, what we call CDFI's. We also work towards
    expanding financial service organizations, lending investment
    and services within under served communities. Our CDFI's--it is
    really an umbrella term for a number of different types of
    organizations: community development banks and community
    development credit unions, which are regulated institutions,
    nonprofit loan funds which can be working in both business and
    housing, microenterprise loan funds, community development
    venture capital funds.
        The CDFI program includes our core funding which helps
    build the financial capacity of CDFI's by providing equity
    investments, grants, loans or deposits to enhance the capital
    base of these institutions to help them better address unmet
    community development needs in their target markets. We also
    have a technical assistance program which fills the capacity of
    start-up, young and small institutions.

                         bank enterprise awards program

        Another major program is our bank enterprise awards program
    which is our primary tool for pursuing our strategic plan goal
    of expanding banks and thrifts, community development, and
    lending and investment activity. Incentives encourage banks to
    increase investments in underserved communities, and we have
    seen startling leveraging numbers of the $58 million that we
    have provided in incentives to the banks. We have seen their
    investments grow to $983 million, 17 times the amount of our
    investment.

                              nonmonetary programs

        Each year there has been an increased demand for our
    funding. And since 1996 we have obligated $190 million in
    funding. We run a number of other programs both nonmonetary and
    in initiatives that I would like to talk to you about for a
    minute.
        Our Presidential Awards for Excellence in Microenterprise
    Development is a nonmonetary award which brings attention to
    organizations that have demonstrated excellence in
    microentrepreneurship. We have begun our Native American
    Lending Study and Action Plan which will help to improve access
    to capital for Native Americans.
        And, finally, we have embarked on a policy and research
    program to evaluate the impact of our Federal investments.

                       impact of our federal investments

        I would like to talk with you for a few minutes now about
    those evaluations and the outcomes that we have unearthed. The
    Fund collected performance and outcome data on 30 of our first-
    round awardees; those 30 awards totalled $34 million. This was
    money that was obligated in 1996 that was put out over the
    subsequent 18 months and has been put to work now for over a
    year. Our plans for these organizations are based on a 5-year
    business plan that we require of our awardees.
        Over the past 3 years our preliminary data shows that $565
    million in CD loans and investments have been made by these
    institutions. They have created or expanded 895 microenterprise
    organizations and over 1,100 businesses. They have helped to
    create or retain over 12,000 jobs. That have developed over
    8,000 units of affordable housing. They have developed child
    care, health care, human service and educational facilities and
    they have provided business training, credit counseling, home
    buyer training and other development services to over 10,000
    people.
        The assets of these organizations have grown by 122
    percent, from $473 million to $1.5 billion in the aggregate in
    1998. Seventy percent of the clients served by these
    organizations are low income and 53 percent of them live in the
    inner city.
        We have also been conducting case studies. We have done
    field work in Boston, Santa Cruz and San Antonio. And my
    written statement contains more information about these case
    studies. Our initial research shows how positively these CDFI's
    are affecting their communities.

                            fiscal year 2000 budget

        I would like to take a minute now to talk about our fiscal
    year 2000 budget. We have asked for $125 million, an additional
    $30 million above the fiscal year 1999 funding level. Fifteen
    million dollars has been set aside for our core programs and
    $15 million for the new PRIME Act, the Program for Investment
    in Microentrepreneurs. The PRIME Act legislation was introduced
    by Congressman Bobby Rush and Chairman Leach in the House as
    H.R. 413. It was introduced by Senators Domenici and Kennedy as
    S. 409 here in the Senate. Essentially PRIME will allow the
    CDFI Fund to build the capacity of low income and disadvantaged
    microentrepreneurs, to build the capacity of micro
    organizations to better serve these low-income clients and to
    support best practices and research in the field. The PRIME Act
    essentially complements the current work of the Fund, which is
    to build community-based organizations, to serve low income and
    very low-income people in communities.

                               prepared statement

        I think our fiscal year 2000 funding request is a logical
    one, based on need demonstrated in the field. We want to
    continue our vision of providing greater access to credit for
    all Americans. And I would like to thank the committee for the
    opportunity to talk with you this morning and look forward to
    working with you on this appropriation. I am happy to entertain
    any questions, as are my deputies.
        [The statement follows:]

                      Prepared Statement of Ellen W. Lazar

                                  introduction
        Chairman Bond, Senator Mikulski and distinguished Members of the
    Subcommittee, it is a pleasure to be before you today to represent the
    Community Development Financial Institutions (CDFI) Fund. I am Ellen
    Lazar, the Director of the Fund. Before I begin my testimony, I would
    like to introduce you to two other key members of the Fund who are with
    me today: Paul Gentille, Deputy Director for Management/Chief Financial
    Officer of the Fund, and Maurice Jones, Deputy Director for Policy and
    Programs at the Fund.
                        strong and effective management
        When I testified before this Subcommittee this time last year, I
    described key steps that the Community Development Financial
    Institutions Fund (the CDFI Fund or the Fund) would take to develop and
    implement necessary improvements to the Fund's financial and program
    management, reporting systems, internal controls, operating procedures,
    and awards monitoring. I am very pleased to report to the Subcommittee
    that over the past twelve months we have made great progress in these
    areas.
        In the Fund's financial audit for fiscal years 1995 through 1997,
    our independent auditors, KPMG Peat Marwick, LLP (KPMG), provided an
    unqualified opinion, affirming that our financial statements fairly
    presented the financial position of the Fund as of September 30, 1997,
    1996, and 1995. KPMG also confirmed our identification of material
    weaknesses that we needed to correct.
        KPMG recently completed the Fund's fiscal year 1998 audit, and I am
    pleased to report that we have again received an unqualified opinion.
    In addition, KPMG verified that we have successfully corrected all
    material weaknesses identified in last year's audit. They have reported
    no new material weaknesses for this year's audit.
        We are in compliance with the Federal Managers' Financial Integrity
    Act (FMFIA). Our system of internal management, accounting and
    administrative control has been strengthened and is operating
    effectively. Our enhanced policies and procedures ensure that our
    programs achieve their intended results; our resources continue to be
    used in a manner that is consistent with our mission; and our programs
    and resources are protected from waste, fraud, and mismanagement.
        As evidenced by our auditor's report, the Fund has taken critical
    steps to strengthen and build its infrastructure and hire staff. During
    fiscal year 1998, a Deputy Director for Management/Chief Financial
    Officer, Awards Manager and Financial Manager were hired--critical
    positions for ensuring proper internal controls and accountability. In
    addition, a Deputy Director for Policy and Programs was appointed and
    program managers for each program were hired. The Fund's legal
    department was substantially increased and additional staff have been
    hired to help carry out the Fund's many programs. Our enhanced internal
    procedures and staff capacity has helped us to deliver more effectively
    our award dollars to the institutions selected to receive awards. For
    example, with respect to our Core Component CDFI Program, all of our
    1996 awardees have received disbursements and 84 percent of our 1997
    awardees has received disbursements. We are currently disbursing the
    1998 awards, which were announced in late September of last year. We
    anticipate disbursing funds to all 1998 awardees by August of this
    year. Our 1999 awards have not been determined yet.
        As I discussed with the Subcommittee last year, the Fund is
    committed to managing for results. We have undertaken a rigorous review
    of the Fund's five-year strategic plan, goals, and performance
    measures. I am happy to report that we have completed this process and
    have forwarded to you a draft of our revised strategic plan for your
    consultation and consideration.
             strengthening communities: providing access to capital
    Overview
        The Fund's mission is to promote access to capital and local
    economic growth by directly investing in and supporting community
    development financial institutions (CDFIs) and expanding banks' and
    thrifts' lending, investment, and services within underserved markets.
        Currently, the CDFI Fund pursues its mission primarily through five
    initiatives: the CDFI Program, which includes the Core, Technical
    Assistance and Intermediary Components; the Bank Enterprise Award (BEA)
    Program; the Presidential Awards for Excellence in Microenterprise
    Development; the Native American Lending Study and Action Plan; and our
    Policy and Research Programs. The CDFI Fund also administers a
    Certification Program for community development financial institutions.
    CDFI Program and Certification
        The CDFI Program has three funding components: Core, Intermediary
    and Technical Assistance. These three components promote the CDFI
    Fund's goal, articulated in its strategic plan, of strengthening the
    expertise and the financial and organizational capacity of CDFIs to
    address the needs of the communities that they serve. CDFIs include
    community development banks, community development credit unions, non-
    profit loan funds, micro-enterprise loan funds, and community
    development venture capital funds.
        The Core Component builds the financial capacity of CDFIs by
    providing equity investments, grants, loans or deposits to enhance the
    capital base--the underlying financial strength--of these organizations
    so that they can better address the unmet community development needs
    of their target markets. In addition, under the Core Component, the
    Fund provides technical assistance grants in conjunction with loans and
    investments in order to maximize the community development impact of
    the Fund's awards.
        The Fund selects awardees that clearly demonstrate private sector
    market discipline and the capacity to positively impact underserved
    communities. The Core Component leverage encourages additional private
    and public sector investments into these same organizations through its
    one-to-one non-federal match requirement.
        The Intermediary Component allows the Fund to invest in additional
    CDFIs indirectly, through intermediary organizations that support
    CDFIs. These intermediary entities, which are also CDFIs, generally
    provide intensive financial and technical assistance to small and
    growing CDFIs, thereby strengthening the industry's financial and
    institutional capacity.
        Since inception, under the Core and Intermediary Components, the
    Fund has made 123 awards totaling $122 million.
        The Technical Assistance (TA) Component of the CDFI Program is the
    Fund's newest funding program. Introduced in 1998, this component
    builds the capacity of startup, young and small institutions. The TA
    Component allows the Fund to direct relatively small amounts of funds
    to CDFIs that demonstrate significant potential for generating
    community development impact but whose institutional capacity needs to
    be strengthened before they can fully realize this potential.
        In the first TA Component round held in 1998, the Fund awarded $3
    million to 70 institutions.
        In 1998, the Fund awarded a total $47 million to 112 institutions
    through its CDFI Program. In 1998 as in all previous years, demand for
    CDFI Program funding far exceeded the funding we announced as
    available. Under the Core and Technical Assistance Components we
    announced the availability of approximately $45 million. We received
    requests for more than $176 million.
        For 1999, with the help of the $95 million appropriated to the Fund
    for fiscal year 1999, we anticipate that we will make $62 million in
    awards to 130 institutions under the CDFI Program. In October, the Fund
    published the fiscal year 1999 Notice of Funds Availability (NOFA) for
    both the Core and Intermediary Components, announcing a total of $57.5
    million available, $50 million for the Core Component and $7.5 million
    for the Intermediary Component. We received 153 Core applications
    requesting a total of $184 million. We anticipate making approximately
    55 Core awards. We received eight Intermediary applications requesting
    a total of $16 million. We anticipate making five Intermediary awards.
    In January, we published the fiscal year 1999 NOFA for the Technical
    Assistance Component. With the $5 million available for TA awards, we
    anticipate making 75 awards.
        To date, institutions in 43 states plus Puerto Rico and the
    District of Columbia have received CDFI Program awards. To encourage
    applications from a diverse pool of applicants, the Fund is conducting
    a record number of informational workshops. Among the nineteen Core and
    Intermediary workshops conducted in 1998, five were located in States
    that have not had previous Core or Intermediary Awardees. This month
    the Fund will hold eighteen informational workshops on the Technical
    Assistance Component around the country, again selecting several
    regions in which there are no current awardees.
        To further our goal of building the institutional capacity of the
    CDFI field, we provide debriefings to applicants that were not selected
    for an award. To date in fiscal year 1999, the Fund is responding to 92
    requests for debriefings. Applicants are given valuable feedback about
    strengths and weaknesses of their applications as observed by those
    community development professionals involved in reviewing their
    requests for funding. Many of these applicants use the information
    gathered from the debriefing to build the strength of their operations
    and to improve their performance.
        In addition to our CDFI funding programs, the Fund administers a
    CDFI Certification Program. CDFI certification increases the
    credibility of community lending organizations in the eyes of potential
    funders and investors. An organization that is certified is better able
    to attract private sector investments from local banks, corporations,
    foundations, and individuals. To date, we have certified a total of 280
    organizations in 45 states, plus the District of Columbia and Puerto
    Rico. New applications arrive each month. Currently, applications are
    pending for the Virgin Islands, plus two of the five states that do not
    currently have any certified CDFIs.
    Bank Enterprise Award Program
        The Bank Enterprise Award (BEA) Program is the Fund's primary tool
    for pursuing its strategic plan goal of expanding banks' and thrifts'
    community development lending and investment activity. By providing
    incentives to these mainstream financial institutions, the Fund
    encourages them to increase their investments in underserved
    communities. These financial institutions do this in two ways: by
    providing loans, investments and services directly to the communities
    in need; and indirectly, by investing in local CDFIs or other community
    development programs, that then provide financial and development
    services to the communities.
        The leveraging involved in this program is impressive. To date, 124
    banks and thrifts in 30 states have received $58 million in BEA
    funding. This $58 million actually translates into investments in
    underserved communities of $983 million, seventeen times the amount of
    the CDFI Fund's investment. The awardees have invested $712 million in
    direct loans, investments and services to the community, and $271
    million into CDFI's.
        The Fund dramatically increased our BEA awards in 1998 when we made
    79 awards totaling $28 million. In 1996, we made 38 awards totaling
    $13.1 million; in 1997 we made 54 awards totaling $16.5 million. The
    three-year total for the 171 BEA awards is $57.5 million. For the
    fiscal year 1999 funding round, we conducted twelve informational
    workshops around the country and received 139 applications. The Fund
    anticipates selecting approximately 80 of these institutions to receive
    awards totaling $25 million.
    Presidential Awards for Excellence in Microenterprise Development
        The Presidential Awards for Excellence in Microenterprise
    Development is a non-monetary program administered by the Fund that
    recognizes and seeks to bring attention to organizations that have
    demonstrated excellence in promoting micro-entrepreneurship. By
    recognizing outstanding microenterprise organizations, the Presidential
    Awards seek to promote best practices and bring wider public attention
    to the important role and successes of microenterprise development
    especially in enhancing economic opportunities among women, low income
    people and minorities who have historically lacked access to
    traditional sources of credit. This program is one of the ways that the
    Fund is promoting performance best practices in the industry.
        In February of this year, the President presented awards to six
    organizations for their work in the microenterprise industry.
    Native American Lending Study and Action Plan
        Our Native American Lending Study and Action Plan is intended to
    stimulate private investment on Indian Reservations and other land held
    in trust by the United States. The first step in accomplishing this
    goal is identifying the barriers to private financing in these areas.
    In 1998, we launched an action plan that will examine lending and
    investment practices on Native American lands, identify lending and
    investment barriers and their impacts, and make recommendations for
    removing them. As part of that plan, we will be holding workshops in 13
    cities across the country this year. The workshops will involve the
    Native American community, financial institutions, state agencies and
    community development organizations. With the assistance of the
    participants in these workshops, we anticipate that the study will be
    completed in fiscal year 2000.
    Policy and Research
        The Fund is perhaps the largest single source of capital available
    to the CDFI industry nationwide. It has access to data from hundreds of
    community development financial institutions nationwide. This includes
    information about the institutions as well as their target markets. In
    addition to baseline data derived from the process of certifying or
    funding applicants, the Fund collects longitudinal data on all of its
    awardees over at least a five-year period. Our policy and research
    goals include: measuring and reporting on the performance and outcomes
    of the Fund and its awardees and seeking to advance the CDFI industry
    as a whole through involvement in industry-wide research and
    development efforts.
        In 1998, we moved forward on the first of these, measuring and
    reporting on the performance and outcomes of Fund awardees. As you
    know, the Fund invests in CDFIs to promote their long-term viability
    and ability to serve distressed communities. Today, I am pleased to be
    able to report some preliminary findings of our efforts thus far with
    respect to the accomplishments of our awardees.
                             performance and impact
    Surveys
        Using surveys, the Fund collected performance and outcome data on
    30 of our 31 first-round CDFI Core Component awardees. These awardees
    were chosen in 1996. We began our evaluation on only first round
    awardees because they have had at least a year to absorb the Fund's
    investments and put them to work. Our sample of 30 first round awardees
    includes six credit unions, fourteen loan funds, three community
    development banks, three venture capital funds, two microenterprise
    programs, and two multifaceted CDFIs. Together, they received $34
    million in CDFI awards. What has our $34 million helped these
    institutions to accomplish?
        Our preliminary findings demonstrate that these awardees have
    accomplished significant community development impact over the past
    three years. For example, they have made $565 million in community
    development loans and investments. These loans and investments have
    helped to create or expand 1,895 microenterprises and 1,148 businesses;
    create or retain 12,412 jobs; develop 8,617 units of affordable
    housing, 98 childcare centers serving 7,168 children, 17 health care
    facilities serving 32,723 clients and 170 additional community,
    cultural, human services and educational facilities. Further, these
    awardees have provided business training, credit counseling, homebuyer
    training and other development services to 10,641 individuals.
        Based on our sample, 70 percent of the clients of the average 1996
    awardees are low-income individuals. Sixty percent are minority
    individuals. Fifty percent are women. Fifty-three percent live in the
    inner city. Eleven percent live in rural communities. Thirty-six
    percent live in suburban areas.
        Since receiving their Fund awards, the 1996 awardees in our sample
    have strengthened their capacities to deliver products and services to
    their target communities. Their total assets have increased by 122
    percent, growing from $473 million in the aggregate before they
    received their awards to $1.05 billion in the aggregate in 1998.
    Case Studies
        In addition to the outcomes surveys, the Fund is conducting in-
    depth case studies of a sample of awardees. The case studies include on
    site evaluations by the Fund to examine the CDFI's activities within
    the local economic development context. To date, we have completed
    three case studies. We anticipate completing several more in the coming
    year. The three case studies that have been completed thus far have
    been in Boston, Massachusetts, San Antonio, Texas and Santa Cruz,
    California. Our initial research suggests how CDFIs are positively
    affecting their communities.
        In Boston, many of the city's poorer neighborhoods did not benefit
    from the economic growth in the 1980s; their conditions actually
    worsened during that period. Yet these same neighborhoods have
    experienced notable improvements in the past 10 years, thanks in no
    small part to the work of CDFIs such as the Boston Community Loan Fund
    and the Local Initiatives Support Corporation, two CDFI Fund awardees.
    These CDFIs have been critical behind-the-scenes actors. They have
    provided badly needed financial and technical support to two of the
    city's most effective community development corporations (CDCs),
    enabling the groups to develop the scale necessary to carry out
    affordable housing and commercial projects that have revitalized long-
    declining communities such as East Boston and Egleston Square. Since
    the mid-1980s, the CDFIs have provided over $7.5 million to the CDCs,
    which in turn have: built or rehabbed over 800 units of affordable
    housing; managed an additional 900 apartments and commercial
    properties; and operated after-school and other programs for 150
    neighborhood youths. The CDFIs have also played a crucial intermediary
    role, working with bankers, city officials, and corporate and
    foundation leaders to encourage additional targeted investment in these
    neighborhoods. A number of bankers view the CDFIs as important partners
    in their community development work, crediting the CDFIs with
    effectively serving organizations and individuals that the banks cannot
    afford to serve.
        All around San Antonio, public and private sector institutions
    recognize the important work of ACCION Texas, a CDFI Fund Awardee. From
    the city's Economic Development Office to local Chambers of Commerce to
    banks ranging in size from local independent banks to Chase Manhattan,
    ACCION is viewed as the source of financial services for a previously
    neglected--yet significant--segment of the population: the low- and
    moderate-income micro entrepreneurs who live and work in some of the
    city's poorest neighborhoods. ACCION is seen as the organization that
    can get loan capital into the hands of this underserved population--and
    just as important--get it back. ACCION's 400 clients include plumbers,
    electricians, seamstresses, independent taxi drivers, and street
    vendors. They are primarily Hispanic. Without ACCION, they would not
    have access to credit for their businesses. The stories are by now
    familiar: these micro entrepreneurs do not have sufficient collateral;
    they don't have good business records; or they don't need enough money
    to make them attractive to a bank. With ACCION, they are able to get
    the financial and technical assistance they need to grow their
    businesses and to make them more prosperous through better business
    management. ACCION's success in San Antonio has led it to begin opening
    offices around the state, in the Rio Grande Valley, Houston, Dallas,
    Austin, and Fort Worth.
        In Santa Cruz county in California, the third largest community
    credit union in the nation, the Santa Cruz Community Credit Union
    (SCCCU), offers a wide range of financial products and services
    designed to meet the financial needs of a predominantly rural low
    income population. The need is perhaps greatest in Watsonville, where
    the unemployment rate is 15.8 percent--more than three times the
    national average. This area has been hard hit by recent plant closings
    resulting from import competition from Mexico. Adding to the
    unemployment rate are the once-migrant agricultural workers who are
    settling in the area in increasing numbers, even though agricultural
    work remains seasonal. The employment and income figures highlighted
    the importance of focusing on the Watsonville population. With the help
    of its CDFI Fund award, the Santa Cruz Community Credit Union opened a
    branch in Watsonville so that it could ensure credit and banking access
    for all citizens, especially the Latino population which had
    historically distrusted traditional banking enterprises due to
    discrimination and neglect.
                        the year ahead: fiscal year 2000
        The President's fiscal year 2000 budget requests $125 million in
    appropriations for the Fund. This request is $30 million above fiscal
    year 1999 funding levels. The Fund proposes to use $15 million of the
    increase to enhance its core programs; thus, $110 million will be used
    to administer the CDFI, BEA, Training, Policy and Research and
    Secondary Market Programs and the Native American Lending Study and
    Action Plan. The remaining $15 million will be used to launch a new
    initiative, the Program for Investment in Microentrepreneurs (PRIME).
        In fiscal year 2000 and beyond, the CDFI Program will continue to
    focus on building the capacity of the CDFI industry to facilitate
    access to capital in underserved and low-income markets. I believe the
    Fund will be able to build on its previous years' experience and
    findings from its first outcomes surveys to inform our practice in
    identifying organizations that can maximize impact in needy
    communities. We will also seek to enhance the performance and impact of
    the industry through our Technical Assistance Program. Through the BEA
    Program, the Fund will continue its efforts to facilitate community
    reinvestment by providing incentives for banks and thrifts to reach new
    markets through partnerships with CDFIs and by targeting lending,
    investment and services in the most distressed neighborhoods. Finally,
    the Fund will seek to enhance the effectiveness and impact of CDFIs,
    banks, thrifts and others engaged in community development finance
    through its Training Program.
        In fiscal year 2000, the Fund will complete its Native American
    Lending Study. We plan to make recommendations to the President and
    Congress on needed statutory and regulatory amendments to existing
    Federal programs and other needed policy changes to improve access to
    capital for Native Americans.
        Based on a feasibility study to be conducted in fiscal year 1999,
    in fiscal year 2000, the Fund plans to launch a secondary market
    program for loans made by CDFIs and examine the potential role of the
    Fund in creating and sustaining these efforts.
        I believe one of the most exciting proposals in the President's
    budget is the creation of the Program for Investment in
    Microentrepreneurs (PRIME). The $15 million PRIME Act was introduced in
    the Senate on February 10 of this year. Senator Kennedy introduced the
    bill. Senators Domenici, Reid, Grassley, Abraham, Robb, Collins, Boxer,
    Santorum, Sarbanes and Snowe are also sponsors of the bill. The bill
    was introduced in the House on January 19 of this year by Congressman
    Bobby Rush. House Banking Chairman James Leach and Ranking Member John
    LaFalce are among the bill's sponsors.
        This program will allow the Fund to meet a growing need that we
    currently cannot address. This is the need to strengthen organizations
    that are providing critical training and technical assistance to the
    most vulnerable population of entrepreneurs: low-income and
    disadvantaged microentrepreneurs. One of the clearest lessons that has
    emerged from the first decade of microenterprise development in the
    United States is that provision of training and technical assistance is
    a necessary ingredient for building successful entrepreneurs. In the
    highly developed U.S. economy, starting and running a successful
    business requires a solid understanding of business regulations, tax
    issues, record keeping, and marketing. Many of the thousands of people
    who have started microenterprises to make ends meet do not have these
    skills.
        Many of the organizations that provide training and technical
    assistance to microentrepreneurs are not currently eligible for Fund
    assistance because they do not meet our financing entity test under the
    CDFI Program. PRIME will allow the Fund to reach these organizations.
    The PRIME Act first, provides training and technical assistance to low
    income and disadvantaged microentrepreneurs; second, builds the
    capacity of microenterprise organizations so that they can better serve
    their low-income clients; and third, supports best practices research
    and development. I believe that PRIME complements the Fund's existing
    programs and will be a key tool for creating opportunity for low-income
    people.
                                   conclusion
        Mr. Chairman, Members of the Committee, thank you for giving me the
    opportunity to provide you with this information on the Fund's current
    activities and its plans for the future. I look forward to working with
    you over the course of this year's appropriations process. I would be
    happy to respond to any questions you may have.

                                      cdfi

        Senator Bond. Ms. Lazar, the CDFI has not been authorized;
    is that correct? There is no legislation by which you can
    measure the accomplishments of goals because this has been an
    appropriated program created out of the hip pocket of the
    Treasury. It has not been reauthorized?
        Ms. Lazar. That is right. The program had been authorized
    originally in 1994 and the legislation sunsetted last
    September.
        Senator Bond. One of the major concerns we have about the
    Fund is the ability to measure the impact of the programs. The
    GAO raised concerns about the impact of the strategic plan, the
    impact of external factors. How have you been able to measure
    the impact the CDFI Fund has on the economic development and
    revitalization of the depressed communities?
        Ms. Lazar. We have done a number of things. Why do I not
    start and I will ask Mr. Jones to add to it as we go along. The
    Fund requires each of its awardees to enter into an assistance
    agreement with us. We set up performance goals with measures
    for our awardees based on the 5-year business plan that they
    submit to us with their application. Those goals and measures
    are in large part developed between our staff and the awardees
    after the award is made.
        The GAO has suggested, when they came to visit with us last
    year, they made three recommendations for improvement in those
    goals and measures. They advised us that we should use greater
    accomplishment measures, outcome measures, if you will, rather
    than output measures. We have moved forward with doing that and
    adding at least one performance measure into the assistance
    agreements that reflects more of an outcome base.
        We also have begun an evaluation system whereby we require
    all of our awardees to fill out a survey that we have recently
    pretested, and the data that I read to you earlier came from
    that survey. The survey will be a requirement to be submitted
    by all of our awardees on an annual basis. So we have good
    information that is coming from those surveys about the
    economic impact of our award.
        We also were advised by the GAO to make sure that the
    measures that we set forth address key aspects of all the goals
    and we are moving forward with doing that. They also
    recommended that we provide baseline and target market
    information in our assistance agreements. And since last July
    when the GAO recommendations were final, we have been doing
    that. So we are working hard to make sure that we are
    consistent with the GAO recommendations.
        On the strategic plan side, the GAO reviewed the strategic
    plan that had been prepared earlier. It was done for our fiscal
    year 1998 budget submission. We undertook last spring a very
    intensive process and a very consultative process to redo our
    strategic plan. That strategic plan has been sent up here to
    the Hill for consultation, and we look forward to talking with
    you about the contents of the strategic plan.

                             conflicts of interest

        Senator Bond. Thank you. We look forward to following up on
    that. As I mentioned earlier, I do congratulate you on a very
    effective job of dealing with the Fund's management
    deficiencies. It is nice to have a contrast where KPMG comes
    back and says that the financial controls are in place.
        There is one serious issue that I must raise with you. It
    is been brought up by the Inspector General who rated a
    conflict of interest. I understand that you have taken some
    steps to address the potentials of conflicts of interest. The
    Treasury OIG has recently released a report and made some
    recommendations. They include training and materials for
    guidelines. What action have you taken to implement the
    recommendation on the conflicts of interest policy made by the
    Treasury OIG in their last month's audit?
        Mr. Jones. We have undertaken several actions with respect
    to the OIG's recommendations as well as recommendations that we
    have received from congressional committees. One thing that we
    do is we use outside consultants to help us review
    applications. And all of the outside consultants have to
    disclose any relationships that they have with an applicant in
    a pool that they are about to review. We recuse them from that
    application as well as any other applications of the same
    category of institution. And so that way, they are not only not
    reviewing an applicant with respect to which they have a
    conflict, they are also not reviewing an applicant that is
    competing against that application that they have a conflict
    with.
        Internally, we also review all Federal individuals who are
    reviewing applications, fund staff as well as other Federal
    people. We get disclosure information from them as well and
    also recuse them from applications that there is a conflict
    with. So we are constantly keeping our eye on making sure, one,
    that there is no conflict of interest and, two, there is no
    appearance of a conflict of interest. And where there is, we
    take decisive and quick action to remove those folks from
    reviewing those applications.

                                 prime proposal

        Senator Bond. Thank you very much. Let me ask a question on
    the microenterprise program. I understand that in 1995 the
    White House directed the Secretary of the Treasury to take all
    appropriate actions to coordinate all microenterprise programs
    administered by the Federal agencies and departments, and the
    interagency coordinating body was to be chaired by the
    administrator of CDFI. To what extent has this interagency
    group been involved in the development of the PRIME proposal?
    How did the interagency group relate this to existing programs,
    for example, in the Small Business Administration?
        Ms. Lazar. Let me tell you a little bit about the
    interagency council, the interagency working group on
    microenterprise. We formed it in July of this past year, July
    1998, and we brought together 12----
        Senator Bond. It took 3 years to get that done?
        Ms. Lazar. I am sorry. I would have to say that is how long
    it took.
        Senator Bond. For the immediate release, August 28, 1995.
    And it got going in 1998. Okay. We appreciate your coming on
    and taking that on.
        Ms. Lazar. We got started in July and I will say there had
    been some work done in anticipation of pulling together this
    working group. The first meeting of the working group took
    place July 8, 1998. We developed a mission for the group and we
    established three working committees.
        Senator Bond. Without going into the group, did they
    develop the PRIME proposal?
        Ms. Lazar. No. The PRIME proposal had been developed prior
    to the group really forming.
        Senator Bond. What was the relationship--developing the
    PRIME proposal, how did that relate to the programs of the
    Small Business Administration programs on micro loans and
    microenterprises?
        Ms. Lazar. In developing the PRIME program which was
    developed up on the Hill with input from us at the Fund, a good
    deal of time was spent trying to coordinate our efforts with
    other Federal agencies, trying to understand other Federal
    programs in this area. What distinguishes the PRIME legislation
    from other pieces of other programs is that it is really a
    training-led program rather than a credit-led program.
        We are right now putting together a compendium of all the
    programs in the Federal Government that will be linked together
    through a Web site. This is part of the work that we have
    undertaken with the interagency work group. To that end, we are
    making sure that the programs are not duplicative but rather
    complementary with one another.
        Senator Bond. I do believe the Small Business
    Administration has a technical assistance and capacity-building
    program already. And we will confer with our staff over there
    and submit some further questions because I am a little bit
    puzzled. It is a good idea but if it is being done once, that
    does not mean because it is a good idea, it ought to be done
    twice. We will work with our staffs on the Small Business side
    and perhaps submit some more questions for the record so I can
    get a better understanding of how this fills in an area that we
    are not already covering, or what the deficiencies are in these
    SBA programs.
        I see that my opportunity to turn to other members of the
    committee for further questioning has deteriorated. At this
    point, I thank you for your testimony. I congratulate you on
    the good work that you have done and we will leave the record
    open.
        There will be other questions, I am sure, from other
    members of the committee. I believe you will want to respond to
    the points raised by Senator Shelby in his statement for the
    record. That will be very helpful. And, as I said, we will have
    some further questions.

                         Additional committee questions

        Ms. Lazar. Thank you very much, Senator. Thanks for having
    us.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                      Questions Submitted by Senator Bond

                            microenterprise programs
        Question. In your fiscal year 2000 budget request, an initial
    funding of $15 million is being proposed for a new microenterprise
    technical assistance and capacity building program called ``PRIME.'' It
    is my understanding that there are already several microenterprise
    technical assistance and microloan programs throughout the federal
    government. In 1995, GAO identified seven other federal agencies and 20
    specific federal programs that support microenterprise development. For
    example, SBA has been administering technical assistance and capacity
    building programs since 1992. The Administration is also proposing an
    increase to the SBA microenterprise programs to $60 million in fiscal
    year 2000. I have also heard that some states and private foundations
    provide support for microenterprise development. I am concerned about
    creating a duplicative program within the Federal government,
    especially for an agency that does not have an established track
    record.
        Could you please describe the objectives of ``PRIME'' and what
    distinctions this proposed program has from other existing programs?
        Answer. The primary purpose of the PRIME Act is to build the
    institutional strength of microenterprise development organizations and
    programs and other qualified entities and assist these organizations to
    effectively meet the training and technical assistance needs of low-
    income and disadvantaged entrepreneurs. The proposed program would be a
    competitive grant program under which the Fund would provide funds to
    microenterprise development organizations, microenterprise development
    programs, intermediaries or other qualified organizations for the
    following purposes: (i) to provide training and technical assistance to
    low-income and disadvantaged entrepreneurs interested in starting or
    expanding their business; (ii) to engage in capacity building
    activities in order to enhance their ability to serve low-income and
    disadvantaged entrepreneurs; and (iii) to engage in research and
    development activities aimed at identifying and promoting
    entrepreneurial training and technical assistance programs that
    effectively serve low- income and disadvantaged entrepreneurs.
        PRIME would allow the Fund to meet a growing need that we currently
    cannot address. This is the need to strengthen organizations that are
    providing critical training and technical assistance to the most
    vulnerable population of entrepreneurs: low-income and disadvantaged
    microentrepreneurs. Many of the microenterprise development
    organizations that provide training and technical assistance to
    microentrepreneurs are not currently eligible for Fund assistance
    because they do not meet our financing entity test under the CDFI
    Program.
        One of the clearest lessons that has emerged from the first decade
    of microenterprise development in the United States is that provision
    of training and technical assistance is a necessary ingredient for
    building successful entrepreneurs. In the highly developed U.S.
    economy, starting and running a successful business requires a solid
    understanding of business regulations, tax issues, record keeping, and
    marketing. Many of the thousands of people who have started
    microenterprises to make ends meet do not have these skills. PRIME
    would address this issue.
        As you note, several agencies within the Federal government
    currently run microenterprise programs, and some states and private
    foundations provide support for microenterprise development. However,
    the overwhelming bulk of this support is in the form of loan capital.
    Support for microenterprise development organizations to meet the
    training needs of low-income and disadvantaged entrepreneurs has been
    minimal. PRIME is aimed at meeting such needs.
        The SBA's microloan program currently focuses on lending to
    qualified intermediaries which in turn provide small scale loans to
    small businesses for working capital, materials, supplies or equipment.
    The intermediary may also receive grant funds in an amount that is no
    more than 30 percent of its SBA loan. The grant funds may be used by
    the intermediary to provide technical assistance to borrowers and
    prospective borrowers. In addition, SBA makes grants to non-profit
    entities that provide technical assistance. These technical assistance
    providers primarily assist clients to access capital by offering them
    marketing and management help. Finally, SBA offers training to
    intermediary lenders to enhance these lenders' capacity.
        PRIME aims to meet the training and technical assistance needs of
    low-income entrepreneurs. It is a human capacity development strategy,
    rather than a credit and finance development strategy. The strategies
    are complementary, and are necessary to assist low-income people to
    enter the economic mainstream.
        PRIME is targeted to some of our most vulnerable citizens. At least
    50 percent of the grants made under the PRIME program must be used to
    benefit very low-income individuals, those persons with incomes of not
    more than 150 percent of the poverty line.
                               management issues
        Question. Ms. Lazar, I am pleased about the progress the Fund has
    made in its management. It seems that you have been able to hire strong
    financial management leadership.
        Could you please elaborate on how you were able to remedy the
    Fund's management problems? I would especially like to hear about how
    critical it has been to have a CFO and other financial management staff
    to deal with these matters.
        Answer. Critical to success in remedying management problems was
    the Fund's organizational restructuring implemented in the fall of
    1997. In addition to the Director, the restructured organization
    includes two Deputy Directors: a Deputy Director for Policy and
    Programs, responsible for Fund policy and programs and a Deputy
    Director for Management and Chief Financial Officer, responsible for
    management and administration functions. In addition, the Fund's Legal
    Counsel handles all of the legal matters of the Fund. The External
    Affairs Officer manages the Fund's outreach activities. This
    organizational structure enables the Fund to effectively manage its
    program, finance, management, legal and external affairs matters.
        Simultaneously with restructuring, we focused on recruiting,
    developing and retaining high-caliber staff throughout the Fund. Our
    goal was to enhance the in-house capacity and expertise of the Fund's
    staff. Among other hiring, the Fund fully staffed a financial
    management unit, including a Financial Manager (controller), staff
    accountant, and budget officer, all critical to successfully performing
    the full range of federal financial management functions (e.g.,
    planning, budget formulation and execution, accounting, internal
    controls, and auditing).
        We also developed, implemented and completed an aggressive
    corrective action plan to address quickly the material weaknesses that
    had been identified by both our new CFO and KPMG during the fiscal year
    1997 audit with a goal of achieving a ``clean'' audit for fiscal year
    1998. Throughout the year, there was a constant management team
    awareness of and support for establishing and maintaining a strong
    management control environment within the Fund--key to an unqualified
    audit opinion. In addition, there was complete management involvement
    and participation in implementing the provisions of the Government
    Performance and Results Act (GPRA) and the integration of the Fund's
    new strategic planning, performance planning, and budget processes.
        Having a CFO and other financial management staff was critical in
    helping the Fund to successfully implement its corrective action plan
    and obtaining a clean audit opinion.
                              performance measures
        Question. Last year you indicated that the Fund, in its reporting
    process for its awardees, had created a rigorous process to allow you
    to understand the impact of the CDFIs at the community level and their
    capacity to sustain themselves over time.
        Please provide some detailed results from this new process.
        Answer. Since the Fund began making awards, we have required our
    CDFI awardees to submit quarterly reports, annual reports and financial
    statements. These reports enable the Fund to monitor the organization
    and financial condition of the awardees as well as understand the
    impact of the awardees on the communities that they serve. In 1998, we
    enhanced our ability to collect data on the impact of our awardees by
    requiring them to complete and submit an annual survey designed to
    collect detailed information on the accomplishments of the awardees and
    their capacity to sustain themselves over time and by conducting on-
    site, in-depth case study analyses of a number of the awardees and
    their communities.
        In 1998, our survey collected performance and outcome data on 30 of
    our 31 first-round CDFI Program Core Component awardees. The Core
    Component is the largest of the CDFI funding programs administered by
    the Fund. The first-round awardees were chosen in 1996.
        We began our evaluation on only first-round awardees because they
    have had at least a year to absorb the Fund's investments and put them
    to work. Our sample of 30 first round awardees includes six credit
    unions, fourteen loan funds, three community development banks, three
    venture capital funds, two microenterprise programs, and two
    multifaceted CDFIs. Together, they received $34 million in CDFI awards.
    What has our $34 million helped these institutions to accomplish?
        Our preliminary findings demonstrate that these awardees have
    accomplished significant community development impact over the past
    three years. For example, they have made $565 million in community
    development loans and investments. These loans and investments have
    helped to: create or expand 1,895 microenterprises and 1,148
    businesses; create or retain 12,412 jobs; develop 8,617 units of
    affordable housing, 98 child care centers serving 7,168 children, 17
    health care facilities serving 32,723 clients and 170 additional
    community, cultural, human services and educational facilities.
        Further, these awardees have provided business training, credit
    counseling, home buyer training and other development services to
    10,641 individuals.
        Based on our sample, 70 percent of the clients of the average 1996
    awardees are low-income individuals. Sixty percent are minority
    individuals. Fifty percent are women. Fifty-three percent live in the
    inner city. Eleven percent live in rural communities. Thirty-six
    percent live in suburban areas.
        Since receiving their Fund awards, the 1996 awardees in our sample
    have strengthened their capacities to deliver products and services to
    their target communities over time. Their total assets have increased
    by 122 percent, growing from $473 million in the aggregate before they
    received their awards to $1.05 billion in the aggregate in 1998.
        The Fund's case studies include on-site evaluations by the Fund to
    examine the CDFIs activities within the local economic development
    context. To date, we have completed three case studies. We anticipate
    completing several per year. The three case studies that have been
    completed thus far have been in Boston, Massachusetts, San Antonio,
    Texas and Santa Cruz, California. Our initial research suggests how
    CDFIs are positively affecting their communities.
        In Boston, many of the city's poorer neighborhoods did not benefit
    from the economic growth in the 1980s; their conditions actually
    worsened during that period. Yet these same neighborhoods have
    experienced notable improvements in the past 10 years, thanks in part
    to the work of CDFIs such as the Boston Community Loan Fund and the
    Local Initiatives Support Corporation, two CDFI Fund awardees. These
    CDFIs have provided financial and technical support to two of the
    city's most effective community development corporations (CDCs),
    enabling the groups to develop the scale necessary to carry out
    affordable housing and commercial projects that have revitalized long-
    declining communities such as East Boston and Egleston Square. Since
    the mid- 1980s, the CDFIs have provided over $7.5 million to the CDCs,
    which in turn have: built or rehabilitated over 800 units of affordable
    housing; managed an additional 900 apartments and commercial
    properties; and operated after-school and other programs for 150
    neighborhood youths. The CDFIs have also played a crucial intermediary
    role, working with bankers, city officials, and corporate and
    foundation leaders to encourage additional targeted investment in these
    neighborhoods. A number of bankers view the CDFIs as important partners
    in their community development work, crediting the CDFIs with
    effectively serving organizations and individuals that the banks cannot
    afford to serve.
        Throughout San Antonio, public and private sector institutions
    recognize the important work of ACCION Texas, a CDFI Fund Awardee. From
    the city's Economic Development Office to local Chambers of Commerce to
    banks ranging in size from local independent banks to Chase Manhattan,
    ACCION is viewed as a crucial source of financial services for a
    previously neglected yet significant segment of the population: the
    low- and moderate-income microentrepreneurs who live and work in some
    of the city's poorest neighborhoods. ACCION is seen as the organization
    that can get loan capital into the hands of this underserved population
    and just as important--get it back. ACCION's 400 clients include
    plumbers, electricians, seamstresses, independent taxi drivers, and
    street vendors. They are primarily Hispanic. Without ACCION, they would
    not have adequate access to credit for their businesses. With ACCION,
    they are able to get the financial and technical assistance they need
    to expand their businesses and to make them more prosperous through
    better business management. ACCION's success in San Antonio has led it
    to begin opening offices around the state, in the Rio Grande Valley,
    Houston, Dallas, Austin, and Fort Worth.
        In Santa Cruz county in California, the third largest community
    credit union in the nation, the Santa Cruz Community Credit Union
    (SCCCU), offers a wide range of financial products and services
    designed to meet the financial needs of a predominantly rural low-
    income population. The need is perhaps greatest in Watsonville, where
    the unemployment rate is 15.8 percent, more than three times the
    national average. Adding to the unemployment rate are the once-migrant
    agricultural workers who are settling in the area in increasing
    numbers, even though agricultural work remains seasonal. The employment
    and income figures highlighted the importance of focusing on the
    Watsonville population. With the help of its CDFI Fund award, the Santa
    Cruz Community Credit Union opened a branch in Watsonville so that it
    could ensure credit and banking access for all citizens, especially the
    Latino population.

                              subcommittee recess

        Senator Bond. The hearing is recessed. Thank you.
        [Whereupon, at 11:25 a.m., Thursday, March 11, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

     DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2000

                                  ----------

                            THURSDAY, MARCH 18, 1999

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:32 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Christopher S. Bond (chairman)
    presiding.
        Present: Senators Bond, Burns, and Mikulski.

                 NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

    STATEMENT OF HON. DANIEL S. GOLDIN, ADMINISTRATOR
    ACCOMPANIED BY:
            MALCOLM PETERSON, COMPTROLLER
            LEE HOLCOMB, CHIEF INFORMATION OFFICER
            ARNOLD G. HOLZ, CHIEF FINANCIAL OFFICER
            JOHN D. SCHUMACHER, ASSOCIATE ADMINISTRATOR FOR EXTERNAL
                RELATIONS
            EDWARD HEFFERNAN, ASSOCIATE ADMINISTRATOR FOR LEGISLATIVE
                AFFAIRS
            JOSEPH H. ROTHENBERG, ASSOCIATE ADMINISTRATOR FOR SPACE FLIGHT
            SPENCE M. ARMSTRONG, ASSOCIATE ADMINISTRATOR FOR AERO-SPACE
                TECHNOLOGY
            EDWARD J. WEILER, ASSOCIATE ADMINISTRATOR FOR SPACE SCIENCE
            ARNAULD E. NICOGOSSIAN, ASSOCIATE ADMINISTRATOR FOR LIFE AND
                MICROGRAVITY SCIENCES AND APPLICATIONS
            ROBERTA GROSS, INSPECTOR GENERAL
            GHASSEM ASRAR, ASSOCIATE ADMINISTRATOR FOR EARTH SCIENCE

                    OPENING STATEMENT OF CHRISTOPHER S. BOND

        Senator Bond. Good morning.
        The hearing of the Senate's VA-HUD-Independent Agencies
    Subcommittee will come to order.
        This subcommittee meets today to review the fiscal year
    2000 budget request of the National Aeronautics and Space
    Administration, or NASA.
        We welcome Dan Goldin, NASA's Administrator and his staff.
        I am always excited by what NASA does--the awe-inspiring
    visions which allow us to picture the far reaches of the
    universe, to see the birth of stars and galaxies, and to
    imagine the possibility of life existing throughout the
    universe.
        This past year has continued that excitement, probably most
    emphatically with the return to space of Senator John Glenn and
    the successful launch of the first two elements of the
    International Space Station, which included the successful
    assembly of the Russian Zarya module and the U.S. Unity
    pressurized node.
        I am optimistic, despite the many challenges facing NASA in
    the coming year, that NASA will have another exciting year of
    achievement and success. In addition, the administration's
    budget request for fiscal year 2000 has attempted to establish
    a more honest NASA budget. Over the last few years, the
    administration has failed NASA and the Congress by requesting
    budgets that underfunded priorities and pitted the escalating
    costs associated with the Space Station with the costs
    associated with Space and Earth Science Programs.
        Nevertheless, with strong concerns voiced by both the
    ranking member, Senator Mikulski, my good friend and colleague,
    and me, the administration, at least within the NASA account,
    has begun to provide a more balanced and rational budget
    request by proposing some $13.58 billion for NASA in the year
    2000. While this is a decrease of $86 million from the fiscal
    year 1999 appropriations, the President's budget does commit an
    additional $180 million in fiscal year 2000 for the continued
    construction of the Space Station while providing balanced
    funding for the Space and Earth Sciences. Nevertheless, I
    expect this to be another very difficult year for funding
    decisions for the VA-HUD Appropriations Subcommittee.
        Mr. Goldin, those who have been to previous hearings have
    heard this sad story. You should be no exception. I need to let
    everybody know what a tough year we expect to have, especially
    since the budget submitted by the President raises expectations
    by not structuring spending decisions according to fiscal
    requirements and program needs. We have significant funding
    needs that we must address in this subcommittee, ranging from
    medical care and increased costs of medical care for veterans,
    to climbing costs associated with housing for low-income
    Americans, to relief for victims of disasters.
        We are not far enough along in the budget process to have
    an allocation for the subcommittee. So it is premature to
    discuss what levels of funding might be available to NASA. But
    you can be sure, with all of these pressures coming in other
    parts of our subcommittee's jurisdiction, it is going to be a
    tight year for allocations.
        Moreover, we did not get the budget deficit under control
    by inventing new programs and priorities. The budget surplus
    belongs to the American taxpayers and, ultimately, priorities
    such as Social Security are going to have to be addressed
    first.
        As we have learned, Federal spending must be responsible
    spending. NASA, as well as every agency, department, and office
    within the jurisdiction of this subcommittee, will have to
    justify fully its funding requests.
        NASA's biggest priority remains the International Space
    Station. Despite the retirement of our good friend Dale
    Bumpers, the continuing escalating costs of the International
    Space Station, from $17.9 billion to some $24 billion, and
    likely more, at completion, will remain a point of controversy
    and concern.
        Somebody will take up the cudgel, I am sure, to lead the
    opposition.
        The problem is compounded by significant and continuing
    concerns certainly that I have and that others have expressed
    over Russia's ability to meet its financial commitment as a
    partner, coupled with questions over its ability to meet
    schedule and hardware commitments.
        In addition, I have been very concerned that every year the
    funding for the Shuttle is reduced to continue to pay for the
    shortfalls and overruns of the International Space Station. And
    every year NASA assures us that safety issues for the Shuttle
    are not being short-changed.
        For example, in fiscal year 2000, the Shuttle account will
    receive about $20 million less than fiscal year 1999's
    appropriation.
        Shuttle safety, the safety of the men and women who venture
    so heroically into space, must remain our highest priority. In
    addition, the next major issue of program debate in NASA is the
    future of space transportation, with additional investment in
    the Shuttle pitted against the development of Reusable Launch
    Vehicles, including the development of a Crew Return Vehicle
    for the ISS.
        NASA is currently working with industry to develop a
    Reusable Launch Vehicle, or RLV, Program, that would be
    considered as a replacement program for the Shuttle, with a
    decision on the status of the RLV and the Shuttle due before
    the end of this century.
        As we all know, the purpose of the RLV is to develop the
    next generation Reusable Space Transportation Systems, such as
    the Single Stage to Orbit, or SSTO, concept, under which a
    rocket attains orbit with only one stage, instead of the two
    which is more common today, carrying a cargo or crew. The
    purpose is to have a vehicle capable of returning to Earth,
    being serviced quickly, and flying again in a very short time.
        Proponents believe the success of RLV will result in
    dramatically lower costs in accessing space, perhaps from the
    current $12,000 per pound associated with the current Shuttle,
    to as low as $1,000 per pound if our hopes and projections come
    out right on the Reusable Launch Vehicle.
        But for the cost of going into space, the critical
    component of the success of a commercial space program, we need
    to insure that this debate begins now. With the exploding costs
    of the ISS as a reminder of the costs of exploring space, we
    need to find ways to justify the costs of these new
    technologies and have the private sector as a partner in
    developing these technologies.
        Finally, I am very concerned about how NASA prioritizes
    programs and funding. We have been informed that a Hubble
    Telescope repair mission may be scheduled for the near future
    and that, because of failures of the gyroscopes, Hubble could
    stop being operational during this year.
        Hubble is clearly one of the crown jewels of NASA, and the
    loss of its use for even a day would be more than unfortunate.
    Nevertheless, I understand that NASA is struggling with
    budgeting a repair mission in large part because it has used
    Hubble reserves for other program shortfalls.
        I understand the risk of failure with the space mission
    because it is often cutting edge science. Nevertheless, NASA
    needs to budget its programs to anticipate needs like those of
    Hubble. We cannot continue robbing Peter to pay Paul. That is
    not an appropriate way to do business.
        We clearly need to understand how NASA prioritizes its
    missions and activities and how funding decisions are made.
        Finally, I conclude by applauding, once again, NASA on its
    many successes. I can assure you that I, and I believe all the
    members of this subcommittee and our staff look forward to
    working with NASA on its budget and programs.
        Having said that, I now, with pleasure, turn to my
    colleague and ranking member, Senator Mikulski, for her
    statement and comments.

                     STATEMENT OF SENATOR BARBARA MIKULSKI

        Senator Mikulski. Thank you very much, Senator Bond.
        I am going to welcome you, Dr. Goldin, and the entire NASA
    team here as we consider our appropriations.
        I am going to have a rather brief opening statement so that
    we can get right into the hearing. We have a vote on at 11:00.
        I also want to acknowledge and express my appreciation to
    Senator Conrad Burns, who is actually on the Commerce
    Committee, which is the authorizer for NASA. Therefore, this is
    quite a lineup that you have here this morning, with
    authorizing and appropriating members here.
        I really want to associate myself with many of the issues
    raised by Chairman Bond. But I will not elaborate on them in
    great detail until we get to the questions.
        I am glad to see that the administration has funded NASA in
    a 5 year approach.
        I am going to thank you, Dr. Goldin, for your work to
    insure that the out-year funding for NASA does not dip to a
    level that hollows out NASA programs. As you know, I have been
    deeply concerned about that.
        Now with a stable request over 5 years, we need to take a
    look at what we are going to do.
        I share Senator Bond's belief that we need to fund Social
    Security first, make sure that we set aside money for Medicare,
    because those two could really gobble up so much of our effort.
    But I do, I think, respectfully disagree with the other party
    that the money we are gathering in general revenues should not
    go for new tax cuts when we need to stabilize and modernize our
    programs. I'm not talking about new starts. But we have such a
    backlog of what we need to do to catch up in work, maintenance,
    and so on that I think ``no new starts, no new tax cuts'' might
    be a nice mantra.
        Having said that, then, I want to say that not only are we
    looking for stable funding, but we are also looking for
    stability and safety in our programs.
        We are pleased that NASA has included funding for the
    upgrades in the Shuttle's safety because it continues to be a
    top priority.
        We also know that we are deeply concerned about the issue
    of the whole Space Telescope endeavor; for one, not only the
    funds for a new, next generation telescope, but I am very much
    concerned about Hubble.
        We want to hear about the Hubble telescope. We want to hear
    about the mission that you are going to be doing, how it is
    going to be paid for and, once we do it, do we then truly
    extend the life of Hubble in a way that is reliable and
    sustainable. We will go into those questions.
        The other continues to be--I see the flashing yellow light
    on my time--the other is the continued escalating cost of the
    Space Station. We now know that we are moving to assemble and
    we are dazzled by the pictures. But we are concerned, once
    again, about Russia as a partner in this.
        As you know, Senator Bond and I asked you for a report on
    whether there should be new approaches. We had hoped to have
    that report in December so we could talk with the
    administration and so on. We want to hear from you on the
    report and why, quite frankly, it took you so long to give us
    the report so that we have it only a few days before the
    hearing, where we really could not give it the proper scrutiny.
        But I know it will be the source of other conversations,
    some of which might be classified.
        In terms of the Russians, I continue to be concerned about
    their missile transfer approaches and, therefore, their hand-
    to-hand complicit cooperation in the proliferation of the
    potential to deliver weapons of mass destruction.
        There are many other issues that we want to talk about,
    and, of course, I will always be interested in the Goddard
    budget. But we are really interested in space science and Earth
    science because that truly is really why we are really here
    with NASA.
        I could elaborate on this, but I would prefer to do it
    through the questions, knowing that Senator Burns will want to
    make some statements as well.
        So we are glad to have your budget. We need to know how we
    are going to sustain it. We are also interested in the fact
    that I truly believe that, because of the situation in which we
    have been and the escalating costs of the Station, you have had
    to--I don't want to say ``rob Peter to pay Paul,'' but you have
    certainly borrowed heavily. And if you have mortgaged the
    family farm, I think this is a good time to talk about it.
        Having said that, I thought I would use an agricultural
    analogy in deference to you, Senator.
        Senator Bond. Well, I'll tell you what--that dog will hunt.
    [Laughter.]
        We need to block those metaphors and see if we can't avoid
    space interference from metaphors. [Laughter.]
        With that, as Senator Mikulski said, we are very pleased to
    have the head of the authorizing team in the Senate, a member
    of this subcommittee, Senator Conrad Burns.
        Senator Burns.

                       statement of senator conrad burns

        Senator Burns. Mr. Chairman, thank you. I have no
    statement, prepared statement. Because we are going to have a
    vote at 11:00, we should get Administrator Goldin and his
    directors' presentations this morning.
        I share some of the same concerns that both of you have
    expressed.
        However, Senator, we have changed the view of some folks on
    wools. So if you need some wools down in Missouri, why we know
    where to get them, how to transport them, and so on.
        Senator Bond. You are putting them in the Space Shuttles,
    right? [Laughter.]
        Senator Burns. We want to send some to Missouri, don't we
    now?
        Senator Bond. Are we on the same wavelength?
        Senator Mikulski. I'm not going to jump in here.
    [Laughter.]
        Senator Bond. I think we will not go there any further.
        Thank you, Senator.
        Dr. Goldin, we have your wonderful statement of about 25
    pages in very small type. This is going to be great reading for
    us today. We will study it carefully.
        I would appreciate it if perhaps you could summarize it for
    us in 10 minutes so that we will all get several rounds of
    questions before we get to our vote.

                         statement of daniel s. goldin

        Mr. Goldin. Good morning, Mr. Chairman and members of the
    subcommittee. I am pleased to appear before you today to
    present the President's budget request for fiscal year 2000.
    And I am really pleased. For the first time in many years, NASA
    has a projected out-year budget that is higher than the budget
    year request.
        I want to thank both the chairman and the ranking member
    for the support you have given this agency in working with the
    administration on this issue.
        Funding has been added to the International Space
    Station's, Space Science and Future Launch. I am gratified by
    the administration's alignment of NASA priorities with the out-
    year NASA budget.
        Nonetheless, the request of approximately $13.6 billion for
    the fiscal year 2000 budget can be appropriately characterized
    as lean. It is below the fiscal year 1999 enacted levels and so
    tightly constructed that there are several areas where concerns
    have been raised and I heard a few of them.
        Senator Mikulski. Was it deliberate that we turned out the
    lights?
        Mr. Goldin. Yes.
        Senator Mikulski. Is this because of a sun spot?
    [Laughter.]
        Senator Burns. It's Y2K. [Laughter.]
        Mr. Goldin. It is not a Y2K bug. We were going to give you
    a multi-media presentation as I speak.
        Senator Bond. Fantastic. Thank you.
        [A video presentation was shown.]
        Mr. Goldin. We will be glad to enter into a dialogue with
    the subcommittee today to address concerns you may have about
    our funding levels for aeronautics, academic programs, space
    launch and technology investments, or any other area in which
    you have concerns.
        Mr. Chairman, we are proud of our accomplishments. Our
    agenda is ambitious, but it is achievable.
        Last year, a new star appeared on the horizon. It is called
    ``The International Space Station.'' With our international
    partners, we have begun to build this research center, which
    will be as big as the U.S. Capitol on orbit. The launches of
    Zarya and Unity and the spectacular EVA's to connect them mark
    the beginning of this next great human adventure in space.
        NASA is more than about space. We are about life on Earth.
    Our technology enriches people's lives, like this child
    (indicating), who is wearing a suit to protect him from
    sunlight. You are seeing the first flower this child has ever
    picked.
        Our Space Science Program is producing fantastic results as
    we keep driving down mission costs. We are in the middle of an
    intense launch period of 10 launches in 9 months.
        Lunar Prospector, which cost only $60 million for the
    entire mission, found indications of water ice on the moon, a
    still controversial finding.
        Deep Space I is testing advanced technologies such as
    electric propulsion. Stardust will return samples of primordial
    material from a comet in interstellar space. Chandra will be
    our third great observatory in orbit. It will explore highly
    energetic bodies, like black holes and quasars.
        Our Earth Science Program is experiencing the most
    ambitious year ever and is providing down to Earth benefits. We
    have a very ambitious program with almost a launch a month for
    the rest of the year.
        For instance, our data helps improve agricultural
    management by identifying disease susceptibility, assessing
    soil moisture, and helping farmers determine how much
    fertilizer to use and where.
        This year is very exciting as we launch Landsat 7. It will
    have many applications in agriculture, forestry, and regional
    planning. Terra will provide daily global measurements of ocean
    color and Earth's biosphere, key data for resolving unknowns in
    the global carbon cycle.
        Quikscat, developed in just 12 months, will use ocean winds
    data to track movement of storm systems. This should lead to a
    significant advance in weather prediction.
        In aeronautics, we are breaking through boundaries of
    flight. The solar powered, remotely piloted aircraft flew at a
    record breaking height of over 80,000 feet. The revolutionary
    X-33 is the flagship of our Reusable Launch Vehicle Program.
    You could see the oxygen tanks and the entire structure being
    built and the Aerospike engine being tested.
        NASA is doing more with less.
        This committee has had concerns about the International
    Space Station hurting other programs. This chart (indicating)
    shows that by 2001, the Space Science budget alone will be
    greater than the International Space Station.
        We have crossed over in fiscal year 1999 with a total
    science budget greater than that for the entire human space
    flight program. Recognizing this trend, the administration has
    included $10 million for next decade planning in this budget to
    insure an appropriate vision for the future that integrates
    robotic and human exploration.
        With funding for fiscal years 1999 and 2000, we are also
    continuing our Space Transportation Architecture studies to
    develop an investment strategy for reducing the cost of access
    to space by using commercial capabilities, Mr. Chairman.
        Now I would like to share NASA's future plans with you. New
    challenges will require revolutionary approaches. We have
    embarked on a NASA-wide program to establish an intelligence
    synthesis environment. Our goal is to enable scientists and
    engineers who are in geographically dispersed areas to work
    together as a team in a totally immersive, controlled, real-
    time, virtual environment for end-to-end space design,
    development, test, manufacturing, and operation.
        This will lower costs, accelerate development time, and
    increase mission success in times of ever decreasing budgets.
        We will look forward to completing the construction of the
    International Space Station with our partners. This research
    center in space will include over 100 major pieces of hardware
    from 16 countries. These pieces will be delivered by 6
    different vehicles from 4 different launch complexes around the
    world.
        The availability of this lab in space will create new
    opportunities for long-term research. For example,
    biotechnology facilities will enable us to uniquely grow and
    study cellular structures, including living tissue and protein
    crystals.
        The requirements of keeping a crew healthy in space so that
    we will be able to go to other planets in our solar system will
    lead to a whole new variety of medical technologies, including
    telemedicine techniques, that will have applications around the
    world.
        One goal of our Space Science Program is to establish a
    virtual presence throughout our solar system, sending fleets of
    small spacecraft, rather than single large missions. This will
    include a sample return mission from Mars in the next decade.
    We will rendezvous with comets.
        The next generation Space Telescope will build on Hubble's
    marvelous results. It should cost about one-fifth of what
    Hubble cost but be about 3 times bigger and 10 times more
    powerful. It will explore much longer wavelengths of key
    scientific interest.
        In the future, NASA will have spacecraft, rovers, and
    probes in orbit around various planets and the moon, in their
    atmospheres around their surfaces, and burrowing underneath
    their surfaces.
        We will require an inter-planetary internet to assemble and
    send back to Earth the tremendous amount of information that
    will be generated by these robotic emissaries. The first step
    at Mars is in this year's presidential budget.
        Future Earth science will help us better understand our own
    planet. We will be able to see the Earth through different
    lenses showing water vapor, the biosphere, global cloud cover,
    ocean temperature, and crystal dynamics. Collectively, these
    views show us how the planet works as a system.
        In the future, we will integrate detailed measurements at
    the global, regional, and local levels and combine them with
    predictive modeling. We hope to be able to understand and
    predict weather and climate on a seasonal, annual, and,
    ultimately, decadal basis.
        Commercial applications will include agriculture, urban
    planning, disaster mitigation, environmental compliance,
    highway and pipeline siting, and resources management. A whole
    new industry is growing based on this work.
        NASA will continue to push the frontiers of flight from
    general aviation to space access. We are developing aeronautics
    technology to help reduce the fatal accident rate by a factor
    of 5 in 10 years and a factor of 10 in 20 years.
        For example, we are working advanced true interfaces that
    will make it easier for pilots to understand what is happening
    in and around the aircraft. We are working at putting air
    traffic control technologies in the cockpit to give pilots the
    ability to optimize their costs based on weather, traffic, and
    other factors.
        With synthetic vision, pilots will be able to see the
    landscape no matter what the weather, day or night, decreasing
    the likelihood of accidents. This technology has applications
    for civil and military, commercial and private, large and small
    aircraft.
        A new Ultra-Efficient Engine Technology program will push
    the state of the art in high temperature materials and
    combustion to lower fuel consumption and improve performance.
    We are looking to the future when there will no longer be a
    distinction between air and space travel. The X-43 is a flight
    experiment that will, for the first time in history, test a
    SCRAMjet at speeds of up to MACH 10.
        Another concept we are studying is the rocket based
    combined cycle with magnetic levitation launch. This is not
    science fiction.
        The revolutionary Reusable Launch Vehicle Program, a
    partnership with industry, is demonstrating technologies that
    could dramatically reduce the cost of launching a payload to
    orbit from today's roughly $10,000 a pound to $1,000 a pound
    while, at the same time, improving safety by a factor of 10.
        Because NASA does not think small, because we plan for the
    long-term, not the short-term, this budget is not designed for
    the next decade. It is an investment in the next millennium.

                               prepared statement

        NASA is proud to lead the way. This program is not for the
    faint of heart. NASA boldly pushes forward and performs to make
    America better. I am very proud and honored to lead the NASA
    team as we serve our country.
        Here you are seeing a plane that will fly on Mars in 2003.
        [The statement follows:]

                     Prepared Statement of Daniel S. Goldin

        Mr. Chairman and Members of the Subcommittee: I am pleased to be
    here to present to you NASA's budget request for fiscal year 2000. It
    is a great time at NASA. This budget is the first budget for the 21st
    Century, a century in which humans will live permanently in space, on
    the International Space Station, and later perhaps beyond. Before we
    look ahead to the bright future, I want to lay the foundation by
    looking at the past. Our achievements, and yes, our problems, have
    prepared us for the future.
        While the fiscal year 2000 request represents a decrease from the
    fiscal year 1999 enacted level, it is the first budget in five years
    which reflects an increase in the outyears. NASA has undertaken the
    challenge of the past five years by becoming more efficient. By
    prioritizing and, as required, cutting programs whose cost estimates
    were unrealistically low, schedules unacceptably long, or objectives no
    longer relevant to our mission, we saved valuable resources. With those
    savings, we started 9 new programs, like Origins, which could help us
    to answer fundamental questions about life in the universe, and
    Advanced Space Transportation, which could revolutionize space travel.
    The percentage of our budget devoted to science and technology has
    increased from 31 percent in fiscal year 1991 to 41 percent today, and
    is planned to grow to 45 percent in fiscal year 2004. At the same time,
    the percentage of our budget devoted to human spaceflight has declined
    from 48 percent in fiscal year 1991 to 40 percent today, and is
    projected to decline to 35 percent by fiscal year 2004. As a result,
    our budget is much more balanced.
        We have made difficult choices to enable us to move toward an
    ambitious, but achievable, future.
        We are managing our programs in a fiscally responsible manner. In
    1992, a General Accounting Office survey of our major programs
    identified an average cost growth of 77 percent. We aggressively
    attacked the problem, and through management oversight, cost-cutting
    efficiencies and identifying the problems, have created positive
    results. Cassini, Mars Global Surveyor, Mars 1998 Orbiter, Mars 1998
    Lander, Stardust, NEAR, ACE, and Mars Pathfinder have all been launched
    on time and within budget.
        We continue to find efficiencies in operations while we improve
    safety; from fiscal year 1993 to fiscal year 1998, the annual Shuttle
    budget is down 29 percent, while the measures of Shuttle safety and
    performance have improved dramatically. I am proud of the NASA-
    contractor team that made this happen. Over the same time period, we
    have improved the manifest lead time by 28 percent, and increased the
    maximum lift capacity to the International Space Station by 71 percent.
        Some of my favorite metrics are associated with science spacecraft
    design and development. In the early 1990s, the average cost of
    spacecraft development was $590 million. From fiscal year 1995 to
    fiscal year 1999, it is $205 million, and our goal for fiscal year 2000
    to fiscal year 2004 is $79 million. Development time has come down
    dramatically. In the early 1990s, the average development time for
    spacecraft was eight years. From fiscal year 1995 to fiscal year 1999,
    it is five years, and for fiscal year 2000 to fiscal year 2004 our goal
    is four years. Our annual flight rate went from two in the early 1990s
    to seven in fiscal year 1995-1999, and we plan on fourteen flights a
    year on average from fiscal year 2000 to fiscal year 2004. The missions
    are exciting, as attested to by extensive media coverage and hits on
    NASA's World Wide Web site, and scientifically sound.
        We're not just talking about improvements, we're implementing them.
    Our Discovery series of spacecraft must be developed in less than three
    years and for less than $150 million (FY 1992 dollars). Stardust,
    launched this month to gather and return samples from a comet, took 27
    months to develop and cost $120 million. We have 11 planetary
    spacecraft that, together, cost the same as the single Galileo
    spacecraft.
        We have changed NASA as an institution. In 1995 we conducted a Zero
    Base Review (ZBR) which created Lead Centers and Centers of Excellence.
    This led to the elimination of redundant capability at our Centers and
    allows each Center to focus on what it does best. We redefined the role
    of Headquarters to define ``what'' NASA should do, and leave it to the
    Centers to figure out ``how'' to make it happen. We met our goal of
    cutting the total Government/contractor workforce at Headquarters by a
    factor of three, including cutting the civil servant staff in half. The
    total NASA workforce has come down from about 25,000 in fiscal year
    1993 to 18,545 for fiscal year 1999 without a reduction-in-force.
        We established a Program Management Council to catch cost overruns
    and schedule problems, and it is working in programs like Chandra,
    Clark, and X-33/RLV. Our new approach to contracting, holding
    contractors accountable for delivering on budget and on schedule, is
    working in programs like SFOC, CSOC and the TDRS-Hughes contract.
        Within NASA, I have established safety as our most important core
    value. The safety ethic will permeate all NASA activities, on the
    ground, in the air and in space. Our current program is good; however,
    we can and will do better. I am working to ensure that all NASA
    managers understand what is expected of them when it comes to safety
    and health. Our managers and employees are stepping up to the challenge
    and working to identify and correct any deficiencies in safety and
    health as these are identified. No compromises shall be made when lives
    are at stake.
        We at NASA are proud of our Strategic Plan. We have a vision for
    the Agency and roadmaps to get there. We look forward to working with
    this committee and others in the coming year as we revise and refine
    our Strategic Plan. Our fiscal year 2000 Performance Plan, which will
    be sent to you shortly, will include interim adjustments to our 1998
    Strategic Plan. These changes reflect a special emphasis on safety and
    changes we have made in the NASA organization. Under the Government
    Performance and Results Act (GPRA), a fully updated Strategic Plan must
    be submitted by September 30, 2000. We intend to get an early start and
    will be working with you to enable the Committee's full participation
    in this process. GPRA, through its requirements for strategic and
    performance plans, has provided a structure for NASA to prove to the
    American taxpayer that we do what we say, and that what we do matters.
        In order to assure that NASA can implement its Strategic Plan, we
    have underway a Core Capabilities Assessment, led by the Chief
    Engineer. The purpose of the assessment is to identify the physical and
    human assets required to deliver on the established Mission Areas and
    Center of Excellence assignments identified in the Strategic Plan. We
    will use the results of the assessment in formulating the fiscal year
    2001 budget.
        We had a very exciting year in 1998, full of new discoveries and
    heroes, and a celebration to commemorate our 40th anniversary. The sun
    rose on the International Space Station with the launch of the first
    element, Zarya (Sunrise), in November, and the world watched as our
    astronauts connected the U.S. Unity node to it in December. John Glenn
    returned to space in October for a nine-day research mission. We now
    have images of the faintest galaxies ever seen. We launched the Mars
    Climate Orbiter, the third mission to that planet in as many years. The
    Tropical Rainfall Measuring Mission, a cooperative mission with Japan
    launched last year, will revolutionize our knowledge of how storms and
    hurricanes form and dissipate and enable new weather forecasting
    methods. The U.S.-Canadian Radarsat created the first detailed radar
    map of Antarctica. We took atmospheric flight to new heights as the
    remotely piloted Pathfinder aircraft surpassed 80,000 feet. We
    continued to push the technology to lower space launch costs, making
    the first selection under the new Future-X program, which is the next
    step in the space access revolution. This is just a sampling; I will
    discuss in more detail the achievements of NASA's Enterprises later in
    the statement.
        We see where we have been; where are we going from here?
        In five years, the International Space Station (ISS) will be
    complete and serving as an outpost for humans to develop, use, and
    explore the space frontier. The ISS will greatly expand research
    opportunities, leading to exploration breakthroughs, scientific
    discoveries, technology development and new space products. We will
    continue to safely fly the Space Shuttle--the workhorse to support
    assembly for the Space Station. While we do this, we will make
    fundamental decisions on the long-range strategy for sustaining human
    access to space through upgrades to the Space Shuttle, or through
    replacement of the Space Shuttle. We will stay on the road to
    commercializing space operations, including space transportation, space
    communications, and the International Space Station. As we transition
    from operations to core R&D functions, we will lay the groundwork for
    decisions on extending human presence beyond Earth orbit.
        In Space Science, we are poised on the edge of a new undertaking
    aimed at helping us answer some very old questions: What is our place
    in the cosmos? How did we get here? Are we alone? You first heard about
    the Origins program a few years ago. It is time to turn Origins into a
    reality. In the not-too-distant future, we will move from the planning
    stages to actual launch and operations of a number of Origins missions.
    These missions include powerful telescopes to find the earliest
    structure in the universe, to search for planets around other stars,
    and to look for potential evidence of life on these newly discovered
    planets. They also include robotic probes to Mars, Europa, and other
    targets in the search for the beginnings of life in the backyard of our
    own solar system. The data gathered from these new missions combined
    with what we continue to learn about the mysteries of the deep universe
    and our own Sun from ongoing missions should help us begin to unravel
    the answers to these questions that are as old as humankind itself. Our
    goal is simple--to do what no generation before us has been able to--
    understand our place in the cosmos.
        Closer to home, through the Earth Science Enterprise (ESE) we will
    develop a comprehensive understanding of the total Earth system and the
    effects of natural and human-induced changes on the global environment.
    To accomplish this, we are drastically shrinking the size, cost and
    development time for missions in the next decade. But NASA is not going
    to stop with just smaller, cheaper versions of today's science
    satellites or be confined to low-Earth orbit. The state-of-the-art in
    instrument and spacecraft technologies points to the near future when
    present-day thousand kilogram, cubic meter satellites are replaced by
    constellations of micro and nano-satellites with instruments on chips.
    These advanced satellites will not operate independently of each
    other--they will be intelligent constellations working together to
    provide the views having the temporal and spatial resolutions users
    want. They will be capable of on-board data processing and direct
    downlink of information to users' desktop computers in near real time
    at the cost of long distance telephone calls. While accomplishing our
    science objectives, these advanced satellites will enable the next
    great advances in weather and climate prediction, improve agricultural
    productivity, and advance the growth of the U.S. commercial remote
    sensing industry.
        With the Aero-Space Technology Enterprise, NASA seeks nothing less
    than to revolutionize the way we travel to neighboring cities,
    countries and planets. The benefits of the communication revolution we
    are living through today will only be fully realized when it is
    accompanied by a transportation revolution. In a ``wired'' economy, we
    need to move people and goods more safely, more quickly, more
    efficiently, and with less environmental impact. Today, NASA is
    concentrating on these public goods issues in partnership with the
    aviation community. Working with the Federal Aviation Administration
    (FAA), airlines and industry, we are going to create a commercial
    aviation system that is safer, more efficient and friendlier to our
    communities and our globe. And while we are revolutionizing aviation,
    by significantly reducing the cost and increasing the reliability of
    space transportation, we will open space to human endeavor. Think of
    the science missions we do today, and then imagine space transportation
    systems that support faster missions with three or four times the
    amount of science at lower cost. Imagine the commercial opportunities
    that will develop in earth orbit for communications, materials science
    and pharmaceuticals, space-based power and other applications when the
    cost is one tenth or even one hundredth of today's costs. That is what
    we are working for.
        We understand the road ahead presents challenges. First among these
    is keeping our promises on key programs such as International Space
    Station and the Earth Observing System. This will require in the first
    case flexibility and determination, and in the second case new
    information technologies and management approaches. Another challenge
    is within NASA itself: the design of the NASA organization, the skills
    of our workforce, the availability of research and technical
    facilities, the evolution of existing assets, and our interactions with
    customers, partners, and suppliers must reflect and support the
    changing nature of our programs. For instance, the emergence of
    ``virtual'' structures--collaborative and geographically dispersed
    teams--to conduct work requires new concepts of organization and
    management. And our emphasis on commercializing operations while
    focusing on R&D requires new ways of dealing with customers, partners
    and suppliers. The third major challenge I see for NASA is that of
    ``continued relevance.'' Fundamentally, NASA needs to continue to
    benefit the taxpayers who foot the bill for a vibrant aeronautics and
    space program. To meet this challenge, we need to remain focused on our
    ultimate customer, the taxpayer, while doing a better job communicating
    the outcomes and benefits of our programs. Mr. Chairman, I believe NASA
    is poised to meet these challenges and achieve our vision for the
    future.
                            fiscal year 2000 budget
        This budget is another important step on NASA's path back to its
    roots in research and development, an important step towards achieving
    the vision I just laid out. The fiscal year 2000 budget provides
    stability in the outyears, and strikes a balance between upholding our
    commitment to the International Space Station (ISS) and advancing
    research and technology.
        All of you are aware of the challenges facing us and our
    International Partners on the ISS program. This budget reflects an
    Administration policy decision to reduce the level of risk to the ISS
    with a net increase of $1.4 billion over the next five years, including
    $349 million more for fiscal year 2000 alone. We have enhanced Station
    budget reserves, are developing a robust Russian Contingency Plan,
    which includes use of the Shuttle for ISS reboost, development of a
    U.S. propulsion module, and additional Shuttle launches for logistics
    support. While advancing the ISS, we have preserved NASA's other core
    research activities and are investing in new technology initiatives
    that will provide robust options for exciting NASA missions in the next
    decade.
        As ISS brightens the sky, so will many, many science missions
    funded in this budget. We are in the middle of launching ten Space
    Science missions in nine months. With the funds provided by the
    Administration in this budget, we will be developing Self-Sustaining
    Robotic Networks. Building on the enormous success of Mars Pathfinder,
    these self-tasking, self-repairing, evolvable networks of small, highly
    mobile machines will give us the permanent ``virtual presence''
    outposts we need to achieve high priority Origins science objectives on
    Mars, Europa, Titan, Callisto and other key points throughout the solar
    system. Thanks to Administration investments, we will also be
    developing the other end of the spacecraft technology spectrum in
    Gossamer Spacecraft. These are lightweight, large-scale, deployable
    spacecraft that will enable revolutionary, light-gathering capabilities
    for solar sails, telescopes, and power collection. Through Mars Micro-
    Missions and a Mars Network, the Administration is also supporting
    enhancements to the baseline Mars Surveyor program that greatly
    increase the quality and quantity of the Program's science return and
    the Program's opportunities in public education and exploration.
        In recent days, I have accepted a recommendation from my senior
    management that NASA revise its previous plan for the next Hubble Space
    Telescope (HST) servicing mission (SM-3), to undertake an expedited
    servicing mission in October 1999, and a second servicing mission as
    soon as operationally feasible. The need for a mission to ensure
    continued HST science operations has arisen suddenly because two of the
    remaining five operational gyroscopes in the telescope's guidance
    system have malfunctioned in the past six months. Although the loss of
    gryoscopes is expected over time, the recent loss of two, in rapid
    succession, leaves the Telescope one failure away from a total shutdown
    of science operations. The spacecraft is not in danger, and will remain
    safe until a repair mission can be launched. However, a shutdown in
    science operations would be a severe blow to the scientific community,
    as Hubble is arguably the most productive, and certainly the best-
    known, astronomical science facility in the world. Developing and
    executing this servicing mission within seven months is a challenge,
    and would not have been possible if it were not for the fact that
    training has been ongoing for the previously planned servicing mission.
    Furthermore, the HST replacement hardware required for this expedited
    servicing mission has been budgeted for in the fiscal year 1999 and
    prior budgets. We are in the process of identifying offsets to
    accommodate the costs of this expedited mission, and will submit a
    revision to our fiscal year 1999 Operating Plan to the Committee in the
    near future.
        We will launch eight Earth Science missions this year, including
    the first two Earth Observing System missions. NASA will continue to
    contribute to the ``Digital Earth'' effort, by fusing Earth Science
    data, socio-economic data, and other data sets that can be ``geo-
    referenced'' and used to communicate a tremendous amount of information
    to scientists and non-scientists.
        A broad new technology initiative I am particularly excited about
    is the Intelligent Synthesis Environment (ISE) that will revolutionize
    the way NASA conceives, plans, and develops its missions. In today's
    engineering environment, we and industry take too long to develop our
    missions and effectively commit about 90 percent of cost very early in
    the development cycle when we only have about 10 percent of total
    design knowledge. Over the next five years NASA will research, develop,
    and implement the tools and processes to dramatically reduce spacecraft
    development time while creating much higher confidence in performance
    and total life cycle cost estimates. ISE will exploit emerging advances
    in ultra-high speed computing, advanced communication networks and
    totally new analysis methods; it will allow us to ``virtually'' build
    and test vehicles and systems before we spend money on expensive
    hardware. When fully deployed, ISE will enable geographically dispersed
    scientists and engineers to function as an integrated, collaborative
    team with the understanding and knowledge necessary to develop complex
    missions faster, with better- understood risk and much lower life-cycle
    costs.
        We are continuing to focus on high-priority aeronautics research,
    aggressively pursuing our goals in aviation safety and systems capacity
    as well as next-generation design tools. And our pursuit of cheaper,
    more reliable space transportation for the next century continues with
    our Reusable Launch Vehicle technology program and the ongoing,
    industry-led Space Transportation Architecture Study (STAS). This Study
    was initiated last year to help us develop an investment strategy for
    reducing the cost of access to space by using commercial capabilities.
    The study is assessing: (1) if the Space Shuttle should be replaced;
    (2) if so, when the replacement should take place and how the
    transition should be implemented; and (3) if not, what upgrades should
    be made to continue safe and affordable flight of the Space Shuttle. We
    awarded study contracts to the Boeing Corporation, Kelly Space and
    Technology, Lockheed Martin Corporation, Orbital Sciences Corporation,
    and Space Access--representing the entire spectrum of players in the
    launch vehicle business--to solicit their assessments of future options
    to that could feasibly commercialize NASA's space launch requirements.
    The industry teams gave NASA their final reports in late January. These
    results are being independently assessed and will be integrated by an
    in-house team into space transportation architecture options. Over the
    next few months, additional work will be tasked to refine and further
    develop some of these options. NASA has set aside a portion of its
    outyear budget to provide resources for achieving a reduction in future
    launch costs, while funding the Space Shuttle Program at levels which
    accommodate essential safety obsolescence mitigation. The STAS will
    help us understand how we can make investments to leverage commercial
    launch capabilities that transition us away from owning and operating
    space transportation systems and toward private sector competition for
    NASA's launch requirements. From these options, the NASA Space
    Transportation Council will make recommendations this summer to me
    concerning a future space transportation investment strategy. We expect
    to continue to invest in critical technologies that reduce financial
    and technical risks for competing concepts leading to a competitive
    selection of a preferred approach or approaches in the 2002-2005
    timeframe. I will make recommendations in this regard to the
    Administration this fall as part of the fiscal year 2001 budget
    process.
        We have taken aggressive actions to ensure that our missions,
    systems, and supporting infrastructure and facilities are not disrupted
    by the transition to the year 2000. As of March 15, 1999, 93 percent of
    our 158 mission critical systems are, or have been made to be Y2K
    compliant. NASA has completed renovation and validation on all but one
    of the 101 mission critical systems we are repairing (Y2K work on the
    SOHO ground system has been deferred until full recovery is complete).
    We will complete implementation of planned repairs and replacements for
    mission critical systems by the end of March. In addition, we have
    repaired almost 350 non-mission critical systems, validated over 6000
    commercial products, and tested over 52,000 workstations and servers.
    No significant Agency asset has been untouched.
        While these accomplishments are noteworthy, NASA is going beyond
    stated requirements to ensure our missions and programs are ready for
    the new millennium. During the remainder of 1999, NASA will conduct a
    suite of extensive end-to-end tests that include interfaces to external
    infrastructure outside NASA control (e.g. electric power grid) to
    validate our Y2K operational readiness. For example, we will be
    executing a series of end-to-end tests, culminating in a Space Shuttle
    pad test, to verify that all aspects of the Space Shuttle program will
    be functional in the Year 2000. As part of this test, we will run a
    pre-launch countdown (to L+5 seconds) with a vehicle physically on the
    pad and all supporting systems in a Y2K configuration. For the
    International Space Stations, we are conducting an end-to-end test with
    Mission Control Center-Houston, Mission Control Center Moscow, and the
    supporting networks. We are also conducting a series of twelve end-to-
    end tests to demonstrate the readiness of command, tracking, telemetry,
    and data services supporting all NASA missions, including NASA's Deep
    Space Network, Ground Network, Space Network, and NASA Integrated
    Services Network. We will continue to conduct end-to-end tests for
    Space and Earth Science missions similar to the recently completed
    Cassini test. This test demonstrated end-to-end compliance by flowing
    data in a Y2K environment from a Deep Space Network facility at the
    Goldstone complex all the way to two end user sites at John Hopkins
    University and in England. In addition to ensuring compatibility
    between NASA's systems and external infrastructure, these end-to-end
    tests will provide added confidence regarding the operations of
    internal NASA systems.
        As a further assurance, each NASA Enterprise and field Center is
    preparing business continuity/contingency plans to provide an
    acceptable level of NASA functions in the event of failures of internal
    or external assets or services due to Y2K anomalies. During the
    rollover weekend, we will have additional ``Response Center'' staff on-
    site at each field Center and Headquarters. We are also establishing
    strategies for all missions for the selective quiescence of facilities
    and systems, including restriction of spacecraft commands during the
    rollover. NASA is committed to ensure that the Agency transitions
    safely to the new millennium with zero failures or significant
    malfunctions and that any unforeseen discrepancies are resolved with
    minimal impact on normal operations.
        We are excited about what the future holds for NASA. The fiscal
    year 2000 budget of $13.6 billion provides not only continuity and
    stability, but also a moderate investment in far-term technologies and
    planning. This vote of confidence from the President that we are ready
    and energized to tackle new challenges in the new millennium is a
    challenge we proudly accept.
                               nasa's enterprises
    Human Exploration and Development of Space Enterprise
        International Space Station.--The International Space Station (ISS)
    has become a reality. The foundation, befittingly named Zarya, for it
    marks the dawn of a new era, was lifted to orbit aboard a Russian
    Proton launch vehicle last November. A month later, Unity was carried
    to orbit aboard Shuttle Endeavour and berthed with the Zarya module.
    Before long, passageways from Unity will link to other chambers such
    as: Destiny, the U.S. laboratory; the Russian Service Module; and the
    airlock.
        Astronauts James Newman and Jerry Ross made it look easy,
    connecting umbilicals providing power and communication links from
    Zarya to Unity, bringing Unity's on-board systems to life. This is the
    first time ever that two such complex international spacecraft--built
    10,000 miles apart, and assembled permanently in orbit over a period of
    a few short days--has been accomplished. We understood that the
    complex, international nature of this venture would present
    unprecedented challenges, because we would not be able to perform
    integrated testing of all international elements on the ground. The
    Zarya/Unity mating was truly an outstanding effort by the NASA/RSA
    team. Many challenges were overcome to reach that moment, and we know
    that many formidable tasks lay ahead. Since the beginning of the
    International Space Station Program, we have worked through many
    questions and uncertainties with our partners to achieve definite,
    measurable, and notable forward progress. In 1994, we were moving out
    of the design phase and into manufacturing. By 1997, we began to see
    major subsystems and elements take shape as we entered into test and
    validation activities. We began to integrate these systems with the
    Shuttle fleet. Today, while the Boeing developmental effort is over 80
    percent complete, we continue to have elements in all phases of
    development, and operational elements on orbit. The International Team
    has demonstrated that it is fully committed to working together to
    overcome new challenges as they arise, to assure safe design and
    operations and to make the ISS a reality.
                                     russia
        When provided with adequate resources, the Russian Space Agency
    (RSA) has demonstrated worthy performance. However, despite a high
    level of commitment by RSA, Russia's fiscal realities continue to
    impede RSA's ability to deliver its substantial contributions to the
    ISS in a timely manner. Those contributions include propulsive attitude
    control, reboost, early crew quarters and life support, crew rescue,
    and command and control during the early assembly period. NASA has
    plans for U.S. capabilities in all these areas, which provide backup
    and in the long-term make ISS operationally more robust. But the costs
    of delaying the assembly until these U.S. capabilities are available
    would be significant; the prudent course is to continue to seek
    Russia's contributions.
        NASA's approach to contingency planning has been to incrementally
    fund activities that permit station development to continue to move
    forward, although not as originally planned, should the planned
    contributions of our ISS partners not be delivered as scheduled. Our
    Contingency Plan to mitigate the financial and schedule risk from
    potential shortfalls in Russian contributions consists of: (1) building
    up U.S. capabilities as backup to protect against possible Russian
    shortfalls, which will also make the ISS more robust; and, (2)
    potential purchases from RSA in specific areas where Russian goods and
    services are of value to the United States.
        In October 1998, to provide funding stability to RSA, NASA
    purchased for $60 million valuable crew research time and stowage space
    in Russian elements of the ISS. To mitigate further schedule
    disruptions and cost growth, NASA is considering plans to continue
    contracting with RSA for additional goods and services of value to the
    U.S. We are carefully monitoring three areas before we make decisions
    regarding any follow-on contract with RSA for goods and services: (1)
    confidence in the Service Module launch schedule, based on successful
    testing, shipment to Baikonur, and funding flow; (2) clarity on the
    Russian Government plans for the future of the Mir, specifically
    including validation that any extension of Mir operations will cause no
    interference with Russian Government funding for their commitments; (3)
    clear understanding from RSA that other Russian hardware and vehicles
    they have committed for ISS are being produced. NASA has budgeted $100
    million in fiscal year 1999 to procure goods and services, which could
    include a Soyuz vehicle needed by the United States to enable a 6-
    person ISS crew prior to the deployment of a U.S. crew return
    capability. However, this budget includes no provision for purchases
    from Russia in fiscal year 2000 and beyond. We will continue to monitor
    the overall Russian situation in this regard.
        The Interim Control Module (ICM), another element of NASA's
    contingency plan, can provide propulsion and attitude control
    capability. Through innovative Shuttle flight planning, NASA has
    developed an ``each flight'' reboost capability, under which NASA
    could, if necessary, offset as much as a 30 percent shortfall in
    Russian Progress vehicle propellant logistics. We are modifying the
    Orbiter fleet to enhance this Shuttle reboost capability to both
    increase flexibility of reboost as well as increase the propellant
    shortfall offset to at least 50 percent. When coupled with the ICM's
    capabilities, Shuttle reboosts will provide needed contingency
    protection to safely maintain elements already in orbit, and allow us
    to continue ISS assembly in the event of Russian shortfalls until a
    U.S. permanent propulsion module can be deployed. As a result of our
    review of the Propulsion Module requirements and implementation plan on
    February 17, we have authorized the contractor to proceed with
    procurement of the next set of long-lead parts, and to prepare for a
    Systems Requirements Review later this month. Delivery of the
    Propulsion Module could be as early as fiscal year 2002.
        Relative to the Service Module, Mr. Koptev, RSA's Director,
    informed me last month that despite running Service Module (SM)
    integration tests around the clock and on weekends, some schedule
    slippage has occurred due to normal technical difficulties. Our ISS
    management team will be traveling to in Russia for a General Designers
    Review and Service Module roll out prior to shipment to the launch site
    next month. At this meeting we will gain better insight into the
    progress of the SM, allowing the partners to evaluate a revised launch
    date for the Service Module. During our assessment last April, we knew
    that the July 1999 schedule for SM launch was aggressive and that a
    September date was possible. This slippage does not impact the elements
    already in orbit.
                               mir space station
        Over the last six months, Russian news media have been reporting on
    the possibility of extending the life of the Mir space station. RSA has
    repeatedly made clear that the Russian Government's top priority for
    human space flight is the ISS. Any potential extension of the Mir
    program would require private funding and must not in any way impact
    Russia's ability to meet its commitment to the ISS program. In mid-
    January, Russian Prime Minister Primakov signed a decree outlining the
    conditions under which Mir could be extended on orbit on a commercial
    basis. RSA indicated that a final decision on a potential extension of
    Mir would be made in the Spring timeframe, depending on the success of
    finding a commercial investor. Assuming no investors come forward, RSA
    has stated that it intends to deorbit Mir in late summer. RSA has
    publicly stated that, currently, there are no investors coming forward.
    NASA is working closely with RSA to understand the status of their Mir
    deorbit plans, and related implications to their ISS commitments.
                                   iss budget
        Last year, the Committee heard from an outside task force of
    independent experts on the projected U.S. cost for the ISS. The Task
    Force report specifically highlighted the extraordinary level of
    complexity inherent in the ISS and concluded that the Program had made
    ``notable and reasonable progress over the past four years'' and faced
    no extraordinary or programmatic ``show-stoppers.'' Nonetheless, the
    report concluded that Program cost and schedule projections were
    optimistic given the challenges ahead, partially due to domestic cost
    increases and partially due to the uncertain status of the Russian
    contributions.
        We recognize the validity of findings of this Task Force,
    particularly in the resources needed for increased risk mitigation,
    schedule protection, and crew return capability. In my October 7, 1998,
    testimony before the Committee on Science, I stated that the Agency
    would require additional resources to continue forward with this
    valuable laboratory in space. I am happy to report that the President's
    fiscal year 2000 budget request provides an additional $349 million in
    fiscal year 2000, and a total net augmentation of $1.4 billion over
    five years, reconfirming the Administration's strong support of the
    ISS. We also recognize the recommendations of the Task Force in a
    number of management areas, and recognize our fiscal responsibility to
    the American taxpayer to balance all aspects of this program and manage
    within the resources available. The Administration has highlighted this
    responsibility by establishing the management of risks in development
    of the ISS as one of the Administration's Priority Management
    Objectives in the President's fiscal year 2000 Budget. We have already
    begun to make management improvements, including the initiation of a
    new management review process for those activities not under the prime
    contract, and are committed to making continued improvements. We are
    also making schedule adjustments and rephasing some content to limit
    the financial augmentation required.
                               development status
        In 1999, development activities are phasing down, while operations
    and research utilization activities are escalating. The fiscal year
    1999 vehicle development budget is nearly $600 million below fiscal
    year 1998, and the number of contractors supporting the program is
    several thousand less than at the peak of the development effort. This
    trend will continue this year, with several thousand additional
    contractors transitioning to other tasks, such as sustaining
    engineering or other non-ISS work. ISS operations planning is now well
    underway. In fact, NASA is already working plans for operations that
    will occur in fiscal year 2001. Mission Control Center-Houston is
    already operational, and has overall authority and responsibility for
    the safety and operations of the ISS and crew. Mission Control Center-
    Moscow is currently performing the actual uplink of commands, and will
    continue to do so until U.S. communications and control systems become
    fully operational with the U.S. Laboratory delivery to orbit in fiscal
    year 2000.
        Near-term, high visibility activities this year include the flight
    of critical ISS spares and an external Russian cargo crane to be flown
    in May 1999. This flight will be followed by the launch of the Russian
    Service Module, providing the early crew quarters and ISS propulsion
    systems. Next, another Shuttle logistics flight is scheduled, followed
    by Shuttle flights to assemble some of the U.S. external framework,
    electronics, communications, attitude control and thermal systems prior
    to flight of the first crew in early 2000.
        Near-term hardware development activities are focused on completion
    and delivery of the U.S. airlock. The ISS involves many systems which
    entail multiple, identical elements, such as the photovoltaic arrays,
    of which four are planned. For the most part, the high-risk, first
    elements of these systems have been delivered to KSC. This year will
    begin the delivery to KSC of many of the subsequent, identical items.
    We will continue Multi-Element Integration Testing (MEIT) effort on the
    next complement of U.S. elements: the initial truss segment, the early
    thermal control system, the first Photovoltaic Arrays, the Canadian-
    built ISS robotic arm and the U.S. Laboratory, Destiny.
        In 2000, we will launch the first ISS crew to orbit, as the launch
    of the first Soyuz to ISS enables permanent crew capability for three
    people. Microgravity research capability will be available in the
    spring of 2000, with the outfitting of the U.S. laboratory, Destiny.
    When Phase II of ISS is complete in late fiscal year 2000, the Station
    configuration will include Unity, Destiny, pressurized mating adapters,
    power, airlock, and Multi-Purpose Logistics Module (MPLM); Zarya, the
    Russian Service Module and Soyuz; and the Space Station remote
    manipulator system (SSRMS) provided by Canada. By early 2003, the ISS
    configuration will also include the second U.S. node, truss segments,
    three solar arrays, the Japanese Experiment Module (JEM) and resupply/
    support vehicles. In 2004, U.S. Station development efforts will near
    completion, with the delivery of a six-crew capability on orbit.
                             international partners
        The work of NASA's other international partners on the ISS program
    is proceeding well and according to plan. All of the partners have
    stated their commitment to do whatever possible to help Russia fulfill
    its obligations to the ISS program and to ensure that the program
    remains on track.
        NASA is also working aggressively with all of its partners to
    ensure that all ISS components are fully Y2K compliant. When I attended
    the historic launch of Zarya from Baikonur on November 20, 1998, I had
    the opportunity to meet with the head of each partner agency on the
    Year 2000 issue. Each agency gave an in-depth presentation on their
    work to ensure full Y2K compliance, and reiterated the commitment to
    achieve compliance early this year. Although I have received Y2K
    assurances from each international partner, I do, however, remain
    concerned about the health and welfare of their critical infrastructure
    (e.g. power, telecommunications), and how it may potentially affect ISS
    activity. As described above, our business continuity/contingency plans
    are intended to ensure an acceptable level of NASA functions in the
    event of failures of external infrastructure in any of the partner
    countries.
        The various international components of the ISS are progressing
    nicely. The Canadian Space Station Remote Manipulator System, or
    ``Robotic Arm,'' will be shipped to Kennedy Space Center in April,
    after stringent testing. The European Laboratory development is on
    schedule and NASA is continuing discussions with the European Space
    Agency (ESA) about the possibility of ESA providing critical crew
    rescue vehicle components. The second Multi-Purpose Logistics Module
    (MPLM), built by Italy, is scheduled for delivery to Kennedy Space
    Center in August. The Japanese Experiment Module and Centrifuge
    Accommodations Module (CAM) development is on schedule. Finally, the
    Brazilian Space Agency has selected its prime contractor and is
    proceeding with its hardware contributions.
                              research utilization
        We are continuing to make progress on ISS research planning and
    facilities development. However, because of schedule delays and the
    need to bolster development reserves, we have slowed the development of
    research equipment. Assuming that the Service Module is launched by
    September 1999, we estimate that the Russian-driven delay to the
    assembly sequence already has slipped utilization flights on average 6-
    8 months. The research funding for ISS is still growing and will, in
    fact, double by fiscal year 2001 over fiscal year 1998 levels, but the
    rate of growth is slower than previously planned. As a result, some
    funding for research facility development has been rephased from fiscal
    year 2000-2003 into fiscal year 2004 and beyond.
        We are focused on developing most of the permanent research
    facilities, while leaving adequate margin in the research utilization
    budgets for some investigation-specific hardware. Our approach is to:
    protect research facility hardware deployment and schedules; maintain
    multi-use hardware schedules (EXPRESS Racks and Pallets, Window
    Observation Research Facility ); maintain planned flight investigation
    buildup rate to the maximum extent possible, fund research utilization
    (experiment unique hardware and support), sub-rack integration at
    approximately 70 percent of that previously planned; and fund payload
    operations and integration (analytical integration, operations
    facilities, training) at approximately 85 percent of that previously
    planned. The ISS program will continue to emphasize the early research
    program by utilizing recently added Shuttle logistics flights,
    accelerating the Human Research Facility, and adding two EXPRESS racks
    to assembly flights 5A.1 and 6A in fiscal year 2000.
                             iss commercialization
        We were pleased with the passage of the Commercial Space Act of
    1998 (Public Law 105-303). This visionary step will serve the American
    people well by demonstrating our government's commitment to the
    economic development of space. NASA is dedicated to continuing its
    leadership in this important area. In conjunction with the Act, we
    released our draft Commercial Development Plan for the International
    Space Station last November. The ISS represents a platform in space of
    unprecedented capability. We envision that it will become a seed for
    emerging commercial activity in the coming decade and we are moving
    ahead to ensure this outcome.
        Our goal is to serve as a marketplace foundation and stimulate a
    national economy for space products and service in low-Earth orbit,
    where both demand and supply area dominated by the private sector. In
    partnership with the private sector, we plan to initiate a series of
    pathfinder activities that could lead to businesses with profitable
    operations over the long run and that become self-sustaining without
    public funding. One area we are examining closely is the provision of
    ISS resupply and servicing by multiple commercial competitors. Our
    draft Commercial Development Plan provides a summary of both our
    overall strategy and potential tactics we intend to pursue in the
    coming years. It will also benefit from a private sector review, now
    underway, and the independent market studies and cost analyses which we
    have recently initiated. We look forward to reporting our progress as
    we open the path for 21st century economic expansion in space.
                                  x-38 and crv
        The Crew Return Vehicle (CRV) will provide a seven-person crew
    return capability for the ISS, beginning no earlier than 2004. The
    Space Transportation Architecture Studies (STAS) are assessing the role
    of systems that provide not only return, but also delivery of humans to
    orbit in a range of potential future architectures. Based on the STAS
    architecture concepts, NASA is evaluating the potential of a CRV to
    evolve to serving a dual-purpose role, or evolve to a Crew Transfer
    Vehicle (CTV) that can deliver and return humans. NASA will finalize
    the CRV requirements and issue a draft Request for Proposals (FP) for
    comment before finalizing the plan for the CRV. The results of the STAS
    and the potential role of a CRV/CTV in potential future architectures
    will be integrated into the final CRV plan.
    Space Shuttle
        The Space Shuttle Program successfully completed its four assigned
    flights in fiscal year 1998. Fiscal year 1999 began successfully with
    STS-95 in October, the mission on which Senator John Glenn returned to
    flight. Most recently, STS-88 opened a new era for the Space Shuttle--
    support of the assembly operations for the International Space Station.
    No longer just a research platform, the Shuttle is now fulfilling its
    original objectives, as the workhorse that will carry equipment,
    supplies and the personnel required to assemble the International Space
    Station during the next several years.
        During 1998, the Super Lightweight Tank was successfully flight
    demonstrated, increasing payload capacity to ISS by over 7000 lbs. The
    SSME Block IIA improvements, which improved the reliability on ascent,
    clearly demonstrate that NASA's investment in safety and supportability
    initiatives have dramatically improved the performance and reliability
    of the fleet.
        In 1998, the Space Shuttle Programs principal operational contract,
    the Space Flight Operations Contract (SFOC), now in its third year,
    made great strides. All of the Phase I contracts have been successfully
    incorporated and the first of the Phase II production contracts, the
    Solid Rocket Booster project, transitioned to SFOC in July 1998. The
    External Tank project is scheduled to move under SFOC in fiscal year
    2000. The smooth transition of other projects to the SFOC is expected
    to occur as major development activities are completed.
        This year, the Shuttle will support ISS logistics and assembly
    flights and a number of research objectives. In addition to setting the
    stage to begin ISS utilization, the Shuttle Program is prepared to
    launch the Advanced X-ray Facility (AXAF), now called Chandra, a Hubble
    Space Telescope repair mission, and the Shuttle Radar Topography
    mission (SRTM) for the National Imagery and Mapping Agency (NIMA).
        When the Orbiter Atlantis returns to flight later this year, after
    its recently completed Orbiter Maintenance Down Period and installation
    of major modifications, it will take advantage of numerous other
    upgrades. Examples are:
      --The Multifunction Electronic Display System (MEDS), a state-of-the-
            art integrated display system used in the cockpit of the
            orbiter. Pioneered by NASA and in use as the standard for
            commercial and military aircraft the world over.
      --The Micro-meteoroid and orbital debris (MMOD) protection system for
            the Orbiter radiators and wings, increases protection of the
            vehicle from the potential damage to critical systems while in
            orbit.
      --Solid Rocket Booster aft skirt improvements reduce risk during
            initial seconds after main engine ignition.
        NASA continues to place the highest priority on the safe launch,
    operation and return of the Space Shuttle and crew, while continuing to
    seek efficiencies in the Space Shuttle Program. The fiscal year 2000
    budget of $2,986.2 million will enable the system to successfully meet
    its goals: (1) fly safely; (2) meet the flight manifest serving diverse
    customers; (3) improve supportability; and (4) continuously improve the
    system. The Space Shuttle Program's fiscal year 2000 budget remains
    essentially constant, with a slight decrease of $12 million from fiscal
    year 1999. We continue to seek efficiencies in the Space Shuttle
    Program. The Space Shuttle manifest currently reflects eight missions
    scheduled to fly during fiscal year 2000--an emergent HST servicing
    mission to replace science critical gyros and five ISS assembly flights
    and two ISS logistics missions.
        Space Shuttle Operations ($2,547.4 million) includes sustaining
    engineering, hardware production, ground processing, launch and
    landing, mission operations, flight crew operations, training, and
    logistics.
        Funding for Safety and Performance Upgrades ($438.8 million)
    provides for modifications and improvements to the flight elements and
    ground facilities including expansion of safety and operating margins.
    This budget also includes supportability and obsolescence mitigation
    efforts, which will be used to develop systems to combat obsolescence
    of vehicle and ground systems in order to maintain the program's
    viability well into the next century.
        This budget will enable the enhancement of the Space Shuttle
    vehicle capabilities as well as the replacement of obsolete systems and
    components. We will address vendor loss, aging components, high repair
    cost of Shuttle-specific devices, and negative environmental impacts of
    some out-dated technologies.
        The Space Shuttle continues to prove itself as the most versatile,
    robust, and reliable space vehicle in use today. Since 1992, Shuttle
    program costs have already decreased by about 37 percent (factoring in
    inflation), while significantly improving flight safety. As we continue
    to look for efficiencies, we will also look for opportunities to
    improve the system, including reducing the standard manifest time
    period and simplifying the payload review process to allow flexibility
    for the science community.
    Consolidated Space Operations Contract (CSOC)
        On September 25, 1998, NASA awarded the Consolidated Space
    Operations Contract (CSOC) to a team led by Lockheed Martin. This
    contract (base period of five years, and an option period of five
    years) began on January 1, 1999, when five current space operations
    contracts transitioned to CSOC. During the remainder of the CSOC
    program, 10 other existing space operations contracts will transition
    to CSOC. The CSOC contract provides a new approach to space flight
    operations, consolidating and privatizing operations facilities under a
    single contract. Over the potential 10-year life of the contract, CSOC
    is expected to provide cost savings to the taxpayer of $1.4B in the
    conduct of Space Communications and Mission Operations for NASA
    Missions.
        The major features of the CSOC Integrated Operations Architecture
    (IOA) that define the implementation are:
      --Consolidation of mission and data services;
      --Application of architectural changes, based on commercially
            developed technology;
      --Centralization & automation; and
      --Conversion to commercial providers.
        NASA has applied a 25 percent small business goal to the CSOC
    contract. Lockheed Martin and its teammates, Allied Signal and CSC,
    propose to meet this target and are in the process of implementing the
    necessary actions to meet the goal.
        Inherent in the successful implementation of CSOC are reductions in
    the contractor work force supporting space operations at five NASA
    Centers over the 10-year period of performance. There will be initial
    reductions to the work force at the beginning of the CSOC program, and
    these reductions are currently being implemented. Following this
    transition, work force impact is, on average, slightly less than 100
    jobs per year in total at all five NASA centers. The CSOC contractor
    team expects to absorb these out-year-staffing reductions based on
    natural attrition and reassignment of employees to other non-CSOC
    programs.
    Life and Microgravity Sciences and Applications
        NASA's Office of Life and Microgravity Sciences and Applications
    (OLMSA) is eagerly looking forward to the remarkable new opportunities
    that will be available on the ISS. Our ISS Phase I Program and
    scientific experiments on Spacelab gave us tremendous insight into the
    possibilities as well as the challenges we will encounter as the ISS
    becomes fully operational.
        Our past successes provide the foundation upon which future
    research will be based. In fiscal year 1998, NASA supported a total of
    850 ongoing, peer-reviewed investigations. Preliminary analysis
    suggests that the commercial cost share investment with NASA in space
    products and service development for fiscal year 1998 was approximately
    $45M. Twenty-one new industry partners joined OLMSA's Commercial Space
    Centers. The organizational merger of our basic science and commercial
    research elements is beginning to show synergies and efficiencies as
    the two groups work together to solve common problems and to use common
    hardware.
        We look forward to increased commercial applications of NASA
    research. Understanding the structure of a virus is key to
    understanding its behavior. Dr. Alex MacPherson published a structure
    of the satellite tobacco mosaic virus at far greater resolution (1.8
    Angstrom) than has ever been published before. Mosaic virus crystals
    grown in space increased by a factor of four over crystals grown on the
    ground. Basic discoveries in this field may hold great potential for
    supporting near-term commercial applications. For example, Biocryst
    Pharmaceuticals, Inc. and Johnson & Johnson have agreed to collaborate
    on the development of a drug (neuraminidase) to treat influenza.
    BioCryst used data from protein crystals grown on Earth and in space to
    develop four lead product candidates that have performed strongly in
    pre-clinical trials against both influenza A and B.
        NASA flight research in protein crystal growth has established a
    hypothesis to account for the increases in purity found in space grown
    crystals. Crystals grown in space are believed to be surrounded by a
    diffusion-zone that acts as a filter to remove impurities. The
    resulting pure solution accounts, in part, for the higher structural
    resolution. This unique zone surrounding the space crystals is
    prevented by convection when these crystals are grown on the ground.
        We had two exciting science flights last year. The Neurolab Mission
    in April 1998, a NASA contribution to the ``Decade of the Brain,''
    helped to expand understanding of how the nervous system develops,
    functions in, and adapts to a microgravity environment. We performed 26
    peer-reviewed investigations and collected a wide range of
    physiological and behavior data in-flight and post-flight. STS-95, in
    October 1998, flew a SpaceHab module dedicated to multidisciplinary
    research. This mission marked the first space flight collaboration
    between NASA and the National Institute on Aging. It carried 26
    commercial research experiments sponsored through NASA's Commercial
    Space Centers. Senator John Glenn's involvement highlighted health care
    and healthy aging. The wealth of scientific data accumulated during
    this flight will help validate apparent symptomatic similarities
    between the effects of space flight and aging.
        In fiscal year 1999, preparation for use of the ISS will continue.
    In order to maximize return on the ISS investment, we will continue to
    build up and maintain a community of over 900 experienced principal
    investigators. We are committed to continue this buildup in fiscal year
    2000. The Commercial Space Centers plan to add 9 new industry
    affiliates and 10 new university affiliates in 1999. To enhance science
    and technology development activities in an era of constrained budgets,
    NASA continues to leverage resources through partnerships and
    cooperative ventures.
        The fiscal year 2000 budget request for OLMSA, $256.2 million, will
    support a variety of activities on ISS, the Space Shuttle, and on the
    ground. Early in the assembly phase of the ISS, research will
    concentrate on small-scale investigations, an approach that has been
    successfully demonstrated on both the Space Shuttle and on the Russian
    Mir space station. We will study the environment, habitability, and
    safety. To help maintain NASA's research communities during the ISS
    build-up, NASA plans to add a SpaceHab research mission (STS-107) in
    early fiscal year 2001. Increased Shuttle middeck locker opportunities
    using both the utilization and assembly flights have been part of ISS
    planning. In addition, we are developing a plan for a stand-by research
    mission which can be inserted into the Shuttle Manifest should the
    opportunity arise.
        Research opportunities aboard the ISS will start in earnest with
    the arrival of the crew and the Human Research Facility (HRF) in early
    2000. The HRF will help us understand the basic mechanisms of
    adaptation to microgravity and help develop and validate
    countermeasures to maintain crew health on orbit. NASA will continue to
    augment its efforts in validating countermeasures with research carried
    out by the National Space Biomedical Research Institute (NSBRI), and
    ground-based research and technology programs. One of the major
    concerns is the biological impact to the crews of the effects of
    radiation. NASA, through peer-reviewed research and in cooperation with
    organizations such as Loma Linda University, Brookhaven National
    Laboratories, and NIH, is developing countermeasures to increase
    predictability of biological damage and lower risk to crew health.
        We will continue to pursue innovative sensor technologies. We plan
    to create an Environmental Systems Commercial Space Center to foster
    commercial interest and participation in research and technology
    development for recycling air and water and monitoring the spacecraft
    cabin environment.
        Gravitational Biology and Ecology flight experiments in fiscal year
    2000 will provide information on the effects of microgravity on plant
    growth and development, and the effects of gravity on plant
    photosynthesis and respiration. Research will begin in evolutionary
    biology with participation of at least five research institutions.
    Flight research on the effects of microgravity on avian development
    will be carried out and research proposals on biologically inspired
    technologies will be implemented. Microgravity Research flight
    experiments in fiscal year 2000 in the area of colloid physics will
    help refine the technologies required for photonic devices used in
    optical communications and computing.
    Space Science Enterprise
        NASA's Space Science program is scientifically robust and more
    ambitious than ever. It is also more streamlined, effective, and cost-
    efficient to the U.S. taxpayer. Beginning with the launch of the Deep
    Space 1 mission on October 24, 1998, the Space Science Enterprise
    entered a nine-month period in which it will have ten launches. Six
    missions have already been launched successfully: DS-1; two Mars 1998
    Surveyors and the piggyback DS-2 microprobes; four payloads on STS-95;
    the Submillimeter Wave Astronomy Satellite; and Stardust, a comet
    sample-return mission.
        On March 4, 1999, the Wide Field Infrared Explorer (WIRE) was
    launched from Vandenberg Air Force Base. Unfortunately, shortly after
    launch, WIRE experienced technical problems that exhausted all of the
    cryogen used to keep the science instrument cold. The mission will not
    be able to deliver any science. However, we hope to recover some of the
    WIRE science with SIRTF and SOFIA. In April, we will launch the
    Tomographic Experiment using Radiative Recombinative Ionospheric
    Extreme Ultra-Violet and Radio Sources (TERRIERS) spacecraft. In late
    May, we will launch the Far Ultraviolet Spectroscopic Explorer (FUSE)
    aboard a Delta rocket. In recent months, technical problems with
    circuit boards identical to those in AXAF, recently renamed Chandra X-
    ray Observatory, were discovered in a non-NASA satellite. Testing of
    the circuit boards on the Chandra observatory was conducted and a
    number of faulty circuit boards were replaced. Chandra has been shipped
    to the Kennedy Space Center and will be launched July 9, 1999 aboard
    STS-93.
        But this intense launch schedule is only part of the story, because
    the existing Space Science programs and missions continue to deliver a
    wealth of new scientific data and insight.
        Results from the Mars Global Surveyor (MGS) and Mars Pathfinder
    spacecraft show mineralogical and topographic evidence confirming
    earlier indications that Mars had abundant water and thermal activity
    in its early history. Measurements from the spectrometer aboard MGS
    show a remarkable accumulation of the mineral hematite, well-
    crystallized grains of ferric oxide that typically originate from
    thermal activity and standing bodies of water. Measurements by the Mars
    Orbiter Laser Altimeter (MOLA) aboard MGS are providing striking new
    views of Mars' north pole and the processes that have shaped it. MOLA
    data reveal that the 750-mile-diameter polar ice cap has a maximum
    thickness of 1.8 miles. The cap is cut by canyons and troughs that
    scientists believe were carved by wind and evaporation of ice.
        Closer to home, the Discovery program's Lunar Prospector spacecraft
    has provided further indications of water ice at the Moon's poles,
    which remains under scientific debate. The spacecraft has recently
    entered a lower lunar orbit for even more precise mapping activities.
    Although its orbital capture has been delayed by about a year, the Near
    Earth Asteroid Rendezvous mission performed a swingby of its target
    asteroid, Eros, adding to our still small inventory of in-situ data on
    small bodies.
        Further out in the Solar System, the Galileo spacecraft continues
    to provide insights into the mysteries of Jupiter and its moons. Last
    year, I reported that Galileo found very strong evidence of a
    subsurface liquid ocean on the Jovian moon Europa. Recent data from
    Galileo suggest that Callisto, another moon of Jupiter, may also have a
    liquid ocean under its icy, cratered crust. The common evidence for
    past or present liquid water on Mars, Europa, and Callisto provides a
    key initial step in our Origins program. Galileo images have also shown
    how Jupiter's intricate, swirling ring system is formed by dust kicked
    up as interplanetary meteoroids smash into the giant planet's four
    small inner moons.
        The Hubble Space Telescope (HST) continued its impressive
    performance. This year, Hubble observations made a watershed event in
    astronomy--the first potential direct image of a planet outside our
    solar system--another key initial step for Origins. A ``long exposure''
    infrared image taken with the NICMOS camera has allowed astronomers to
    peer into a previously unseen realm of the universe and uncover the
    faintest galaxies ever seen. The Hubble Space Telescope has brought us
    unprecedented new science discoveries and continues to revolutionize
    our understanding of the universe. However, in January 1999 HST lost
    the use a third, redundant gyroscope. This has caused us to plan an
    accelerated Hubble servicing mission in October of this year to replace
    the gyroscopes and several other items which were planned for the 2000
    Hubble servicing mission.
        Last year we confirmed the existence of a special class of neutron
    stars, now dubbed ``magnetars.'' Magnetars are dense balls of super-
    heavy matter, no larger than a city, but weighing more than the Sun.
    They have the greatest magnetic field known in the Universe, so intense
    that it powers a steady glow of X-rays from the star's surface, often
    punctuated by brief, intense gamma-ray flashes, and occasionally by
    cataclysmic flares like the one observed on August 27, 1998. Our own
    star provided surprises as the Solar and Heliospheric Observatory
    (SOHO) team dramatically recovered from what was thought to be a lost
    mission, and obtained the first evidence of long-theorized quakes on
    the surface of the Sun. Another important first for NASA Space Science
    is the ongoing demonstration of ion main propulsion and other new
    technologies on the Deep Space 1 technology validation spacecraft.
        We have learned some fascinating new things about our own star, the
    Sun, as well. Last May, the first images from NASA's Transition Region
    and Coronal Explorer spacecraft revealed activity in the solar
    atmosphere in stunning detail and included the first detailed
    observations of a magnetic energy release, called a magnetic
    reconnection. Less than a month later, SOHO, a NASA/European Space
    Agency mission, revealed a rare celestial spectacle: two comets
    plunging into the Sun's atmosphere in close succession. In July,
    scientists confirmed for the first time that solar flares produce
    seismic waves in the Sun's interior that resemble those created by
    earthquakes. (Enough energy was released from that quake to power the
    United States for 20 years at its current level of consumption.)
        This year has certainly been impressive, but we are very excited
    about what is ahead as well. The proposed budget of $2.197 billion, an
    increase of $77 million over last year's budget, continues to support a
    strong and well balanced Space Science program that will allow us to
    carry on research of the Sun, the Solar System, and the Universe. It
    maintains support for the Origins Initiative to search for planets
    around other stars, to study galaxies and stars as they are born, and
    to look for evidence of life elsewhere in the solar system and the
    universe. The fiscal year 2000 budget also maintains support for a
    multitude of ongoing missions.
        The budget request features five new items in the Space Science
    Enterprise. Two new program elements are funded in the Mars Surveyor
    program beginning in fiscal year 2000: Mars Network and Micromissions.
    Mars Network will develop communications capability to provide a
    substantial increase in bandwidth and connectivity from Mars to Earth,
    thus greatly improving the scientific and educational return for this
    ongoing program. Mars Micromissions will provide low-cost capability
    for delivering small payloads, including telecommunications elements of
    the Mars network. Competitively selected Micromissions will deliver up
    to a 50-kg science payload to Mars to collect high-priority scientific
    data. The first planned Mars Micromission is the ``Mars Airplane,''
    which will commemorate the 100th anniversary the Wright brothers'
    historic first flight in 2003.
        Also in the fiscal year 2000 request, the Cross-Enterprise
    Technology program budget is augmented to include funding for three
    initiatives: Self-Sustaining Robotic Networks; Gossamer Spacecraft; and
    Next Decade Planning. Self-Sustaining Robotic Networks will build on
    the success of Mars Pathfinder. This initiative's goal is to extend
    ongoing advances in spacecraft automation and miniaturization
    technologies to produce self-tasking, self-repairing mobile robots for
    permanent, ``virtual presence'' planetary science and exploration
    outposts in challenging environments. The Gossamer Spacecraft
    initiative provides additional funding to develop and demonstrate the
    deployment, control, and utility of ultra-lightweight deployable
    structures. These structures can be used as sun shields, ultra-large
    telescopes, solar arrays, antennas, or solar sails, and will
    revolutionize a wide variety of missions, including those of other
    agencies such as NOAA and the Air Force. Next Decade Planning will
    support an improved, Agency-wide planning process to develop and refine
    concepts and technologies for a robust menu of potential future civil
    space programs.
        As we continue to explore our Universe, we bring scientific benefit
    not only to the space science community, but to America's taxpayers and
    citizens of the world. Our Space Science program is exciting and
    relevant, as attested to by numerous front-page stories and magazine
    covers, and by World Wide Web interest in this field in the past few
    years. NASA has made countless scientific discoveries and advances over
    its 40-year history, but stay tuned--there is much more to come.
    Earth Science Enterprise
        Since its creation in 1958, NASA has been studying the Earth and
    its changing environment by observing the atmosphere, oceans, and land,
    and their influence on climate and weather. The perspective afforded
    since the beginning of the space age planted a growing seed of
    knowledge--we now understand that the key to gaining a better
    understanding of the global environment is exploring how the Earth's
    systems of air, land, water, and life interact with each other. This
    approach, called Earth System Science, integrates fields like
    meteorology, oceanography, biology, geology, and atmospheric sciences.
        The Earth Science Enterprise continued to make great progress
    through 1998. We have recently revealed evidence to suggest that the
    1997-98 El Nino event may have been a major contributor to the average
    global sea level rising about eight-tenths of an inch before it
    returned to normal levels, according to scientists studying TOPEX/
    Poseidon satellite measurements of sea surface height. While NASA can
    accurately measure global sea level rise today, we really need a decade
    or more of sustained research before we can say with certainty whether
    there is a definitive link between sea level variation and climate
    change. The SeaWiFS instrument on Orbview-2, a commercial satellite
    launched in 1997, is providing data on ocean biological productivity
    for NASA research, and the firm is marketing these same data to the
    commercial fishing, oil, and shipping industries. The data are being
    procured by NASA as a ``data buy'' from the commercial supplier.
        NASA has also begun to measure rainfall in the tropics and sub-
    tropics. Approximately two-thirds of the global rainfall occurs within
    the tropics, directly influencing our day-to-day weather, according to
    scientists studying measurements of sea surface height from the US/
    French TOPEX/Poseidon mission. The Tropical Rainfall Measuring Mission
    (TRMM), a joint endeavor with Japan which was launched in 1997, is for
    the first time delivering accurate measurements of precipitation over
    the global tropical oceans, a critical indicator of climate patterns
    over the whole world.
        Polar regions also have a major influence on moderating the Earth's
    climate. Until the fall of 1997, Antarctica, a region the size of
    Canada and Alaska combined, had never been fully mapped at high spatial
    resolutions. The Antarctic Mapping Mission (AMM) is accomplishing this
    mapping using data from the Canadian Radarsat satellite in which NASA
    is a partner.
        While 1998 was an outstanding year for Earth Science results,
    missions launched in 1999 and beyond promise to increase our
    fundamental understanding of the Earth system. We have 30 Earth Science
    launches scheduled over the next five years. The President's budget
    request for Earth Science for fiscal year 2000 is $1.459 billion.
        The Earth Observing System (EOS), the largest element of NASA's
    Earth Science Enterprise ($663.2 Million for fiscal year 2000), is a
    program of multiple spacecraft designed to provide measurements of the
    key, multi-disciplinary parameters needed to understand global climate
    change. The first EOS spacecraft--EOS AM-1 and Landsat-7--represent 2
    of the 8 missions the Earth Science Enterprise will launch this year.
    These missions, plus the EOS PM-1 and Chemistry-1 missions, will help
    achieve the fundamental EOS measurements, which will begin our
    understanding of the Earth system. PM-1 and Chemistry-1 remain on track
    for launch in 2000 and 2002, respectively. The EOS program also
    includes several small spacecraft such as the U.S.-French TOPEX/
    Poseidon follow-on mission known as Jason-1, QuikScat, Ice, Cloud and
    Land Elevation Satellite (ICESAT), Solstice, and the Active Cavity
    Radiometer Irradiance Monitor (ACRIM) satellite.
        The Earth Probes program ($138.2 Million for fiscal year 2000)
    addresses specific, highly focused Earth science questions that are new
    or complementary with other parts of NASA's Earth Science enterprise.
    It also has the flexibility to take advantage of new opportunities in
    international cooperation or technical innovation. Currently approved
    Earth Probes include the Total Ozone Mapping Spectrometer-EP and the
    Earth System Science Pathfinder missions (the Vegetation Canopy Lidar
    and the Gravity Recovery and Climate Experiment). A new US/French ESSP
    mission called PICASSO-CENA was selected in December 1998 to study the
    Earth's atmosphere in tandem with the EOS-PM-1 satellite.
        A parallel series of New Millennium program missions is being
    developed to validate advanced technology for future Earth Science
    spacecraft. The Earth Orbiter-1 mission will demonstrate an advanced
    land imaging system with a hyperspectral and multispectral capability
    starting in 1999. The Space-Readiness Coherent Lidar Experiment will
    fly in the cargo bay of a Space Shuttle in 2001 to test whether a
    space-based sensor can accurately measure atmospheric winds from the
    surface to a height of ten miles. Atmospheric winds determine the
    transport of energy and chemical constituents across the Earth--hence
    an important parameter for weather prediction. Recognizing the high
    value of ocean winds data, we have rapidly developed a replacement
    mission for the failed NSCAT mission called QuikScat, which was ready
    for launch in November 1998--only 18 months after the loss of NSCAT.
    Safety concerns with the QuikScat's launch vehicle will push the launch
    into the spring of 1999. We are also purchasing ocean wind vector data
    during this interim period between NSCAT and QuikScat.
        The EOS Data Information System (EOSDIS $231.5 Million for fiscal
    year 2000) has been serving thousands of users by providing available
    data and information from NASA-sponsored programs since September 1995.
    EOSDIS will operate the EOS spacecraft, and acquire and distribute the
    basic data gathered by them. An essential element of EOSDIS, the Flight
    Operations Segment (FOS) was to provide command and control of EOS
    spacecraft including the upcoming launch of EOS-AM-1. FOS experienced
    serious schedule and performance problems throughout 1998, which
    resulted in replacement of an essential element of FOS with a
    commercial, off-the-shelf system developed by Raytheon. This new system
    has enabled EOSDIS to progress toward the goal of meeting all ESE
    mission needs from now through 2002. Command and control of the EOS-AM-
    1 mission is currently on schedule for meeting the July 1999 launch
    date. In addition, EOSDIS is also on track to support operations of the
    PM-1 (12/00), ICESat (7/01) and Chemistry (11/02) spacecraft.
        The Triana mission is an Earth observation spacecraft to be located
    at the Earth-Sun LaGrange-1 point providing a near-term real time,
    continuous high definition color view of the full Sun-lit disc of the
    Earth. This mission will carry three major scientific experiments to
    make the first direct measurements of the solar radiant power reflected
    by the Earth, to make global aerosol and ozone measurements, and to
    observe solar wind. A selection was made in October 1998 for the
    Scripps Institution of Oceanography to conduct the Triana mission with
    the Goddard Space Flight Center. Launch is scheduled for December 2000.
        Along with basic Earth Science research, we also conduct
    Applications Research to help universities and State & local
    governments apply remote sensing data and science to practical
    problems. We have established five Regional Earth Science Applications
    Centers (RESACs) to target efforts on specific regional issues. The
    Commercial Remote Sensing Program (CRSP) at the Stennis Space Center
    works with industry to extend the utility of ESE's science data within
    the broader U.S. economy. Through partnerships with CRSP, companies
    gain assistance in product development and in validation of new remote
    sensing instruments.
        In 1992, CRSP, along with KPMG Peat Marwick, performed a study that
    valued the remote sensing and geospatial market at $850 million
    annually, using airborne platforms. In 1998, due to NASA's strides in
    Earth Observations satellite R&D and corporate commitments, the market
    was valued at $2 billion. With the anticipated operations of
    commercial, space-based, high-resolution systems, low-cost positioning
    data from GPS, enhanced internet access to data and value-added
    information, underpinned by low-cost, high-performance work stations,
    industry is projecting a conservative estimate of $4 billion in private
    investment by 2005.
        CRSP's data buy program has been active and robust. In September
    1998, NASA awarded five contracts for Phase II of the $50 million
    Scientific Data Purchase. NASA is developing plans for the next data
    buy as the commercial remote sensing market matures. Also last year,
    NASA's CRSP entered into a five-year Joint Sponsored Research Agreement
    with Mississippi for the purpose of developing commercial remote
    sensing through collaborative research and public-private partnerships.
    This year, CRSP will establish at least 75 commercial partnerships in
    ``value-added'' remote sensing product development, an increase from 37
    in fiscal year 1997. In addition, CRSP will establish at least 20
    agreements with industry in support of other federal agency needs. In
    fiscal year 2000, the CRSP will focus Earth Observing Commercial
    Applications Program (EOCAP) joint commercial applications research to
    develop 20 new-market commercial products.
        The Earth Science Enterprise balances funding across observations,
    research and data analysis, applications and commercial remote sensing,
    information systems, and advanced satellite technologies to ensure the
    Nation has the tools to answer scientific questions about the Earth,
    and to put these answers to work for the benefit of society. Earth
    science is science in the national interest, and NASA is committed to
    its success.
    Aero-Space Technology Enterprise
        The Aero-Space Technology Enterprise is working in an exciting and
    challenging time as we revolutionize the science and technology that
    powers U.S. civil aeronautics and space transportation. Last year we
    presented to you an Enterprise program focused on three ``Pillars'' for
    success--Global Civil Aviation, Revolutionary Technology Leaps, and
    Access to Space--and a set of ten goals to address current and future
    National needs. By developing high technical risk technologies, we
    contribute to aviation safety, increase air system capacity, enhance
    environmental compatibility, and open new opportunities in space.
    Within the past year this Enterprise has had to make some hard choices.
    Budget pressures, along with shifting industry and market conditions,
    made it impossible to pursue with excellence all our ambitions. Rather
    than spread the pain and do a little less of everything, we established
    a set of priorities among the goals, and are pursuing our top
    priorities as coordinated with our customers and stakeholders. Our
    priority goals are aviation safety, aviation systems capacity, next-
    generation design tools, ultra-efficient engine technology, general
    aviation, experimental aircraft and access to space. We have
    dramatically reduced our support to the high-speed civil transport and
    affordability goals, canceling the High Speed Research and Advanced
    Subsonic Technology Programs.
        We have worked hard over the last year to take advantage of
    synergies between aeronautics and space transportation activities and
    are increasing funding in the latter. We have made significant progress
    in defining the contribution of our existing projects and programs to
    the goals. We believe these goals will help us better manage our
    research activities while fostering a better understanding of these
    activities for the American people. The President's proposed budget for
    fiscal year 2000 of $1.0065 billion is focused on maximizing a return
    to our highest priority goals.
    Aeronautics
        We are proud of our past accomplishments in two focused programs,
    High Speed Research (HSR) and Advanced Subsonic Technology (AST).
    Although dramatic advances were made against the original HSR program
    goals, our industry partners indicated that product development would
    be significantly delayed, which led to the decision to terminate this
    program in fiscal year 1999. The need to refocus our technology efforts
    from industrial competitiveness issues to a broader, more public
    policy-oriented emphasis resulted in the decision to terminate the AST
    program at the end of fiscal year 1999.
        The aeronautics budget request, $620.1 million, enables us to
    pursue a new focused program, Aviation Safety, as our top aeronautics
    priority. As global GDP expands over the next decade by an annual rate
    of 3 to 4-percent, demand for air travel will dramatically increase--it
    is expected to triple within 20 years. Great strides have been made
    over the last 40 years to make flying the safest of all major modes of
    transportation. However, even today's low accident rate is not good
    enough and if air traffic triples as predicted, this rate will be
    totally unacceptable. The national goal is to reduce the aircraft
    accident rate by a factor of five within 10 years, and by a factor of
    10 within 20 years. In addition to accident rate reduction, we will
    work to decrease injuries and fatalities when accidents do occur. We
    are also working on aviation system technologies that could support
    pilots and air traffic controllers. Safety is also a top priority of
    the FAA. We are working closely with FAA, manufacturers and airlines to
    prioritize technology efforts and to ensure their rapid implementation
    in order to meet our aggressive safety goal. FAA is responsible for the
    operation and near-term research and development of the National Air
    Traffic System, while NASA conducts the longer-term, higher-risk
    research and development. Last October, we signed an MOA with the FAA
    to solidify our cooperation in this area.
        Our fiscal year 2000 budget also support the Aviation Systems
    Capacity (ASC) Program, which builds on research we have conducted over
    the past few years in the Advanced Subsonic Technology program. Our
    goal in capacity is ``while maintaining safety, triple the aviation
    system throughput, in all weather conditions, within 10 years.'' This
    is absolutely required if the aviation system is to keep up with demand
    and allow the predicted growth in air travel to occur. The ASC program
    is looking at modernization and improvements in the Air Traffic
    Management System and the introduction of new vehicle classes which can
    potentially reduce congestion. Efficient and flexible routing,
    scheduling and sequencing of aircraft in all weather conditions are
    critical to meeting capacity demands. As in safety, we are working
    closely with FAA on this program.
        I am very excited about our work in experimental aircraft. On
    August 6, 1998, the solar-powered Pathfinder Remotely Piloted Aircraft
    broke its own world altitude record for a solar-powered aircraft by
    almost 10,000 feet, and established a world record for propeller driven
    aircraft of 80,201 feet. This flight was another step in meeting the
    challenge of flying a solar powered aircraft at 100,000 feet. In
    another first, an international cooperative project with the Russian
    Central Institute of Aviation Motors achieved the first extended
    supersonic combustion in flight using a scramjet flown to Mach 6. The
    X-43 (HYPER-X) research vehicle, which is an air-breathing, dual-mode
    scramjet-powered plane capable of speeds up to Mach 10, will be
    delivered this year and will have its first powered flight ( to Mach 7)
    in fiscal year 2000. Experimental aircraft such as these are invaluable
    tools for exploring new concepts and for complementing and
    strengthening laboratory research. In the very demanding environment of
    flight, X-planes are used to test innovative, high-risk concepts,
    accelerating their development into design and technology applications.
        We are pioneering a new safe and efficient general aviation air
    transportation system that will allow us to travel up to four times
    faster than we can by car from doorstep to destination, even if that
    doorstep or destination is a small community many miles from a large
    hub airport. To make this possible, NASA has been working and will
    continue to work on advances in propulsion and avionics that will make
    general aviation affordable and safe.
        Our fiscal year 2000 budget includes the Ultra Efficient Engine
    Technology Program and REVCON, or revolutionary concepts. The Ultra
    Efficient Engine Technology Program will enable the next breakthroughs
    in propulsion systems that will spawn a new generation of high-
    performance, operationally efficient, economically viable and
    environmentally compatible U.S. aircraft. We will develop and
    demonstrate breakthrough technologies in propulsion component and high-
    temperature engine materials which can create future commercial and
    military propulsion systems which are simpler, achieve higher
    performance, and do less damage to the environment. REVCON is a process
    that will develop concepts that are a revolutionary departure from
    traditional approaches to aeronautical design. We will fully utilize
    the next-generation design tools we are developing to produce
    substantial benefits in concept development. REVCON will change
    fundamentally the way systems are designed and accelerate the
    transition of high-risk/high-payoff technology from the laboratory to
    flight.
    Advanced Space Transportation Technology
        The Advanced Space Transportation Technology program supports our
    ``Access to Space'' pillar. Our goal is to completely revitalize access
    to space by reducing launch costs dramatically over the next decade,
    increasing the safety and reliability of current and next generation
    launch vehicles, and establishing new plateaus of performance for in-
    space propulsion while reducing cost and weight. We are committed to
    developing technology that will reduce the payload cost to low-Earth
    orbit by an order of magnitude, from $10,000 to $1,000 per pound,
    within 10 years. The budget request, $254 million, fully supports this
    goal.
        NASA's Reusable Launch Vehicle (RLV) Program includes both ground-
    based technology development and flight demonstrators (X-33, X-34,
    Future-X Pathfinder vehicles) to validate key component technologies,
    prove that the technologies can be integrated into a functional
    vehicle, and demonstrate the required operability to make low-cost
    access to space a reality. Once demonstrated, we expect that these
    technologies will be used by private industry to build next-generation
    launch vehicles that will meet government and commercial needs at
    dramatically reduced costs.
        Early last year the X-33's first major flight component, the liquid
    oxygen tank, was placed in the vehicle's assembly structure. The X-33
    launch site at Edwards Air Force Base is nearly complete. The
    technologies we are developing are risky, and development problems are
    not unexpected. In fact, the landing gear is the only piece of existing
    hardware on the X-33. All other components require advanced
    development. Recently, the X-33 program has experienced some
    manufacturing and technical problems that have led to a slip in the
    first flight to July 2000. We are working with the industry team to
    resolve these problems and expect no additional cost to the government.
    The X-34 also has experienced some manufacturing difficulties that will
    delay the first unpowered flight four months to September 1999; the
    first powered flight is currently scheduled for February 2000. We are
    confident that these problems will be overcome and these programs will
    provide valuable technology for application to future space launch
    vehicles.
        In fiscal year 1999, we initiated the Future-X program which
    includes ``Pathfinder'' flight experiments for demonstrations of
    technologies which can further reduce the cost and increase the
    reliability of reusable space launch and orbital transportation
    systems. We are particularly pleased with the selection of the Advanced
    Technology Vehicle (ATV), the first contract award under Future-X. The
    ATV includes cost-sharing by industry and possibly the Air Force. We
    are working closely with the Air Force on this program to ensure it
    will meet defense as well as civil space needs. We are strengthening
    the links between the Advanced Space Transportation Program, which is a
    technology development program, and Future-X flight validation; we want
    to make more transparent the decision-making mechanism for determining
    if an ASTP technology truly requires flight validation in Future-X.
    ASTP will continue to push the state-of-the-art technologies that will
    be flown under the Future-X program if required for validation prior to
    implementation in commercial, DOD or civil transportation systems.
        We have restructured the Small-Payload Focused Project (Bantam).
    Its goal is to develop and demonstrate unique technologies that will
    enable the development of a reusable launch system that will launch
    200- to 300-pound payloads for $1-to-$1.5 million per flight by 2004/
    2005. The ground technology program, commercial market, and provider
    developments will support decisions on whether to pursue a Future-X
    flight demonstration of the most promising vehicle concept. Concepts
    currently under study include multi-stage rockets, air-breathing
    combined-cycle vehicles, magnetic levitation launch assist, and beamed-
    energy laser-powered vehicles--to name a few. In fiscal year 2000, the
    results of these technology demonstrations and system level analyses of
    multiple concepts will support concept down-selection. As we proceed
    with this program, we will periodically solicit proposals from industry
    to supply such a launch vehicle for this payload class and as with all
    NASA technology programs, industry will have access to the technology
    as we develop it.
    Commercial Technology
        Since its inception in 1958, NASA has been charged with ensuring
    that NASA-developed technology is transferred to the U.S. industrial
    community to improve its competitive position in world markets. The
    fiscal year 2000 budget request of $132.5 million continues this
    important aspect of our mission. Our commercialization effort
    encompasses all technologies created at NASA centers by civil servants
    as well as innovations from NASA contractors. The technology
    commercialization program conducts a continuous inventory of newly
    developed NASA technologies, maintains an internet-based database of
    this inventory, assesses the commercial value of each technology,
    establishes R&D partnerships with industry for dual use of the
    technology, disseminates knowledge of these NASA technology
    opportunities to the private sector, and supports an efficient system
    for licensing NASA technologies to private companies. The amount
    requested for NASA commercialization efforts includes $97.5 million to
    carry out the provisions of the Small Business Innovation Research
    (SBIR) Act, which requires a set-aside of 2.5 percent of NASA's total
    extramural R&D spending for small business research grants, along with
    an additional set-aside for the Small Business Technology Transfer
    (STTR) Program of 0.15 percent of NASA's total extramural R&D spending.
    The NASA SBIR program has contributed to the U.S. economy by fostering
    the establishment and growth of over 1,100 small, high technology
    businesses.
                                   conclusion
        Mr. Chairman, I am proud of NASA and I am pleased with this budget.
    It gives us the stability we need to continue the construction of the
    ISS and to conduct cutting-edge research in science and technology.
    There is no question that the ISS partnership will continue to face
    challenges. But if the successes of the last few months are any
    indication of our ability to jointly overcome difficulties and succeed,
    I look forward to the coming year with great enthusiasm. While we are
    building this magnificent international laboratory in space, we already
    are studying how we can make this facility a seed for commercial space
    activity for the early part of the next century, and for opening the
    space frontier for human activity beyond low-Earth orbit. Like the
    railroads, the Government will build it, and it will create entirely
    new opportunities for private enterprise. To get there, we will
    continue to fly the Shuttle safely while developing new technologies
    that could make space launch more affordable and reliable. We look
    forward to a robust competition for NASA's launch business among
    several providers in the next decade. We will not just be going to low-
    Earth orbit, as NASA will continue to push the frontiers of knowledge
    about our planet, our Solar System, and our Universe. Micro-rovers will
    look for signs of ancient life on Mars, and perhaps existing life on
    the moons of Jupiter and Saturn, while we continue to search for
    planets in nearby solar systems that could also harbor life today. This
    budget is the beginning of a new era in vehicle and mission design, as
    we create an Integrated Synthesis Environment that will dramatically
    lower costs and reduce development times, allowing us to do even more
    exciting science and technology.
        NASA remains committed to providing the American taxpayer with the
    best possible space and aeronautics program in the world. Our
    accomplishments demonstrate we are capable of that. We are determined
    to continue that tradition. I truly believe the best is yet to come.

                        NATIONAL AERONAUTICS AND SPACE ADMINISTRATION FISCAL YEAR 2000 ESTIMATES
                                           [In millions of real year dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                                       Fiscal year
                                                                    ------------------------------------------------
                                                                     1998 OPPLAN  9/ 1999 OPPLAN  12/    2000 PRES
                                                                          29/98           22/98           BUDGET
    ----------------------------------------------------------------------------------------------------------------
    SPACE STATION..................................................          2331.3          2304.7   ..............
    RUSSIAN PROGRAM ASSURANCE......................................           110.0           (53.0)  ..............
    SPACE SHUTTLE..................................................          2912.8          2998.3   ..............
    PAYLOAD AND UTILIZATION OPERATIONS.............................           205.4           177.0   ..............
                                                                    ------------------------------------------------
          HUMAN SPACE FLIGHT.......................................          5569.5          5480.0   ..............
                                                                    ================================================
    INTERNATIONAL SPACE STATION....................................  ..............  ...............          2482.7
                                                                    ================================================
    SPACE SHUTTLE..................................................  ..............  ...............          2986.2
    PAYLOAD AND UTILIZATION OPERATIONS.............................  ..............  ...............           169.1
                                                                    ------------------------------------------------
          LAUNCH VEHICLES AND PAYLOAD OPERA-  TIONS................  ..............  ...............          3155.3
                                                                    ================================================
    SPACE SCIENCE..................................................          2043.8          2119.2           2196.6
    LIFE AND MICROGRAVITY SCIENCES AND APPLICA-  TIONS.............           214.2           263.5            256.2
    EARTH SCIENCE..................................................          1417.3          1413.8           1459.1
    AERO-SPACE TECHNOLOGY..........................................          1483.9          1338.9           1006.5
    MISSION COMMUNICATION SERVICES.................................           400.8           380.0            406.3
    ACADEMIC PROGRAMS..............................................           130.0           138.5            100.0
                                                                    ------------------------------------------------
          SCIENCE. AERONAUTICS AND TECHNOLOGY......................          5690.0         56553.9           5424.7
                                                                    ================================================
    SAFETY, MISSION ASSURANCE, ENGINEERING, AND ADVANCED CONCEPTS..            37.8            35.6             43.0
    SPACE COMMUNICATION SERVICES...................................           194.2           185.8             89.7
    RESEARCH AND PROGRAM MANAGEMENT................................          2025.6          2121.2           2181.2
    CONSTRUCTION OF FACILITIES.....................................           122.4           168.5            181.0
                                                                    ------------------------------------------------
          MISSION SUPPORT..........................................          2380.0          2511.1           2494.9
                                                                    ================================================
    INSPECTOR GENERAL..............................................            18.2            20.0             20.8
                                                                    ================================================
          TOTAL BUDGET AUTHORITY...................................        13,647.7        13,665.0         13,578.4
          TOTAL OUTLAYS............................................        14,206.2        14,043.0         13,356.8
    ----------------------------------------------------------------------------------------------------------------

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        Senator Bond. Thank you, Dr. Goldin.

                          flood plane mapping program

        Before I get into the questions I have prepared, it struck
    me when you mentioned disaster mitigation that our friends in
    FEMA, who also come within the jurisdiction of this
    subcommittee, have been having tremendous problems trying to
    find the resources to do flood mapping and other things.
        I trust you have been having discussions with James Lee
    Witt on the potential application of your capabilities to their
    needs?
        Mr. Goldin. Yes, sir. We are standing by to support FEMA
    and we are working on a joint program right now, the planning
    for that program, to do that flood plain mapping.
        Senator Bond. How long or to what extent do you think you
    can meet their needs?
        Mr. Goldin. I think we could make a significant
    contribution in cutting their costs. Instead of using
    conventional techniques whenever you send people out into the
    field, by using our aircraft and spacecraft technologies, I
    think we could cut their costs significantly. We are in the
    process of performing the analysis to substantiate that right
    now.
        Senator Bond. Any idea of how much that might cost?
        Mr. Goldin. No. We are in that process now.
        Senator Bond. Well look carefully because every dollar we
    have to give to them is probably a dollar that comes out of
    NASA.
        Mr. Goldin. Oh, we will look very carefully, sir.
    [Laughter.]
        Senator Bond. This is what I call the incentive means of
    assuring that we all work together.
        As this goes forward, would you please do that.
        Mr. Goldin. Dr. Ghassem Asrar can speak to this.
        Dr. Asrar. Good morning.
        We have three pilot projects with the objective of
    identifying what are their requirements and what are the costs
    associated with them. We are also bringing the private sector
    in to work with us in a partnership because we want to make
    sure that once we demonstrate the utility of our technology,
    there is a means for FEMA to obtain those services routinely.
        The pilot projects, two of them are on the West Coast, one
    is in the Midwest, and we are in the process of mapping them,
    combining the observations with the model to give them the
    decision-making tools that FEMA needs.

                  setting goals for the civilian space program

        Senator Bond. I appreciate that. That will be of continued
    interest to this subcommittee and I would ask that you keep us
    advised on that.
        I would like to ask a sort of general question about the
    setting of goals for the civilian space program. Does NASA have
    plans that either go to the White House and Congress, or does
    the White House set the plans, or do you get approval from
    Congress? To what extent does the scientific community have
    input--people and places like the National Academy of Sciences?
    I would like for you to address that in terms of the next major
    manned mission to be. What are your discussions that are going
    on? Are you looking at manned flight or even the establishment
    of a man based on Mars or the Moon?
        How do you set those priorities? What are your long-term
    goals?
        Mr. Goldin. First, let me say that we spend a lot of time
    consulting with all the people who have a vested interest in
    NASA. My staff spends a lot of time at the White House. I spend
    time going to each of your offices. My staff talks to your
    staff. We have people who have outreached different groups in
    the country. We work very closely with the National Academy of
    Engineering, the National Academy of Sciences, and we integrate
    all that input. We do this routinely, day in and day out.
        Senator Bond. We are very interested. But our knowledge is
    that of a mustard seed when it comes to these areas.
        I hope that you are getting the National Academy of
    Engineering and the National Academy of Sciences to really help
    direct your work. The peer review scientific decisionmaking
    would be of most interest to me.
        Mr. Goldin. I was just honored by being nominated--and I
    accepted--to the National Academy. I am a member of that
    organization now.
        I cannot participate in my capacity as NASA Administrator,
    but I certainly am very sensitive to that. We, NASA, fund many,
    many studies at the National Academy.
        There is one point I would like to make. We intend to get
    the Space Station done before we come back to this Congress and
    this administration and ask for more money for another human
    expedition beyond Earth orbit.
        The administration has put $10 million in this year's
    budget for future planning. As part of that, we intend to look
    to all of the scientific community, the Congress, the
    administration, and citizens groups to figure out what is the
    right thing to do for NASA next.
        Over the next 2 years, we will be doing studies and share
    those studies with this committee and other committees of the
    Congress so that everyone knows what we are doing.
        Senator Bond. What is the scientific community telling you
    would be the most productive use? Have you gotten any word back
    yet?
        Mr. Goldin. There are many different opinions. But there
    seems to be an opinion swelling up which says instead of just
    having robotic missions and missions with people, we ought to
    be able to integrate the two and perhaps build things like
    robotic colonies in advance so that before we send people, we
    build up an infrastructure, rather than trying to put
    everything in one big vehicle and going off and doing it.

                             space station overruns

        Senator Bond. Let me talk now about the Space Station. The
    estimated cost has grown from $17.4 billion to more than $23.4
    billion.
        Depending upon how you look at it, the Space Station
    overruns are anywhere from $6 billion to $8.3 billion,
    depending on which estimates are correct. What have you learned
    that can be applied to the next major large space project or
    even any other government initiative in the scientific field?
        What can we learn from these overruns?
        Mr. Goldin. There are a couple of issues.
        First, NASA has not built a major human space flight
    activity in over 25 years. That was a very big problem. In the
    space science area, and in the Earth Science area, we are able
    to do things many, many times.
        One thing is clear: the engineering tools we have are
    inadequate. In this year's budget, we have a significant
    activity to develop better engineering tools. We have worked on
    this with the engineering community.
        Senator Bond. What do you mean by engineering tools? Can
    you give us some idea of what you mean by that?
        Mr. Goldin. Yes.
        When we commit to a major new program, whether it is Boeing
    building the 777 or NASA building a Space Station, whether GM
    is building a car or General Electric is building a
    refrigerator, you commit roughly 90 percent of your money when
    you have about 10 percent design knowledge on building
    something new.
        We intend to develop a set of tools that will allow us to
    completely simulate in virtual space the design, operation, and
    maintenance of these activities before you have to go and cut
    any hardware and commit money.
        I feel this has been a major problem in engineering in this
    country.
        Senator Bond. Well, NASP was out in the forefront of
    development. I saw the computer models for NASP. But that may
    not be a good example.
        Mr. Goldin. NASP had the problem of not being able to
    predict how we could build materials that could handle the
    incredible heat load. For that reason, we were never able to
    make NASP work after spending some billions of dollars.
        That is precisely the issue. They had tools that showed how
    it operated, but it did not simulate the physics of the details
    of the system and how you could build it up. That was the
    problem.
        Senator Bond. Let me turn now to Senator Mikulski.

                             hubble space telescope

        Senator Mikulski. Thank you, Mr. Chairman.
        I would like to get right to the issues around the Hubble
    Telescope, the Space Telescope.
        Dr. Goldin, could you tell us what is really now the status
    of the Hubble Space Telescope? We know, we understand that some
    of the gyroscopes are failing. You had wanted some help in an
    emergency supplemental now that you are going to be doing it
    differently.
        Could you tell us the operational status of Hubble, number
    two, what you are going to do to correct it, and, number three,
    does this really extend the life of Hubble in a reliable way or
    has this just been one more contract failure at Hubble? You
    know, first it was the mirror; now the gyroscopes, I think
    three of them, have failed.
        Mr. Goldin. Yes. Yes.
        Senator Mikulski. Why don't you try to tell us the Hubble
    story and then the implication of the cost of fixing Hubble on
    the rest of the NASA budget?
        Mr. Goldin. Okay.
        First, so everyone knows what I am talking about, that
    [indicating] is the Hubble Space Telescope. It is about 30 feet
    long. Next to the Hubble Telescope [indicating] is a gyro. This
    piece [indicating] is so everyone would know about what a gyro
    looks like in size. If you look into this element here, you can
    see the wires that failed. They are 1/1000th an inch by 1/
    6000th an inch. There is a white surface and over the white
    surface you will see two small wires. This gyroscope is the
    state of the art. You can buy no better in the world than this
    gyroscope. The Hubble has the most rigid requirements for
    stability, and this gyroscope tells us exactly where the Hubble
    is so that we can operate the control system.
        At the present time, there are three operating gyros on the
    Hubble. Three of them have failed. We are very concerned that,
    if we lose one more gyro, we lose science on Hubble, which is
    perhaps one of the most productive scientific instruments that
    NASA has, if not one of the most productive instruments in the
    world. We cannot afford to lose the science on Hubble.
        Senator Mikulski. I agree. But if three have failed, are
    you saying--what are you saying?
        Mr. Goldin. Now let me tell you our understanding of that.
        Senator Mikulski. I am not trying to finger-point here. I
    am trying to pin-point the problem. If we come back with the
    same gyroscopes, will then others fail again?
        Hubble can only get so many rescue missions before the
    Congress tires of it.
        Mr. Goldin. Yes. We have planned servicing missions to the
    Hubble. When we first went up and launched the Hubble, we had a
    series of gyroscopes on board and three of the six failed. Two
    failed for electronic reasons which were fixed. One failed
    because this little wire that you saw eventually wore out
    because it is immersed in what is called a viscous damping
    fluid.
        We then replaced four of those gyroscopes on the first
    servicing mission and then they all lasted. The expected life
    of these gyros is about 12 years. So we thought we had the
    problem in hand. We did not have any failures, and when we went
    up for the second servicing mission, we did not replace them.
    Then they failed. We had three of them fail.
        We are prepared to replace four to six gyros on this next
    mission. We believe we have good gyros. No one in industry is
    incompetent. This is the best technology available. There is
    one change being made to the gyros which pertains to the
    chemistry, by packing them instead of with an oxygen
    pressurant, which could eat up the wire, with an inert one.
        Senator Mikulski. In my limited time, I don't need to know
    that kind of detail.
        Mr. Goldin. Okay. In any case, we will replace these gyros.
    We will be going up in another 12 to 18 months and, at that
    time, we will assess whether we will keep those gyros or make
    another replacement so that we will not have to have an
    emergency mission.
        Senator Mikulski. You are planning a Hubble servicing
    mission in October 1999, is that correct?
        Mr. Goldin. Yes.
        Senator Mikulski. That is to deliver six new gyros, is that
    right?
        Mr. Goldin. Yes. Then we will also replace a computer and
    some other equipment which we checked out on the John Glenn
    flight.
        Senator Mikulski. Now how long do you think this will
    extend the life of Hubble?
        Mr. Goldin. We believe that these gyros have an expected
    lifetime of 6 to 12 years.
        Senator Mikulski. And what is the expected life of Hubble?
        Mr. Goldin. Hubble, if we continue to service it, will be
    good perhaps to the end of the first decade of the next
    century.
        Senator Mikulski. So it is worth the investment to make
    these repairs?
        Mr. Goldin. It is among our highest priority to make these
    repairs.

                       servicing mission cost for hubble

        Senator Mikulski. Now how much will this servicing mission
    cost and how will this impact on the rest of the NASA budget?
        Mr. Goldin. The servicing mission will cost about $75
    million in fiscal year 1999 and fiscal year 2000, and when we
    replace all of the equipment for the Shuttle, to replace the
    equipment we used, the total cost will be about $136.6 million
    through 2003.
        Of that, $26.3 million is for the science package; $26.3
    million is for operational activity; and $84 million is to
    replace the expendable pieces of the Shuttle equipment.
        We intend, for fiscal year 1999, to absorb within our
    existing budgets in the Human Space Flight Account, $45.5
    million, which is what we need for fiscal year 1999 to get this
    going.
        We are presently working with the administration to see
    where we might reprogram in fiscal year 2000 through fiscal
    year 2003.
        Senator Mikulski. Dr. Goldin, as you know, we need to have
    the Hubble repaired for all the reasons you talked about--its
    scientific accomplishment, it will be a good investment to keep
    an existing program going that is bringing us a tremendous
    amount of scientific knowledge. However, you said that the
    budget is lean. Therefore, this is now a new $75 million hit
    that was unexpected and unanticipated. Therefore, we look at
    the Hubble and, therefore, look at how we are going to work
    this appropriation and how we work with the administration who,
    essentially, I know said to you ``eat it.'' I mean, that is
    what they said. You are trying to swallow it while we are
    trying to do other things.
        My question to you is will there be negative consequences
    on other programs that we need to take into consideration as we
    work both with you and the administration and among ourselves?
        Mr. Goldin. There is no doubt that there will be negative
    impact on other programs. Our budget has come down for 6 years
    and we have to do things. The only way we could fix it is by
    not doing something else. That is the level of discussion we
    are having with the administration.
        Senator Mikulski. Do you now know what you will not do
    because of it?
        Mr. Goldin. Not yet. But we will know before your markup
    and we are committed to getting you that data before your
    markup.

                                 russian report

        Senator Mikulski. I see that I have a yellow light. Hubble
    took a lot of time.
        Could you tell us where we are now? You did this Russian
    report. As you know, we are very concerned about the continued
    unreliability of the Russians to deliver what they promised.
        You then have to fund a redundancy program to support them.
    We asked for a report that said are there other ways where we
    could honor our international relationship with them but
    essentially get a dollar's worth of guaranteed value for a
    guaranteed American taxpayer dollar. This is with full
    knowledge that it is the Soviet, the Russian, scientists that
    are competent, but the political and bureaucratic situation
    there is not as reliable as the Hubble gyroscopes.
        Mr. Goldin. First let me say the reason the report was late
    was we wanted to be thorough. So we contacted a number of
    companies who had been doing business in Russia. We contacted
    10 different elements of the Department of Defense and other
    activities.
        We wanted to know how did they do business. There was one
    common theme: set a fixed set of requirements, negotiate a firm
    fixed price contract, have measurable milestones, and have the
    ability to do audits and traceability. That was the common
    theme that came out of all of it.
        We then analyzed that data and proposed that this is the
    right way to go.
        Should I keep going, Mr. Chairman? I see the red light.
        Senator Bond. Please finish. Finish the answer because we
    are going to be back and forth on this subject.
        Mr. Goldin. It is our assessment at the present time that
    this is the right way to do business. We have brought in Arthur
    Andersen to audit the work that we are doing. The GAO and the
    IG, has audited the approach we have been using with the
    Russians. So far we have an ability to trace when we send
    dollars there, to trace it through the system.
        Senator Mikulski. Dr. Goldin, my time is up. I am trying to
    get a dollar's worth of value for a dollar's worth of taxpayer
    dollars and that we don't have to go to a redundancy system
    because we are already foraging for funds in important
    programs.
        So where are we and where are we going?
        If we want to go to Senator Burns and get back to me on
    this, that's fine. But I am continually frustrated by this
    Russian endeavor.
        Mr. Goldin. That report dealt specifically with if we
    bought goods and services from Russia, how would we do it to
    assure taxpayer value. I believe we have answered that question
    and we can assure the taxpayers for every dollar spent that we
    are getting a dollar's value.
        The broader question you are asking is how can we deal with
    a Russian Government that does not pay its bills to the Russian
    Space Agency. That is a broader question. That is a question of
    great concern to me. The Russian Space Agency, when they have
    been given dollars by their government, performs superbly.
        Senator Mikulski. So we are still back to the political
    problem that we had some months ago?
        Mr. Goldin. Yes. There will be a meeting next week between
    the Vice President and Mr. Primakov. This will be the only
    significant subject that I have to bring up at that meeting,
    about the ability of the Russian Government to do what it says
    it is going to do.
        Senator Mikulski. I know my time is up.
        Will you then really press firmly?
        Mr. Goldin. Oh, yes.
        Senator Mikulski. I don't want to take any more of the
    Senator's time.
        Senator Bond. We will come back to it. We want to come back
    to that subject.
        I want to give Senator Burns an opportunity to get in here,
    too.
        Senator Burns. Thank you, Mr. Chairman. I just have a
    couple of comments.
        I think Senator Mikulski has pretty well covered this.
    There is still a lot of concern about the Russian situation.
        I just want to bring the committee's attention to a couple
    of areas which I think are very important.

                               prepared statement

        By the way, I have a statement and, if I may, I would put
    that into the record.
        Senator Bond. Without objection, we would be happy to have
    it. Thank you.
        [The statement follows:]

                   Prepared Statement of Senator Conrad Burns

        Thank you Mr. Chairman, I would like to begin by saying that NASA
    has been the Administration's shining star in this decade and I am very
    confident in saying Dan Goldin is the reason for that success.
        I think very highly of the Administrator's abilities. I also find
    it difficult to believe that year after year NASA is punished for it's
    abilities to save American tax dollars. The research conducted by NASA
    is research that has unbelievable returns and applications in the
    private sector. NASA has retained the mission of our federal government
    to conduct R&D to be disseminated to our nation's economy.
        NASA's current budget request is $87 million below the fiscal year
    1999 appropriated level. Considering NASA's investment into the
    International Space Station (ISS), this is a substantial decrease in
    the agency's budget. Granted, the Space Station has hit its share of
    speed bumps. However, it is my opinion that the Space Station is back
    on the right track.
        Mr. Chairman, I would like to encourage you to consider increasing
    NASA's budget and reaffirming Congressional support for NASA. A $500
    million dollar targeted increase in NASA's budget would be one of the
    best investments this nation could make.
        NASA is an investment in America's future. Recently, a NASA
    astronaut volunteered to visit a couple of high schools in Montana.
    Students in Whitehall and Bozeman had an opportunity to visit with NASA
    astronaut Robert Curbeam and discuss his recent space shuttle mission.
        These kids and communities are still talking about this visit. The
    impression Mr. Curbeam had on these children will not be forgotten
    soon. He is a very valuable asset to the nation's space program.
        We cannot continue to penalize NASA for the agency's cost
    efficiency. Each time the agency reduces its costs, they find they are
    also reducing their budget levels. It's time to recognize that NASA's
    return on the dollar to the taxpayer is positive in terms of our
    federal budget.
        I am also very supportive of Administrator Goldin's ``three pillars
    of success'':
        First, Global Civil Aviation--The goals of this objective is to
    reduce the aircraft accident rate by a factor of five within 10 years,
    and a factor of 10 within 25 years.
        Additionally, this research will reduce emissions and noise levels
    to give general aviation a place in the future of everyday
    transportation in our nation. That means commuting for many of us in
    rural states. I applaud Administrator Goldin for his work in this area.
        Additionally, I would like to suggest that much of the work at the
    FAA in terms of general aviation may be better suited in NASA. Safe and
    affordable general aviation is an objective we need to continue to
    pursue.
        In 1998, we did not have a major commercial passenger jet accident
    in our nation. However, major commercial aviation accident rates
    globally have been nearly constant over the past two decades. While the
    rate is very low, increasing traffic over the years has raised concerns
    in the potential for these accident rates increasing.
        NASA's research and technology development will address accidents
    involving hazardous weather, controlled flight into terrain, human-
    error-caused accidents and incident, and mechanical or software
    malfunctions.
        Pillar two: Revolutionary Technology Leaps.
        NASA's vision to reduce airline travel time and increase the
    production of affordable general aviation aircraft will ensure the
    future of alternative travel methods in our future. Rather than driving
    into D.C. on a bottlenecked I-395 or Route 66, workers can safely
    commute in small, efficient planes.
        NASA's third pillar for success is one I am certainly interested.
    Affordable access to space. The opportunity we have before us today in
    this field will save the taxpayer millions and reinvest those dollars
    into the nation's economy. NASA is best suited for R&D. Taking the
    operations expense out of NASA's budget and putting those funds toward
    hard R&D in cooperation with our nation's universities will be the best
    thing we can do for our nation.
        This third pillar reduces the payload cost to low-Earth orbit from
    $10,000 to $1,000 per pound and does this within ten years. In Montana,
    we are very excited about the Future X program. The X-33 is scheduled
    to land in Montana on test flights from Edwards Air Force Base in
    California late next year.
        The Future X program has been extremely successful--continuation of
    programs like X-33 and X-34 will result in further development in the
    private sector. I am awed by the technologies developed by NASA and
    later applied in the private sector. This is the definition of what our
    government is about--Research and Development.
        Montanans are also very excited about the future of space launch
    development. We are convinced it is only a matter of time that the
    shift of space launch and landing operations move from NASA to the
    private sector. We have vast sparsely-populated areas in our state that
    are very conducive to space launch criteria. We are especially excited
    to work with both NASA and private sector aerospace companies to expose
    Montana's benefits as a viable spaceport state.
        Lastly, I encourage the Administrator to continue his work in new
    propulsion technologies. The Ultra Efficient Engine Technology Program
    will create a new generation of high performance, operationally
    efficient and economical, reliable and environmentally compatible U.S.
    air and spacecraft.
        I am confident in NASA's abilities and I would like to further
    explore the opportunity for NASA to take on an additional role in the
    area of general and commercial aviation. That is the direction we are
    headed--eventually, it is my vision to see NASA as the primary agency
    overseeing not only our nation's space activities, but also our
    nation's airspace activities.
        Thank you, Mr. Chairman.

        Senator Burns. There are a certain amount of things that
    Americans have benefitted from with the space program that get
    very little attention. I think our work in civilian and
    international aviation is important.
        I think I mentioned this to you, Mr. Administrator, the
    last time, that I would like to see some more propulsion work
    being done. I know our new airplane for high speed civilian
    application has been sort of put on hold. But I don't think we
    should be letting slide new engines and materials--in other
    words, in our propulsion work. I want to continue that and also
    what we are doing as far as learning things about our own
    Earth.
        I think up in Montana you heard from some people when you
    were up there on a recent visit about how we can serve those
    people and the valuation of lands, forests, and this type of
    thing. It has great environmental overtones to it and would
    help us become better managers.
        That is all I wanted to say, basically, because these two,
    here, will get the final appropriation. But I do not think this
    is a time we should start to cut back on R&D as far as what we
    are doing in space and what we are doing as far as space serves
    this country and this planet.
        We do not hear much about that, but we know it is very,
    very significant. So we appreciate that.
        I am just going to make the plea not only for our reusables
    but also for what we are doing with education and our R&D into
    the application to civilian and commercial aircraft here in
    this country and abroad.
        I appreciate your good work.
        I saw your good friend this morning. He is adjusting to the
    private sector very well.
        That is all I have.
        Senator Bond. Was there a question in that?
        Senator Burns. No, there was not a question. There was a
    statement.
        Senator Bond. We appreciate very much your participation.
        Senator Burns. Ever since I got married I quit asking
    questions. [Laughter.]
        Senator Burns. I won't do that again. [Laughter.]
        Senator Bond. Okay.
        Senator Burns. You will figure that out. Better stand up.
    Some of these are going over your head.
        Senator Bond. Well, I have a hole in my glove. They are
    going just right straight through the webbing. [Laughter.]

            russian delivery of space station hardware and services

        I want to go back to some of the questions that Senator
    Mikulski began.
        Considering the difficulty Russia has had funding the
    Service Module, do you think that Russia can make timely
    delivery of Space Station hardware and services? Why would you
    think that they can? If not, in any event, what are your
    contingency plans?
        Mr. Goldin. First, let me say that there is a real value
    added technically for Russia. I leave the political issues to
    the foreign policy of this country. One of the major reasons we
    went forward with the Russians on the Space Station is we only
    have the Shuttle. We have a multi-$10 billion investment that
    will be up in space and we wanted to have assured access to
    that. The Russians have the Proton, the Soyuz, and the
    Progress. To us, that was absolutely essential and still is
    essential. So in some way, shape, or form, we believe the
    Russians should be in the program.
        Second, the Russians, when they have the money, they do
    perform. When we got them that $60 million, it was the
    difference between day and night. As we speak, the Service
    Module is being packed, readied for shipment into the Baikonur
    Cosmodrome, and it should be shipped somewhere around April 12.
    At that time, we will send a team to Russia to go through the
    schedule on the launch preparations at Baikonur. At the present
    time, the Russians say they could launch by September 20. We
    think it is more realistic that they will launch by November.
    But, even at that, it fits within our capacity to accommodate
    it. It will also allow us to have a permanent presence by
    astronauts early next year. So we think we are on the right
    path.
        Now, am I frustrated? I am darn frustrated. I come from a
    world where people do what they say they are going to do. It
    makes a tremendous disruption.
        One of the other lessons we learned is I think we may have
    done better negotiating with the Russians because we treated
    the Russian culture like the American culture. Had we known up
    front, I think we would have done it a little bit differently
    in terms of our contingency planning.

                    monies paid to the russian space agency

        Senator Bond. I want to get back to this. But one of the
    things that Senator Mikulski and I talked about last year that
    I believe you are doing is trying to find ways to get money to
    bypass what we would call the bureaucracy; to get money and put
    our cash right on the barrelhead, where the work is being done.
        Now this $60 million, is that one of your first monies?
        Mr. Goldin. It was right on the money. That $60 million
    made all the difference.
        Senator Bond. To whom did you pay that?
        Mr. Goldin. We paid it to the Russian Space Agency. But we
    did it with a firm fixed price contract, with very set
    milestones, with an auditing capability, and we gave them
    milestone payments. So they did not get paid until we saw
    results occurring.
        This is what we learned in our discussions at the request
    of Senator Mikulski and a number of other members on how we
    should contract. It was a very fruitful contracting approach
    and it made a significant difference in getting results.
        Senator Bond. Well, I'll tell you. Speaking of that $60
    million, we have heard some Russian officials say that with
    that $60 million, we have purchased 25 percent of the research
    time. Others say we have purchased 75 percent of the research
    time.
        What did we get?
        Mr. Goldin. We got 4,000 hours of research time, which will
    allow us to do a significant increase in research as we are
    building the Space Station. We also got a significant amount of
    on-orbit storage, which is crucial for us to place critical
    spares and other equipment for servicing the system.
        So we got $60 million in value back for the $60 million we
    paid to get this thing off dead center.
        Senator Bond. All right.
        As a bottom line, what is your estimate on how much more
    funding we are going to have to provide the Russians?
        Mr. Goldin. We have $100 million in the fiscal year 1999
    budget. We initially had thoughts that we might put in $150
    million a year for the next 4 years into the out-year budgets.
        But on second thought, we reflected and said this would be
    a disincentive for the Russian Government to pay their bills to
    the Russian Space Agency. So, in preparing the fiscal year 2000
    plan, we just left $100 million in fiscal year 1999 to give us
    some latitude should we need to make purchases. We will clearly
    monitor what is going on and if we do need additional funds,
    request it.
        But putting the money down there, all it does is the
    Russians have a tendency to say the money is there and then we
    have to pay less money to the Russian Space Agency. We felt
    that would be very, very wrong.
        Senator Bond. So we need to continue to figure out ways to
    make sure that that money goes to the Space Agency. Can we do
    that with any future payments?
        Mr. Goldin. We are going to be very frugal in any future
    payment to get specific goods and services in return for the
    money that we spend in Russia.
        Senator Bond. Be frugal versus is the money going to go to
    the Space Agency?
        Senator Mikulski. That's the question.
        Mr. Goldin. The answer is we believe we have a method for
    assuring that. We have audited that and we have records for the
    monies we sent. We trace the monies from bank to bank, to the
    agencies, to the people that get it. We go down on the floor.
    We have people in Russia watching how that money is spent.
        Senator Bond. But are you sending it to the Russian
    Government and then following it? Or do you have a mechanism
    for sending it to the bank?
        Senator Mikulski. Or agency?
        Mr. Goldin. We don't send it to the Russian Government.
        Senator Bond. That's a start.
        Mr. Goldin. We send it to the Russian Space Agency.
        Senator Bond. Okay. All right. So your future money will be
    going not to central government?
        Mr. Goldin. Not to the Russian central government. It will
    go to the Russian Space Agency.
        Senator Mikulski. If I might follow up, this is the crux of
    what we were trying to get at in our report.
        So, instead of now it going government to government, we
    want to draw the distinction that it is going agency to agency.
        Mr. Goldin. Agency to agency.
        Senator Mikulski. Is this, then, new?
        Mr. Goldin. It is not new. The other thing we do in
    specific cases is sometimes corporation to corporation.
        Senator Mikulski. Is this new with the Russians?
        Mr. Goldin. Is this new with the Russians?
        Senator Mikulski. Yes.
        Mr. Goldin. No.
        Senator Mikulski. Then I don't get it. I thought the
    problem was that it was going to the government.
        Mr. Goldin. There was desire a number of times to have it
    go to the Russian Government, and we have resisted those times.
        Senator Bond. What happened? I thought the problem was that
    the money went to the Russian Government and never got to the
    Space Agency.
        Senator Mikulski. That was my understanding, too, Mr.
    Chairman.
        Mr. Goldin. No. We never sent money to the Russian
    Government.
        Senator Bond. Well, you had two of us fooled.
        Mr. Goldin. We resisted that. We resisted that. And, in
    fact, when we surveyed the other agencies in the Federal
    Government and other corporations on how we were doing it, we
    felt that we had the right approach to doing that.
        Senator Bond. Well, I'll tell you.
        Senator Mikulski. Why don't you continue with your
    questions, Mr. Chairman, and extend this if you wish. Your
    questions were mine on that issue.
        Senator Bond. Well, I am about to finish up on the Russian
    side. I will then turn it back to you, Senator Mikulski.
        I did want to say that Senator Hutchison has been detained
    on the floor. She is working on the supplemental
    appropriations, which is where Senator Mikulski and I ought to
    be. Senator Hutchison does obviously have a very deep interest
    in this whole area of operation, and she is going to be
    following up with post-hearing questions. I know that you were
    looking around. Normally, we would expect to see her here.
        I guess my final question is this. Maybe we are just
    missing something, but the Russian Space Agency in some ways is
    the government. Where did we find the problems that money did
    not get to the scientists?
        It seemed to me that the money was not getting down to the
    people who were doing the job. What happened there?
        Mr. Goldin. First let me say that the Russian Space Agency
    is not like NASA. The companies, they own interest in the
    companies that they do business with. It is not like they give
    them contracts.
        I know that there are some people from Russian industry who
    came to America and said we are not getting the money. That is
    where it came from. I know some of those gentlemen. Some of
    those gentlemen would love to get their hands on the money and
    we, NASA, are not interested in giving the money to those
    gentlemen because those gentlemen have not demonstrated the
    commitment we would like to see.
        I think that is where it came from. There was a lot of
    self-interest of Russian corporations coming to America----
        Senator Mikulski. I think I need a shot of vodka right now.
    [Laughter.]
        Mr. Goldin. They'd come and they'd talk to members of
    Congress. They'd make statements that they cannot defend.
        We were not pleased with some of the things they said
    because we did not agree with them.
        Senator Bond. I might just ask, has the Inspector General
    looked at any of these things? Have you had any comments on
    this?
        Ms. Gross. We originally were looking at the monies
    following from the Johnson Space Center and how they would do
    it. But we do not have access rights into Russia. I am very
    interested to hear about these access rights because I do want
    to follow up on what access rights they are and who has them. I
    hope it is the Inspector General, among others, that has those
    rights.
        Our exposure to that came more in the MIR setting, where we
    did a series of reviews, for the MIR. Part of the problem we
    had which impacted on the safety of the MIR missions for
    Americans had to do with payments by the Russian Government to
    its employees, or the RSA to its employees.
        The issue was not so much about the American money, but it
    was more that the Russian Government was not keeping its
    commitments.
        Senator Bond. Okay.
        Mr. Goldin. What I am trying to say is with the money that
    we send, we track the goods and services we buy. I have the
    same problem that the Inspector General has, and I plan to
    discuss that with the delegation coming, that the Russian
    Government keeps saying it is going to pay their people and
    then they don't pay their people. That has an impact on 16
    countries that are working on the Station. That, in my mind, is
    the problem. The Russian employees of the Russian Space Agency
    and their contractors do not get paid at times. That is the
    issue. It is not American money--NASA money, I should say.
    There are other issues, but with the NASA money, we try to
    track it to the best of our ability so that we are sure we get
    value for it.
        It is the Russian money that is not coming and it is this
    Russian money not coming that is creating the problems that we
    have.
        Senator Bond. Senator Mikulski.

                             meeting with primakov

        Senator Mikulski. This, then, takes me to another issue. I
    think the chairman has pursued this to the extent that we can
    do it here.
        The meeting with Primakov is when, Dr. Goldin?
        Mr. Goldin. It's next week.
        Senator Mikulski. I would like to ask if you think
    appropriate in this setting what you intend to press at the
    meeting. Number two, I have another question related to the
    proliferation issue and what I would like to recommend that we
    press.
        Mr. Goldin. The details of the discussion I think might be
    inappropriate, but as for the general concern, we have one
    specific concern. For the last few years, the Duma appropriates
    a budget for the Russian Space Agency and that budget does not
    get passed down in full value to the Russian Space Agency. When
    it does get passed down, it comes a half-year to 9 months late.
    It is very difficult for my counterpart in Russia to do
    adequate planning. That is the single biggest problem we have.
        Senator Mikulski. So, therefore, the issue is not our money
    getting to the Space Agency, it is the question of their money
    getting to their Space Agency?
        Mr. Goldin. That is what has caused all the problems, and
    caused us to undertake contingency plans. In this year's
    budget, the Administration has programmed $600 million to spend
    in America to get contingencies against the Russians not
    performing.
        The issue comes back to the Russian Government
    appropriating money and not having it passed on to the Russian
    Space Agency. That is our single biggest concern.
        Senator Mikulski. What I am going to suggest is that the
    chairman and I write a joint letter to Vice President Gore to
    show a spirit of bipartisanship, asking that this also be
    pressed at the meeting so that it is clear that we are
    interested in essentially a partisan-free zone for you to also
    be further empowered to press this. I think it has very
    significant questions.
        Let me now, therefore, then go to the proliferation.
        Mr. Goldin. Before you come to proliferation, there is one
    point I again want to make which is a very important one. Every
    time the Russian Space Agency gets the resources, they have
    performed superbly.
        Senator Mikulski. We understand that.
        Mr. Goldin. They have the ability to do it. It is the
    government not supporting their own space program that is the
    problem.

                        russian proliferation activities

        Senator Mikulski. In January, the State Department
    sanctioned three more Russian entities for sending technology
    to Iran. I don't know if any of those entities are directly or
    indirectly involved in the Space Station endeavor. I find Mr.
    Primakov a very fascinating individual. He could be a very
    important personality in terms of our larger foreign policy,
    both in Iran and Iraq.
        As a former KGB agent of the Eastern region, he, therefore,
    knows the leaders of those countries intimately--up close, and
    personal. He has then recycled himself through Gorbachev,
    Yeltsin, after and around Yeltsin and back to Yeltsin, and I
    believe he is a significant figure in Russian and global
    policy.
        Therefore, are we going to be talking with Mr. Primakov at
    this meeting about enlisting their support--one, to make sure
    the Russians themselves are not participating in this
    proliferation, and, two, to get some assistance perhaps in
    these very troublesome areas of Iran and Iraq?
        Mr. Goldin. We, NASA, are a civil space agency, and it is
    crucial for us that we work with other space agencies in other
    countries that abide by the rules of nonproliferation of
    weapons of mass destruction.
        Senator Mikulski. That is why we went to Russia in the
    first place.
        Mr. Goldin. It is.
        Senator Mikulski. It's better for them to work with us on
    the Space Station than to be working with Iran or such
    countries.
        Mr. Goldin. We constantly consult with the foreign
    community.
        Senator Mikulski. Is this going to come up as part of the
    NASA deal? I mean, this was part of the NASA deal.
        Mr. Goldin. We rely on the foreign affairs community within
    the government to advise us on what we should do. We await
    direction from the administration and the foreign service
    activity within that administration to give us guidance in this
    area.
        Senator Mikulski. Then let me ask this question. The State
    Department sanctioned three more Russian entities for sending
    technology to Iran. Were those entities directly or indirectly
    involved with the space cooperation with the United States?
        Mr. Goldin. To the best of my knowledge, none of those
    institutions was involved in NASA activity.
        Senator Mikulski. Has NASA, as part of a civilian agency,
    been involved with the State Department, essentially been an
    advisor to the State Department, on how perhaps to help deal
    with the Russian proliferation activities?
        Mr. Goldin. First, we always cooperate with the State
    Department.
        Senator Mikulski. Cooperation is one thing. Being an
    advisor is another.
        Mr. Goldin. We can't advise on proliferation. That is not
    our area. But we certainly can advise on the things we do and
    the fact that we cannot operate with agencies that are in this
    area.
        I want to point out something. Every time I meet with
    Koptec, every time I meet with the Russian Ambassador, every
    time I meet with a senior official of the Russian Government I
    tell them the following: NASA is a civil space agency.
        Senator Mikulski. I appreciate all that. But the fact is
    that NASA is a civil space agency, but we are involved in a
    great deal of international effort. And for part of our
    international effort, one was a way of allies to participate in
    bold scientific endeavors. The other was to involve the
    Russians.
        So these are not exactly sharp distinctions.
        You--meaning NASA--have a great deal of experience because
    what does spread proliferation but the ability to launch. This
    is why we are having meetings today on China. This is why we
    are going to be having other meetings. It goes to the fact that
    other countries now have the capacity to launch.
        We don't know what got leaked to China. We don't know what
    Russia is selling. At the same time, of course, presumably we
    do know--or I hope we know.
        My question is because of your capacity, are you involved
    in being an advisor on how we can help the Russians stay
    between the white lines and not proliferate?
        Mr. Goldin. I communicate with the highest levels of the
    foreign affairs community in this country.
        Senator Mikulski. I don't know what that means. Are you
    talking about Secretary Albright? I mean, I go to the Baltimore
    community. That's different, between being at Jimmy's Diner and
    the Mayor.
        Mr. Goldin. My staff attends all appropriate meetings that
    take place on the subject.
        Senator Mikulski. Are we in a situation where in this
    conversation you don't want to be specific for reasons that are
    not cranking with the question?
        Mr. Goldin. There are things I do not feel comfortable
    saying in this open environment that would be a problem.
        Senator Mikulski. Then that is a better way than me to
    continue to try to pressure you.
        My time is up. I have other questions, but I would return
    now to the chairman.

                       commercializing the space station

        Senator Bond. I would want to open up another area--
    commercialization of space or commercializing the Space
    Station. That all sounds really great. But I am not sure
    everybody knows exactly what we mean.
        When you talk about it as head of NASA, you talk about the
    commercial use of the Space Station or turning the keys over to
    the private sector.
        Can you give us a sort of explanation of what you expect
    would happen and when it would happen?
        Mr. Goldin. First, when I talk about commercialization, I
    don't talk about people who provide commercial services where
    NASA is the only customer. There are some entrepreneurs who do
    not understand that concept. It is not commercialization if
    NASA is the only customer.
        We are interested in people who want to commercialize space
    where NASA is one of a multiplicity of customers and the
    overhead can then be amortized across a broader base.
        There are people who come to me and say Mr. Goldin, all I
    need is the first $100 million. Then I could send robots and
    astronauts to the moon. That is not commercialization because
    the first money ought to come from the commercial sector.
        We are now looking at running a competition for
    nongovernment organizations to run the utilization of the
    utilization of the Space Station. We, NASA, would then work
    with that organization to purchase some of the utilization
    time. We would like to do that so there could be a broad base
    of companies spending money in addition to NASA. We don't know
    how successful that would be, but that is our first attempt on
    the Space Station. We are preparing the documents now. We are
    talking to the community about that subject. Our intent is that
    commercial activity be real commercial activity and not
    shuffling of Uncle Same's money from one pocket to another.
        Senator Bond. I guess I am still not clear. I understand
    better what it is not. To what extent do you see commercial
    operations taking over and supplanting the efforts which this
    committee funds to assure space exploration?
        Is there an extent to which some of your tasks now being
    performed with money that we appropriate to you will be
    performed by, more and more by the commercial sector on the
    basis of the profit potential that those would entail?
        Mr. Goldin. We have set a goal of 30 percent for commercial
    usage of the utilization time on the Space Station and have
    indicated that, if there are more commercial pressures, we
    would cut back on our government time up to 50 percent or more.
        I do not anticipate that that activity will kick in in less
    than 5 years. And then, once the Space Station is up and
    operating and once we could establish user costs and user fees,
    and schedule it, we will then be in a better condition. So for
    the next 5 years we don't see it.
        However, right now, there are about $45 million a year of
    commercial money going into utilization of activities that
    could be put on the Space Station. That is a far cry from the
    30 percent I am talking about of the total utilization of the
    Space Station.
        Senator Bond. I could assume that if the private sector
    were paying 35 percent, or were taking 30 percent of the
    utilization, they would pay their allocable share of that
    particular operation?
        Mr. Goldin. I would hope so. Right now, I don't think we
    will have problems with the utilization of the Space Station.
    The biggest problem we will have is getting the costs of access
    to the Space Station down. I think that is the single biggest
    deterrent to commercial utilization of the Space Station.
        It is $10,000 a pound to get up there and that is a very
    stiff fee. Toward this end, we are working with a number of
    different launch vehicle suppliers to see if they could get
    lower cost access to that Space Station, which would then make
    it more commercially viable for people to use it.

                            space station completion

        Senator Bond. What is your current expected schedule for
    completion of the Space Station? How much slippage in both the
    schedule and the cost do you expect?
        Are you comfortable with the numbers you can give us now?
        Mr. Goldin. Well, I will tell you that we are keeping a
    very tight schedule because one of the other lessons we find is
    whenever we put in too much schedule reserve, it gets used up
    by our NASA employees and industrial partners and contractors.
    So we are holding a very tight schedule which says completion
    of development will occur in September of 2003. That is when we
    will put 6 people on board the International Space Station.
        We have a 1 year assessment of how much slippage could
    occur. This is in rough agreement with the Chabrow report. So
    our best assessment today is we could slip about another year
    beyond that. That is the best knowledge we have at this point
    in time.
        Senator Bond. What about costs?
        Mr. Goldin. By the way, there is one other point. Assembly
    completion, which would be when we brought the habitation
    module up, and the centrifuge facility would be July, 2004. If
    you put that 1 year slip, it would take it to a year later.
        The best estimate of development complete is $22.1 billion
    to $23.7 billion, and the assembly complete is $23.4 billion to
    $25.3 billion. Those are the best estimates we have to date of
    those numbers.

                          space station operation cost

        Senator Bond. What about the operation costs after it is
    completed?
        Mr. Goldin. The operation cost is estimated to be $1.3
    billion a year. And it is in 5 to 10 years from now that we
    hope to get commercial utilization of that Space Station. But
    it is not 100 percent of that. Our initial goal is 30 percent
    of that. That hinges on the ability to bring down the access
    costs to getting up there.

              upgrades to the shuttle or reusable launch vehicles

        Senator Bond. I have a number of questions that we are
    going to submit for the record. There is one last one that I
    want to discuss here because it is of interest to me, as well
    as are all these others.
        You at one point said you would make a decision by the end
    of the decade on whether to make a major upgrade to the Space
    Shuttle or to rely on the private sector to build a new,
    Reusable Launch Vehicle, like the Venture Star. Where are we on
    that timeframe? What is the status? What are you seeing? What
    do you project?
        Mr. Goldin. As part of the 2001 budget process, we will
    have a firm position on it. Where do we stand now? When we
    started the Reusable Launch Vehicle Program, the leaders of the
    corporations working with us were very optimistic. They thought
    that by 2000 they would be ready to reduce the technical risk
    of developing that system and go commercial.
        We now have been at it with two different companies, two
    different vehicles, and we think it is much tougher--we, NASA,
    and the corporations. We also thought that if we flew
    successfully the X-33, that would retire enough of the risk.
        When we talked to the financial community 3 and 4 years
    ago, before it was a reality there was a sense that that would
    be okay. We are hearing now that we will have to retire much
    more technical risk before the financial community is willing
    to take on the business risk. They don't want to take both of
    them on.
        We think there is going to have to be some more technical
    risk reduction and that it will probably be another 3 to 4
    years before we could really get at a hard decision. But in
    that, another wonderful thing is happening.
        The people who have worked on the Shuttle for decades and
    felt no competition, and always handed us ever increasing cost
    estimates for making upgrades and making changes suddenly feel
    the heat of competition. I think this is wonderful. They are
    now acting, the USA Corporation is very serious, performing
    very well, and they are taking a look at upgrades that we could
    make to the Shuttle to keep it safe.
        I also want to point out that we are spending a half
    billion dollars a year on Shuttle upgrades today and we have
    been continually improving the safety. We believe it will be
    very worthwhile over the next 2 to 4 years to continue upgrades
    to the shuttle--not multi-billion upgrades but upgrades
    measured in hundreds of millions of dollars, which are sensible
    things to do--and keep the spirit of competition going, keeping
    investment from the USA Corporation, from Lockheed-Martin and
    Boeing, in the different activities. I think the government
    will benefit from this.
        In addition, there are new concepts coming to the
    marketplace and it gives other people an opportunity to
    compete.
        So my sense is that we are going to conclude that we need
    another 2 to 4 years. Keep the competition going.
        Senator Bond. How much are you going to be investing in the
    Shuttle in that period of time?
        Mr. Goldin. Although the contractors might be interested in
    billions, we will be talking of hundreds of millions. Those
    hundreds of millions could do some very sensible things. Again,
    this has not been worked out with the administration, but I
    think some investments measured in hundreds of millions of
    dollars over a 3 to 4 year period could do some very
    significant safety upgrades to the Shuttle, very significant
    productivity upgrades to the Shuttle. It also keeps the
    competitive stress going.
        But I do not think we should commit to a $5 billion or $10
    billion liquid flyback booster at this time because we would
    then give one contractor an opportunity to think they have a
    sole source position and that would not be healthy for the
    agency or the country.
        Senator Bond. Thank you very much, Dr. Goldin. I will
    submit the rest of my questions for the record.
        Now I would like to turn to my ranking member for such time
    as she may require.

                                      y2k

        Senator Mikulski. Thank you, Mr. Chairman. I know that we
    are in the final minutes before a very important vote.
        First of all, Dr. Goldin, I would like to thank you and all
    of NASA on your hard work on the Y2K problem. Last year, when
    we had our appropriations hearing, GAO gave NASA a ``D'',
    which, given the fact that you were one of the leading
    technology agencies, was distressing.
        I understand that that report now gives you a ``B'', which
    puts you far ahead of many of the other agencies. I know that
    was the result of a tremendous amount of determination and
    extra costs that the agency did. So I want to thank you for
    that.
        Mr. Goldin. You helped inspire me, Senator.
        Senator Mikulski. Oh, that makes me feel good, Dr. Goldin.
    [Laughter.]

                                hubble follow-up

        There are two issues in writing that I would like to follow
    up on. One that we talked about was the follow-up on Hubble and
    the impact on other programs so that we have this information
    as we work on this--again, together with the administration and
    with you.
        [The information follows:]

        If NASA does not receive supplemental funding for the Hubble
    Servicing Mission 3A, the added mission will proceed as now planned and
    we will have to find the means to accommodate added requirements within
    our current funding level, most likely at the expense of other
    activities. We have not yet determined what would be cut to fund SM3A,
    but should that become a necessity, we will of course inform the
    committee in a timely manner. Consistent with Senate direction, we are
    preparing a comprehensive report regarding the HST accelerated
    servicing mission, which we hope to deliver on or about July 1.

                        space hope instructional program

        Senator Mikulski. The other thing in writing is I note that
    there continues to be a program under discussion at Goddard
    called the Space Hope Instructional Program. That was to
    establish that information technology facility in Baltimore.
        I still do not kind of know what it is, where it is, what
    does it mean. Does it mean dislocation of NASA employees and
    relocation? Could you give me in writing an actual description
    of the real program, not noble goals, in addition to noble
    goals. Also, number two is the impact on employees. In other
    words, I do not know where we are going with this, what the
    status of it is. Also, I understand it would involve possible
    relocation of Goddard employees to Baltimore. That often causes
    some rather cranky eruptions.
        Mr. Goldin. I would be pleased to answer that for you.
        Senator Mikulski. Thank you.
        [The information follows:]
    Background
        NASA Goddard and its Maryland based contractor workforce face
    serious problems in attracting and retaining skilled Information
    Technology (IT) personnel. An analysis of this problem suggests an
    approach modeled after the very successful Focus Hope program in
    Detroit. This program includes elements similar to the recent and
    successful migration of space mission operations to Bowie State
    University as well as experience gained in the successful Minority
    University-Space Interdisciplinary Network Training Program. ``Space
    Hope'' would be a pilot information technology training program. The
    approach is to establish a broad public/private partnership with IT
    related businesses, academia and local community interests that draw
    upon the under utilized segment of our urban populations to address
    regional IT needs, as well as those of NASA. It offers core IT
    curricula instruction, formulated by local industry partners, combined
    with on-the-job training in specific workforce skills. Baltimore,
    Maryland was identified as the pilot site because of its strong base of
    information related business, public/private sector interest, favorable
    community response, proximity to Goddard, and access to a trainable
    urban population with immediate employment needs.
    Space Hope Status
        Goddard initiated preliminary discussions with industry, civic and
    academic groups in the Baltimore area regarding the Space Hope concept
    and ultimately came into contact with the Greater Baltimore Alliance
    (GBA) which took an interest in coordinating a response to this
    problem. GBA identified various corporations in the Baltimore area as
    potential partners, who we understand are prepared to co-fund core
    curricula, fund their individual specialized training component, offer
    IT job placements and other support for such a training program. In
    addition, we believe an arrangement has been negotiated between GBA and
    one of our contractors to manage and implement the core instructional
    program. Goddard is evaluating implementation options and plans to make
    recommendations to NASA Headquarters.
        Over the course of the past six months, Goddard Space Flight Center
    management has been preoccupied with an intensive activity to
    transition to the new Consolidated Space Operations Contract (CSOC). At
    the same time the Center has been dealing with several major on-orbit
    issues which caused Center management to review its overall strategy
    for mission operations, and to some degree reconsider aspects of the
    Space Hope program. However, Goddard management remains convinced that
    the Space Hope program could make a contribution to space operation
    needs, and therefore has started to refocus attention on this
    initiative. In the near future, Goddard plans to outline a definitive
    proposal that will serve as a basis for addressing this critical need
    in an affordable and sustainable manner.
    Does it mean relocation for NASA employees?
        Although we have not outlined a specific proposal for Space Hope,
    permanent relocation or reassignments are not contemplated.

            fiscal year 2000 budget for goddard space flight center

        Senator Mikulski. Now let's go to the Goddard budget.
        Goddard is scheduled to have $2.4 billion and at the same
    time it has been instructed to develop two new starts--Triana
    and the University Class Earth System Science Mission, or
    UNESS.
        Mr. Goldin. UNESS.
        Senator Mikulski. Could you tell me if the fiscal year 2000
    budget is adequate now for Goddard to conduct its operations?
    Again, we have been concerned about the impact on the Space
    Station and others. Also, does your budget allow you to begin
    these new projects or not?
        Mr. Goldin. Yes, it does, and, in fact, the enthusiasm is
    contagious at Goddard for some of these new programs. They are
    adequately funded and they can do these programs.
        Senator Mikulski. Do you believe that to be so?
        Mr. Goldin. I believe that to be so. But if there is a
    concern, I will be talking to the center director, Al Diaz,
    after this hearing, and if there are any concerns that he
    expresses to me, I will also let you know.
        Ghassem, would you like to say something on this?
        Dr. Asrar. Yes, Senator.
        On the first subject, Triana, this is a mission of fixed
    value, where we have $75 million. We competed that. Goddard is
    a partner and Scripps Institution of Oceanography is the lead
    institution for that. The budget for that is well laid out in
    our budget for 1999, 2000, 2001, and beyond.
        The university class experiment that you referred to is a
    level of effort. We just started that. We have not actually
    announced it. We will announce it in the May timeframe.
        We have not received the proposals yet.
        Senator Mikulski. So it is just being developed?
        Dr. Asrar. It is in the stage of development, the early
    stage of development.
        Senator Mikulski. Well, of course, we are very proud of
    Goddard and its Earth Science effort. We have been reading
    their outstanding work on the sun eruption issue. You know,
    with the Millennium coming, there is a lot of armageddon type
    fear in all kinds of categories.
        So we look forward to hearing more about that. But, really,
    I think it goes to what Senator Bond was asking about,
    commercial activity, whether you talked about working with FEMA
    on flood mapping.
        So much of what Goddard is doing--everybody sees the
    dazzling pictures of Hubble which are more than just pictures.
    There is real science information there and all of that.
        But what I think is a message that we need to get out is,
    really, how the work of NASA is improving the day to day lives
    of the American people and even the world.
        The more I read these reports I see what we could be doing
    in agriculture and flood prediction, helping agencies save
    money, and knowing that that could be value added. Once we have
    those maps, not only do they help local government, but this is
    a market for the private sector to buy and value add to for
    specific uses.
        Senator Bond. Senator, if I may interrupt for just a
    minute, while we are worrying about armageddon, I am faced with
    a much more pressing problem. The Budget Committee is in markup
    and there is scheduled a series of votes.
        Senator Mikulski. Why don't you go and permit me to finish
    up with my question.
        Senator Bond. I am pleased to present you with the gavel.
        Senator Mikulski. I will view this for now as just a loan.
    [Laughter.]
        Senator Bond. It's a loan. You know, Rush Limbaugh has a
    brain on loan from God; you have a gavel just on loan from the
    Appropriations Committee.
        Dr. Goldin and associates, thank you very much. If you all
    will excuse me, I am off to defend against some kind of evils,
    I know not yet what. [Laughter.]
        Senator Mikulski [presiding]. Okay. We will be there. I am
    sure that we will have a full court press knowledge about this
    next week. The budget comes up next week and, as you know, this
    is why we are going into some of these issues.
        When I was in the House, we helped do new product
    development in the Great Lakes area in terms of mapping and
    scientific information. The private sector then value added to
    that in very specific niche markets for maritime and other use.
        What we are hoping is that even this information or
    knowledge that is being developed would be the same. I just see
    that in the flood mapping this would be an incredible endeavor.
    What we are trying to do with FEMA is to identify the areas
    that are so prone to disaster that we essentially buy them out
    now. In some instances we have gone in and rehabilitated 12
    times. You see?
        That is where we see this work going.
        Let me conclude my questions.
        Mr. Goldin. May I give you a substantiation of what you
    have just said? In 1992, there was a $750 million a year remote
    sensing business. As a result of the technologies developed by
    NASA-Goddard and used by the value added sector, that industry
    is now $2 billion a year. It is projected to be $4 billion a
    year by 2005 and $10 billion a year by 2010.
        That technology from Goddard in and of itself could be
    paying for two-thirds of the NASA budget.

                              solar stereo mission

        Senator Mikulski. Personally, that is great to hear. In
    fact, it's fantastic to hear.
        One of the reasons I chose to be on this subcommittee and
    why I am always so eager to hear what NASA is doing is it
    really does look at and has implications for the day to day
    needs of our own people, people of the world, and the long-
    range needs of our planet. So let me conclude with this.
        I would like you to tell me what do we now know about the
    sun surges, or whatever the scientific term is? I want to know
    how NASA is going to celebrate the Millennium and what are you
    doing New Year's Eve? [Laughter.]
        I know that James Lee Witt is at the Disaster Center,
    Shalala intends to be at HCFA to show Medicare is going out, so
    why don't you tell us about these sun surges and NASA's plans,
    as we turn the century mark, for how it intends to celebrate
    it. Then I want to know where you are going to be New Year's
    Eve.
        This is not an invitation to come to a party, now.
    [Laughter.]
        But if NASA is having one, it would probably be one of the
    best around--but not more fun than James Lee Witt's, I might
    add.
        Mr. Goldin. I think it could be.
        First, with regard to the sun, we have made some incredible
    discoveries about these coronal mass ejections which have a
    huge impact on things here on Earth. It disrupts power systems,
    it disrupts satellites, it creates all sorts of problems for
    space travelers.
        We will be able to do a better job in protecting the health
    and safety of our astronauts by having a much earlier
    anticipation of when these events could occur.
        The breakthrough in solar terrestrial physics in the last 6
    months has been nothing short of breathtaking. There are a
    number of new programs which you have supported that will take
    it to the next step.
        The Solar Stereo Mission is going to give us three
    dimensional images of these phenomena which will lead even to
    further understanding and benefit of how our sun works and how
    it affects our Earth. We thank you for the support for doing
    that.
        Senator Mikulski. Will, through your work at NASA, we be
    able to give more predictive dates of when these surges or
    eruptions will occur?
        Mr. Goldin. That is our intention. Now we have tens of
    minutes to an hours worth of anticipation and we hope to make
    that perhaps a day or two. This would really give people time
    to plan. But I think that is a few years off in the science
    now.

                              nasa--the millennium

        With regard to NASA, for the Millennium, we intend to give
    this Nation 15 additional payloads on orbit. In the last 25
    years, we have never launched that many spacecraft. It is an
    unbelievable task that we have ahead of us this year. I think
    half of them are going to come from your center, at NASA-
    Goddard. It is an unbelievable task we are facing, but the NASA
    team is up to it.
        As for myself, my wife and I are debating if we should go
    up to a mountain or should we go to New York City. We have not
    resolved that debate. I lean toward New York City.
        Senator Mikulski. Well, New York City sometimes goes into
    orbit. [Laughter.]
        Mr. Goldin. And you're welcome to come with us, Senator.

                        ranking minority closing remarks

        Senator Mikulski. Actually, I think I am going to be in
    Baltimore at a program called the Visionary Arts Museum, where
    there will be whole Millennium turn. It's right across from the
    sign center. I am going to be at a place that is visionary,
    scientific, futuristic.
        This old century has brought us incredible scientific
    discovery. Some have created mass weapons of destruction. Then,
    at the same time, we have created massive, new scientific
    information that has saved lives and saved communities, and
    NASA has been part of it.

                         Additional committee questions

        We thank you for this hearing. We know that there will be a
    lot of homework to do between now and the appropriations. I
    wish you to thank all the people at NASA for helping bring us a
    long way on many of the issues at this time.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                      Questions Submitted by Senator Bond

                  setting national space goals--nasa's mission
        Question. Mr. Goldin, how do we as a nation set goals for the
    civilian space program? Does NASA develop a set of plans and then try
    to get approval from the White House and Congress, or does the White
    House set the plans, tell NASA what to do, and then you both try to get
    approval from Congress? How does that process happen?
        For example, after the completion of the International Space
    Station, what do you expect the next major manned mission to be? Has
    this been discussed within NASA and what is the decision-making process
    for such a mission? In addition, is NASA looking at manned flights to
    Mars or the establishment of a manned base on Mars or the Moon. If so,
    have you looked at budgeting issues?
        Answer. The sequence by which the Nation's goals in space are
    defined can vary, but consistently occurs within the framework of the
    Constitutional relationship between the Congress and the White House.
    The foundation of any goals enunciated by NASA and the White House is
    contained in U.S. law--the National Aeronautics and Space Act of 1958
    (as amended, or ``The Space Act'') is the starting point. The Congress
    may pass other laws that might limit or stimulate the consideration of
    goals above and beyond what is already indicated by ``The Space Act.''
        The White House periodically issues a National Space Policy, which
    is likely to elaborate on Congressional direction but may also reflect
    White House initiatives, and normally addresses policy for military and
    intelligence, as well as civilian, activities in space. The last four
    presidential administrations have each issued National Space Policy
    directives. These directives have been fairly consistent in their basic
    objectives and approaches toward reaching those objectives.
        Within the legislative and policy framework, planning for the
    future of the U.S. civilian space program is, in almost all cases, done
    by NASA, in consultation with space program stakeholders, including the
    science communities, industry, other Federal agencies, and our
    international partners. NASA then seeks approval for its plans from the
    Administration. As the White House approves plans, NASA and the
    Administration then seek approval from the Congress. Both in current
    practice, and historically, this has been the way space program
    planning has been done in the great preponderance of cases.
    Occasionally, a US Presidential Administration or members of Congress
    will propose plans directly to NASA. In cases where this comes as a
    suggestion, NASA will investigate incorporation of the specific idea
    into current plans, and will either adopt, modify, or reject the
    proposal. In cases where an Administration or Congressional proposal
    comes in the form of a directive or a mandate, NASA then develops
    implementation plans to correspond with the directive, adjusting other
    plans and reallocating resources as necessary.
        With the advent of the Government Performance Requirements Act and
    the establishment of an agency Strategic Plan, the processes described
    above have become more codified. NASA has used its strategic planning
    processes to establish a series of goals over a 25-year time frame,
    documenting them in the NASA Strategic Plan. In most cases, the goals
    and objectives for long-term time-frames are less specific then those
    in near-term time-frames. The Agency's strategic roadmaps provide a
    general framework within which the Agency can develop a greater level
    of planning detail for the out-years as current accomplishments,
    technology developments, and resource availability issues resolve
    themselves in the current time-frame.
        NASA's Strategic Plan currently identifies ``Conduct human missions
    to planetary and other bodies in our solar system'' as a goal of the
    Human Exploration and Development of Space Enterprise in the 2010 to
    2023 timeframe, following achievement of the Agency goals that will be
    met by the International Space Station. The specifics of what type of
    missions would best fulfill this long-term goal have not been
    determined. NASA has, of course, had multiple study efforts over the
    years that have examined the possibility of a human mission to Mars.
    NASA continues to study such possibilities, and we are also attempting
    to further improve our long-range planning efforts across the board.
    However, none of these preliminary study efforts has reached the point
    were specific budget considerations could be considered, except in as
    much as the Agency has conducted such efforts in recent years with a
    particular focus on ways to achieve various missions at low cost.
                             national space council
        Question. Mr. Goldin, when you first became head of NASA, there was
    a National Space Council at the White House to coordinate military,
    civil and commercial space policy. The Clinton Administration hasn't
    used that structure. Was the making of national space policy better or
    worse when the Space Council mechanism was used? Would you recommend
    that the Space Council be restored?
        Answer. While the Clinton Administration has chosen to address
    space policy matters within the framework of a National Science and
    Technology Council rather than a National Space Council, it is not
    apparent that ``the making of national space policy'' is ``better or
    worse'' for it. Certainly the making of National policy in any arena is
    improved by the extent to which it responds to the entire National
    policy agenda, rather than asserting only the policy claims of special
    interest groups--however meritorious those claims.
        There is very little that NASA does that does not have
    ramifications for many dimensions of the Nation's current well-being
    and its future. For example, the civil space program draws from, and
    contributes to, the vitality of our industries; the education and
    capabilities of our workforce; and the visionary aspirations of our
    citizens, young and old alike. Executive Branch discussions of space
    policy issues that occur within the framework of the National Science
    and Technology Council are more likely to reflect these and other
    dimensions. If I were to draw any distinction between the significance
    of the two Councils, it might be one of emphasis, but it is impossible
    to say whether one produced ``better'' or ``worse'' policy. The
    ultimate test of any policy is whether it served its ultimate
    objectives, and that judgment can only be made ``in the long run,''
    with all the benefits of hindsight.
                               mission decisions
        Question. What are the procedures by which missions are selected
    and budgets for those missions determined. Please provide a step-by-
    step overview of this process, including oversight review. Also, please
    provide a summary of the yearly review and oversight procedures for
    missions that are selected and budgeted.
        Answer. The NASA Strategic Plan identifies the goals of each of the
    Enterprises and provides specific objectives for the near, mid and far
    term. Science missions aligned with these objectives are defined within
    the scope of the budget allocated to each Enterprise. Announcements of
    opportunity or similar announcements such as NASA research
    announcements that are provided to the science community and responses
    are peer reviewed to select the highest quality science instruments and
    investigations that can be accomplished within cost and schedule
    constraints. For major programs, oversight responsibilities are
    retained at NASA Headquarters. For those programs, an independent
    assessment is conducted by the Independent Program Assessment Office
    (IPAO) prior to Agency approval of the program. Agency approval must be
    granted prior to program transition from formulation into
    implementation.
        During program implementation, oversight for major programs is
    executed by the NASA Program Management Council. In addition to
    receiving regular status reviews, the NASA Program Management Council
    also receives the report of an Independent Annual Review (IAR) team.
    The IPAO also executes the IARs. The IAR team reviews the status of the
    technical progress, the schedule, and costs to verify that the program
    is meeting its commitments. If cost and schedule thresholds are at
    risk, a Termination Review may be required to facilitate the Agency
    deliberations on terminating, rescoping, or continuing the program.
        For projects or smaller missions, the responsibility for approval
    and oversight may be delegated to a Lead Center. The Lead Center will
    also utilize an independent assessment to inform their deliberations
    prior to approval of the project. Ongoing oversight will also be
    delegated to the Lead Center's Governing Program Management Council.
                          national academy of sciences
        Question. What role does the National Academy of Science play in
    setting goals and objectives for NASA? For example, how closely do you
    follow its recommendations on what space science programs to pursue?
        Answer. NASA's science programs solicit National Research Council
    (NRC) guidance on scientific goals for their flight and ground research
    programs, generally on a decennial basis. During the past five years,
    the Office of Space Science has requested and received research
    strategy documents from the NRC's Space Studies Board on planetary
    exploration, solar and space physics, and astrophysics. In addition,
    every ten years the NRC prepares an integrated discipline-wide survey
    of priorities for astronomical research supported across the federal
    government. These products, based on research community consensus
    processes external to NASA, provide valuable guidance to OSS management
    in prioritizing missions and programs. NASA follows this research
    guidance where possible, subject to constraints of cost, technology,
    available infrastructure, risk, program balance, and national policy.
                              full cost accounting
        Question. What is the status of NASA's efforts to implement full
    cost accounting?
        Answer. NASA continues to progress toward implementation of full
    cost management, budget and accounting practices. NASA's full cost
    initiative focuses on improved mission and administrative cost
    efficiencies by integrating full cost information into all key agency
    practices. During the past few years, NASA tested key full cost
    concepts, trained key staff, simulated full cost management practices,
    estimated and reported basic full cost information to external
    oversight authorities, developed full cost budget estimates and
    initiated full cost management activities at key Centers. NASA plans to
    continue to integrate key full cost practices into agency operations
    during the next few years. NASA plans to implement all full cost
    practices in conjunction with the implementation of its new standard
    integrated financial management (IFM) system in the next several years.
        The overall objective of NASA's full cost initiative is to improve
    the way NASA achieves its mission by implementing new, improved
    management, budgeting, and accounting policies, practices, and
    procedures. In its simplest terms, the concept of full cost ties all
    Agency costs (including Civil Service personnel costs) to major
    activities. All costs must be associated with an activity, commonly
    referred to as a cost objective. Based on experience gained in earlier
    stages of the full cost initiative, NASA plans to use ``projects'' as
    cost objectives for managing, budgeting, and accounting. In contrast to
    the current approach in which Civil Service personnel costs and certain
    other costs of an institutional nature are not tied to projects, under
    the full cost approach all costs will be associated with projects.
        NASA has made significant progress in developing, testing and
    initiating full cost practices into agency operations during the past
    few years. NASA tested key full cost concepts at its Centers. NASA
    trained key staff on full cost practices. NASA simulated full cost
    management practices at the Center and agency levels. NASA successfully
    applied analytical accounting techniques and reported basic full cost
    information to external oversight authorities. NASA developed full cost
    budget estimates and used key indicators for internal budget
    deliberations. In addition, NASA initiated full cost management
    activities at key Centers.
        NASA's full cost initiative integrates a phased development and
    introduction of full cost practices in conjunction with NASA's new,
    standard integrated financial management (IFM) system. NASA plans to
    continue to use cost finding techniques and to pursue related interim
    full cost practice improvements. In addition, NASA plans to operate all
    full cost practices in conjunction with the implementation of its
    planned new IFM system implementation during the coming years.
        Question. What are the five most critical issues that face NASA in
    implementing full cost accounting and how has NASA addressed these
    issues?
        Answer. NASA faces a variety of significant issues in implementing
    the full cost initiative. These issues include (1) restructuring NASA's
    appropriations, (2) implementing required financial system
    capabilities, (3) training on management in a full cost environment,
    (4) applying new cost accounting principles in the NASA environment,
    and (5) obtaining and integrating agency ``buy-in''. NASA continues to
    pursue the effective resolution of these issues.
    Appropriations Restructure
        NASA requires certain restructuring of its appropriations and
    related oversight to optimize the benefits of it full cost initiative.
    The integration and synergy of changes in each area (management,
    budgeting, and accounting) are critical to the strength and benefits of
    NASA's full cost practices.
        Full-cost accounting by itself, over time, would likely lead to
    gradual budget and management improvements. However, concurrent changes
    to full cost practices in the accounting, budgeting, and management
    areas can be expected to ensure that NASA optimizes improvements in
    each area, as soon as possible. To this end, NASA has pursued key
    budget changes as part of the full cost initiative. Furthermore,
    certain legislative provisions are being pursued to ensure that NASA
    achieves all of the key benefits of its full-cost practices, while NASA
    retains its long-standing ability to appropriately and efficiently
    assign/reassign its staff to achieve mission requirements.
        As part of its fiscal year 2000 budget request NASA proposed that
    following language which was adopted by the House of Representatives
    and is under consideration by the Senate:

              NASA shall develop a revised appropriation account structure
            for submission in fiscal year 2001 budget request consisting of
            the ``Human Space Flight'' account; the ``Science, Aeronautics,
            and Technology'' account; and the ``Office of Inspector
            General'' account. The accounts shall each include the planned
            full costs (direct and indirect costs) of NASA's related
            activities and allow NASA to shift civil service salaries,
            benefits and support among accounts, as required, for the safe,
            timely, and successful accomplishment of NASA missions.

        The eventual enactment of such appropriation language is critical
    to optimal full cost benefits.
    Supporting Financial System Capabilities
        The effective and efficient implementation of the full cost
    initiative in NASA requires key management system capabilities. NASA's
    current financial systems are out-dated, are not standardized, and lack
    cost accounting capabilities. Without such capabilities, detailed cost
    accounting support becomes extremely labor intensive. Such labor is
    not, and is not expected to be available.
        While certain after-the-fact cost finding techniques can be used to
    establish a minimal level of cost accounting capability for analytical
    purposes, such techniques cannot support NASA full-cost accounting,
    budgeting, and management in an operational setting. As a consequence,
    NASA has determined that the timely and efficient implementation of
    full-cost management in NASA requires new standard system capabilities.
    As noted above, NASA is currently implementing a new standard IFM
    system that is expected to support completely full cost management,
    budgeting, and accounting through the timely production of consistent
    cost information. Because Agency-wide implementation of the IFM system
    is a lengthy process, NASA is also developing a strategy to pursue
    certain full cost practices, to the extent practical, without the new
    system with the expectation that the system will follow shortly
    thereafter, thereby supporting optimal long-term practices.
    Training
        Training in full cost management, budgeting, and accounting across
    NASA is required to achieve the key mission and administrative benefits
    envisioned under the full cost initiative. Technical training in
    budgeting and accounting is to be provided to financial/resource
    personnel. Further, training in managing on a full cost basis is
    needed, particularly for program and project managers.
        To meet these needs, NASA has:
      --Developed and maintained a written full cost initiative
            implementation guide that is available to all NASA staff;
      --Held full cost briefings for all Headquarters and Center staff;
      --Conducted exercises involving (1) re-casts of budgets into a full-
            cost basis and (2) development of estimates of the costs of
            program and projects on a full-cost basis, using cost finding
            techniques;
      --Conducted an Agency-wide full cost management simulation exercise,
            focusing on the organizational structures and processes used to
            implement full cost practices.
        Further, NASA will continue to include full cost practices as a
    part of all program and project management training and include full
    cost budgeting and accounting as part of the training segment of the
    IFM system implementation.
    Applying Cost Accounting Principles within the NASA Environment
        The basic concept of full costing is typically associated with the
    private sector and the economic imperative that mandates that all costs
    must be recovered to ensure economic survival. As such, the traditional
    accounting discussion of ``absorption'' or ``full costing'' typically
    focused on manufacturing operations and related product costing. In
    that regard, the approach involved accounting for the direct material
    and direct labor costs related to manufacturing a product and involved
    assigning a share of other indirect costs, such as maintenance, data
    processing, security, and general office costs, to the product. In this
    context, the cost objective was the product.
        While the private sector has a long history of activity in the cost
    accounting area, the Federal government's involvement only recently has
    evolved and been refined. In response to significant financial
    management legislation in recent years, a wide variety of concepts,
    techniques, and approaches have evolved. The challenge NASA faced was
    to adapt this emerging body of new Federal cost accounting knowledge to
    the NASA environment.
        The NASA full-concept integrates several fundamental accounting,
    budgeting, and management improvements. The planned improvements
    include accounting for all NASA costs as direct costs, service costs,
    or general and administrative (G&A) costs, budgeting for all
    appropriate program/project (``project'') costs, and managing such
    ``project'' costs from a full cost perspective. The term ``project'' is
    used to represent NASA's final cost objective.
        Briefly stated, (1) direct costs are costs that can be obviously
    and/or physically linked to a particular project, (2) service costs are
    costs that cannot always be initially, readily and/or immediately
    linked to a project, but subsequently can be traced to a project
    (optimally based on service consumption) and (3) G&A costs are support
    costs that cannot be linked to a specific project in an economical
    manner. Such costs are typically allocated to cost objectives (or
    projects) on a reasonable, consistent manner.
        All costs will continue to be controlled and managed within NASA.
    Under full-cost management, however, project managers (with the most
    direct mission responsibility and most intimate project knowledge) are
    expected to continue to control direct costs but are also expected to
    have greater influence over service costs and appropriate awareness of
    G&A costs. Project management control/influence is not unconstrained.
    At the same time, NASA Enterprise and Center management are expected to
    continue to guide expenditures related to Center capabilities
    consistent with strategic imperatives.
        The introduction and integration of the basic private sector
    ``absorption'' practices has been a particular challenge in a
    government research and development (R&D) environment. NASA is
    addressing this challenge by adopting the private sector practices and
    continuing to train, test, modify and integrate applicable full cost
    practices into agency activities.
        An additional challenge concerns comparisons of project cost
    estimates and actual costs at different time intervals. If a project
    were budgeted and funded using the customary NASA basis and
    subsequently were accounted for on a full cost basis, there would be a
    need to restate the original budgeted amounts into a full cost baseline
    in order to facilitate accurate comparisons. The conversion process
    will require careful estimates and approximations in order to support
    budget to actual cost comparisons.
    Need for Broad-Scale Participation
        In the development of the full cost initiative, an important issue
    was striking an appropriate balance between (1) broad-scale
    participation of NASA management in concept formulation, testing, and
    implementation and (2) efficient mechanisms for concept development,
    prototyping, testing, and implementation. Participation is vital to
    achieving ``buy-in'' at all levels; efficiency is needed to achieve
    timely accomplishments.
        The approach developed involved an organizational structure geared
    to the specific tasks at hand. When tasks were completed, the
    organizational structure was disbanded. To illustrate, the following
    organizational structure was used to support the Agency-wide testing of
    the full cost initiative:
      --Steering Group, composed of Senior Executives from representative
            Headquarters organizations and Centers;
      --Policy Group, consisting of representatives of all Headquarters
            organizations and Centers (the Steering Group and Policy Group
            were basically the same groups that provided oversight during
            the concept and prototyping phases);
      --Implementation Oversight Group, composed of all Center Chief
            Financial Officers (CFO's) and representatives from the agency
            Enterprises;
      --Issue Teams, ad hoc groups established to develop solutions to
            identified issues.
        Upon completion of Agency-wide testing, the groups were disbanded.
    In the current implementation stage, NASA managers are expected to
    implement the full cost initiative within their areas of
    responsibility. In addition, key operational matters are being
    addressed through related Integrated Financial Management (IFM) system
    working groups and committees. Ongoing oversight is provided through
    existing agency communication mechanisms, including the agency CFO
    Council.
                                 space station
                                  iss overruns
        Question. The estimated cost of the International Space Station
    (ISS) has grown from $17.4 billion too more than $23.4 billion. Why has
    the ISS program encountered such a large overrun--$6 billion to $8,3
    billion depending on that of your current estimates are correct?
        Answer. The growth in the ISS cost projections through the
    completion of assembly have increased for several reasons:
      --Lengthened assembly launch schedule,
      --Addition of new scope,
      --Contractor overruns,
      --Make-work changes, and
      --Maintaining sufficient reserves.
        Although the first element launch (FEL) was delayed only 8 months
    since the fiscal year 1994 budget (Mar-98 to Nov-98), the assembly
    sequence has stretched out 29 months. Assembly complete has shifted
    from Jun-02 to Nov-04 with the recently rebaselined assembly sequence
    (Rev-E). Although the lengthened assembly launch schedule has generally
    not caused increases in annual funding, it has resulted in planned
    operations and research funding for the lengthened time frame.
        Much of the additional scope has been added to implement
    contingency plans related to potential Russian shortfalls. Both the ICM
    and a U.S. propulsion capability have been initiated as part of NASA's
    contingency plan. A U.S. developed crew return vehicle (CRV) was added
    when analysis indicated that the Russian Soyuz would not meet the
    emergency return requirements for the 7-person crew planned for the
    duration of the station's operations period. The addition of the U.S.
    CRV is estimated to increase funding about $1 billion through fiscal
    year 2004.
        Overruns by the prime contractor have also contributed to overall
    cost growth. Boeing's current overrun estimate at completion is $986
    million.
        Make-work changes, including impacts driven by accommodation of the
    Russian segment, have also contributed to the projected growth. To the
    extent that all these changes depleted reserves to a low level, NASA
    has increased funding estimates to ensure sufficient reserves.
        Question. In what specific areas did NASA underestimate the cost
    and why did the underestimates occur?
        Answer. The stretch-out of the assembly sequence has not
    contributed to increases in annual funding, but the impact runout cost
    is estimated to result in about $3 billion of the projected cost growth
    included in the fiscal year 2000 budget estimates. The schedule delays
    affect operations and research activities already planned and estimated
    at a level of approximately $115 million per month. Extension of the
    assembly sequence into this operations and research period is
    calculated by multiplying the months of schedule slip by the average
    monthly costs. This results in a total cost for the delay of assembly
    complete of $3.3 billion for the full 29 months.
        NASA is committed to minimizing the impact of the schedule problems
    and limiting program cost growth, while maintaining the integrity and
    robustness of the vehicle for the research opportunities it will
    provide for many years to come. U.S. hardware is being held to earlier
    delivery dates to avoid excessive contractor costs, while providing for
    increased integration, verification and testing activities to enhance
    performance on orbit. All hardware and schedules, both U.S. and
    partners', are closely monitored so that the agency can continue to
    plan and manage the program in an efficient and effective manner.
        The contingency planning activities have increased the ISS annual
    funding levels. The implementation of contingency plans, while
    increasing annual funding levels, provides critical backup, and
    possible replacement capabilities, to Russian provided hardware. NASA
    has been proactive in contingency planning activities aimed at
    mitigating the potential loss of Russian-provided capabilities,
    including the initiation of development of U.S. propulsion capability.
    The acquisition of the Interim Control Module, development of a
    propulsion module, orbiter fuel interconnect modifications, and
    additional logistics carriers, and procurement of Russian goods and
    services, enhance U.S. segment autonomy and help maintain the assembly
    schedule. Funded within the Space Station account as part of the
    Russian Program Assurance (RPA) effort, these activities have increased
    the Space Station annual funding requirements by about $1.2 billion
    between fiscal year 1997-2004.
        The current estimate of overrun for the prime contract is $986
    million. Over 82 percent of the Prime development contract has already
    been completed and this is clearly exhibited by the quantity of flight
    hardware already delivered. This level of completion is resulting in a
    continued drop off in the development effort work force. Prime
    Contractor staffing levels are decreasing, with over 2000 employees
    having transitioned off the Program from peak development levels in
    fiscal year 1997. Still, the Program continues to be very concerned
    with Prime contractor cost management and we have budgeted reserves
    accordingly, having also initiated an internal review of cost
    management issues and concerns. We expect to implement improved
    procedures and processes in the very near term in a number of critical
    areas to manage the program's resources.
        Question. What lessons have we learned that can be applied to the
    next large space project or for any large Governmental initiative like
    this?
        Answer. When undertaking an unprecedented, multi-year, global
    project like the ISS, some lessons learned have emerged that may be of
    use to future programs:
      --Not all risks are knowable. When pushing the technical boundaries
            in so many areas, difficulties and challenges will arise which
            cannot be foreseen. Nonetheless, in planning a project, they
            should be anticipated as best as possible.
      --Preserve resources for unforeseen problems. When problems are
            known, they should be prudently addressed as quickly and
            economically as possible. When unknown problems emerge, as they
            are bound to, they will require resources.
      --The global political and economic environment may change. The world
            is dynamic, and while not possible to predict what may change,
            such changes must be accommodated. To lead globally and gain
            from what other nations have to contribute requires
            flexibility.
      --Integrated system analysis and testing capabilities are critical.
      --Communications among domestic and international partners is
            critical.
                                total iss costs
        Question. NASA has indicated that the International Space Station
    program will grow from a total of $17.9 billion to some $23.4 billion
    at completion and likely significantly more. GAO has estimated a life-
    cycle cost for ISS through fiscal year 2012 of 95.6 billion. What is
    NASA's estimate for total costs, including operational costs, for the
    life cycle of the ISS? How does NASA plan to budget these costs?
        Answer. NASA's fiscal year 2000 budget estimate through completion
    of assembly is $23.4 billion, with a potential range to $25.3 billion.
    NASA's estimate for a 10-year operational period is $13 billion. In
    addition, about $10.2 billion was funded prior to fiscal year 1994 for
    the Freedom program.
        GAO's estimate was based on the fiscal year 1999 budget. It
    included about $64 billion that the GAO estimated as ``station-
    related'' including Shuttle-Mir flights, Shuttle assembly, research and
    operations flights, civil service support, research principle
    investigators. These activities are funded in other NASA program and
    project budgets.
        NASA will continue to fund these activities in the appropriate
    program and project budgets. When a full cost approach is implemented
    for the NASA budget, some costs, like civil service, will be allocated
    to the ISS and other program budgets. Other costs, such as
    communication support, and agency and center general and administrative
    activities, will also be allocated to specific NASA programs.
                            russian funding problems
        Question. The current Space Station is the result of the redesign
    of the Space Station Freedom begun in fiscal year 1993. The inclusion
    of international partners (such as Russia, Japan, Canada, and the
    European Space Agency) was touted as a way to save time and money over
    the earlier Freedom program. In particular, Russian participation was
    to save $2 billion and 18 months. Nevertheless, Russian funding
    problems are continuing in a crisis state and we understand that
    Russian funding problems are likely to impact the current schedule of
    assembly launches and hardware. In response to previous concerns with
    Russia's ability to provide the Service Module, NASA developed a
    contingency plan, which included the development of an interim control
    module.
        What is the current status of Russian funding for its sections of
    the Space Station?
        Answer. The 1999 Russian Federation budget provides approximately
    2.5 billion rubles ($114 million USD at current exchange rates) to RSA.
    Of that total, 1.1 billion rubles (approximately $50 million USD) will
    be allocated to the ISS program and 600 million rubles (approximately
    $27 million USD) to Mir operations through August 1999. RSA may receive
    additional revenue from off-budget sources, such as the sale planned by
    the Russian Government of frequency spectrum and additional excise
    taxes. NASA believes that the projected 1999 budget for RSA represents
    a significant shortfall in the funding required to fulfill RSA's
    obligations to the ISS program.
        RSA believes they can achieve a late-1999 launch of the Service
    Module, provided that the fiscal year 1999 budget is disbursed in a
    timely fashion. However, the 1999 budget has yet to be disbursed in
    full, placing continued budgetary strains on RSA. RSA has received
    approximately 524 million rubles (approximately $24 million USD) for
    ISS through May 1999.
        Question. Considering the difficulty Russia has had funding the
    Service Module, do you believe Russia will make timely delivery of
    other Space Station hardware and Services? If so, why? If not, what are
    your contingency plans? What are the cost implications of those plans?
        Answer. The Russian ISS program continues to struggle due to
    shortfalls in Russian Government funding for the Russian Space Agency
    (RSA). NASA is concerned that continued shortfalls in funding may
    threaten progress on Russian ISS elements beyond the Service Module, to
    include operation of the Service Module on-orbit and support of needed
    launch infrastructure. Continued shortfalls could result in delays in
    the program unless full Russian Government funding, or off-budget funds
    are received. Of particular concern is the development of follow-on
    Soyuz and Progress vehicles and the Science Power Platform.
        In attempting to minimize U.S. cost growth, the ISS Program has
    taken the approach of incrementally buying down the level of Russian
    risk. NASA has laid out a comprehensive contingency plan that allows us
    to move the ISS Program forward, maintain the Russian partnership based
    upon their economic ability, and achieve greater U.S. backup capability
    over the next several years. The objectives of this plan are to contain
    U.S. cost growth, protect the ISS schedule, and maintain program
    stability, while providing backup capability in the event of further
    Russian shortfalls.
        A key component of the ISS contingency plan is the buildup of U.S.
    capabilities to increase ISS robustness and provide contingency against
    possible Russian shortfalls. NASA has developed an Interim Control
    Module (ICM) to protect against a Service Module failure to achieve
    orbit, with a secondary focus to protect against Progress propellant
    resupply shortfalls. The ICM schedule supports a launch on need as
    early as 2000 and provides 1 to 3 years of ISS propulsive capability
    depending on its usage. Through innovative Shuttle flight planning,
    NASA has developed an approach under which NASA can already offset a 30
    percent shortfall in Progress vehicle propellant logistics, and the
    Agency is taking additional steps, such as the modification of the
    Orbiter fleet to enhance Shuttle reboost capability. Development of a
    permanent U.S. Propulsion Module is scheduled to be available in 2002-
    2003, providing full U.S. propulsive redundancy.
        Additionally, the ISS contingency plan seeks schedule stability by
    working with the Russian Space Agency (RSA) to meet near-term
    objectives and to ensure reliable resupply and crew rescue capability
    to ISS. The broad operational capabilities that Russia has committed to
    provide for the ISS naturally places requirements upon the other ISS
    partners for systems integration. As a result, there are many Russian
    goods and services that are of great value to the U.S. for risk
    mitigation, operational effectiveness, capability enhancement and
    safety. These goods and services are outside of the initial ISS
    Partnership agreements because they have only been recently identified
    as assembly plans have matured and as we have begun preparing for crew
    operations and potential contingencies. The cost of procuring these
    goods from Russia is small in comparison to the cost of developing the
    same capability in the U.S. Each of the Russian goods that have been
    identified are key to meeting ISS schedule requirements.
        The total level of funding for Russian contingencies through
    assembly complete (funded through the Russian Program Assurance budget
    line) is $1.2 billion. This includes funding for last fall's $60
    million procurement of Russian research time and stowage, and $100M
    identified for Russian goods and services procurements in 1999. It is
    possible that NASA may require some specific Russian goods or services
    to address currently unforeseen needs in the future, although
    additional funds are not budgeted in subsequent years.
                    nasa's purchase of russian research time
        Question. NASA recently transferred $60 million in funding to
    Russia in exchange for all the research time (4,000) allocated to
    Russia during the assembly period. Nevertheless, I understand that a
    Russian official indicated that NASA had purchased between 25 percent
    and 75 percent of Russia's research time. What did we actually get for
    our $60 million? Please identify what this research time will be used
    for?
        Answer. NASA purchased 4,000 Russian crew hours, which essentially
    doubled the crewtime available for U.S. research during the assembly
    period. The availability of crewtime is a significant limiting
    constraint on the research program during the 3-person phase. This
    additional crewtime will be especially valuable for initiating,
    monitoring adjusting and servicing experiments and significantly
    advancing research productivity. The hours will be used to enhance
    early biotechnology, human physiology, gravitational biology and
    commercial product development activities. As crewtime increases, the
    productivity of the research program grows commensurately; because it
    enables a greater number of experiments to proceed for longer periods
    and at increased frequency, thus acquiring many more processed samples,
    or empirical data points. NASA plans to begin early ISS research
    activities with delivery of the Human Research Facility on flight 5A.1
    (STS-102) and two EXPRESS Racks on flight 6A (STS-100). Ongoing
    utilization activities will be initiated with the first five
    utilization flights, all prior to the 6 person crew capability. NASA is
    confident that this Russian crewtime will be very valuable and fully
    utilized within the research program.
                          commercialization of the iss
        Question.There is a lot of talk about ``commercializing'' the space
    station, but little agreement about exactly what that means. What do
    you, as the head of NASA, mean when you talk about commercial use of
    the space station or about ``turning the keys over to the private
    sector'' as you've said in the past? What is your time frame for the
    latter?
        Answer. In 1998, the Committee played a pivotal role in the
    formulation and ultimate enactment of the Commercial Space Act (Public
    Law 105-303) which called for several reports relative to the potential
    for commercial opportunities with respect to the ISS. NASA responded
    with its Commercial Development Plan for the ISS. We have a vision of
    an expanding space program with private investment, international
    collaboration, and vigorous economic development. Since the Plan was
    released, NASA has begun to receive, for the first time, true
    entrepreneurial offers involving private investment in the ISS. We
    expect to announce the first agreements soon. These business ventures
    will unequivocally demonstrate our commitment to the economic
    development of space.
        For almost 20 years, the same three barriers have impeded those
    seeking to develop commercial space products and services: pricing,
    process, and property protection. NASA pledged in the ISS Commercial
    Development Plan, to break down those barriers through our ISS
    pathfinder initiative, and it is beginning to work.
    Pricing Policy
        NASA's ISS pricing policy has been formulated using value-based
    pricing, with a marginal cost floor. The policy includes provisions to
    waive all, or part, of the marginal cost during the short run in order
    to stimulate private investment; it invokes full marginal cost in the
    long run in order to prevent Government subsidization of profitable
    enterprises. In addition, the policy includes a demonstration revenue
    reinvestment program that would permit NASA to ultimately recoup value
    in excess of marginal cost and apply it directly to the ISS economic
    development program. The Administration has agreed that this
    legislative authority could be instrumental to ISS commercialization,
    and NASA transmitted to the Congress on July 27, 1999, an
    Administration-sponsored legislative proposal for a ``Space Station
    Commercial Development Demonstration Program.'' Implementation of this
    legislative initiative will dispel price uncertainty and create a new
    investment engine not dependent on annual appropriations to fuel its
    acceleration. Further, it will help free the Government from performing
    tasks that the private industry, with some Government assistance, can
    assume.
    Process Reform
        ISS entrepreneurial offers, involving significant private
    investment, are now receiving the special treatment they deserve at
    NASA. We have addressed the long-standing concerns that NASA have a
    single-point-of-entry for entrepreneurs by establishing a new Division
    for Space Utilization and Product Development at NASA Headquarters as
    well as an executive position of Special Assistant for
    Commercialization within the Office of the Administrator to ensure
    priority attention. NASA will no longer waste valuable human resources
    debating hypothetical business scenarios. If a commercial offer is
    real, the NASA response will be real.
    Intellectual Property Protection
        U.S. law provides NASA with a variety of measures to protect its
    own and other parties' intellectual property and proprietary data. In
    accordance with these laws, NASA has established policies and
    procedures to protect such property and data. Currently, NASA's General
    Counsel is completing a guide to explain to private industry in a clear
    and comprehensive manner how these laws and procedures, as well as ISS
    international agreements, apply to commercial activities on the ISS.
    NASA fully intends to uphold its commitment to protect the competitive
    position of U.S. industry and the economic growth of the Nation.
        These reforms are essential, and all are in the final stages of
    completion. The enactment of Public Law 105-303 and NASA's announcement
    of intent have already stimulated private investment proposals that are
    under review. I am convinced that this momentum will build. In the
    future, we believe that a non-Government organization could undertake
    management of the ISS Utilization and Economic Development. NASA
    outlined this option in our ISS Commercial Development Plan, and a Task
    Group of the National Research Council is in the process of evaluating
    our reference model for such an organization. While this work proceeds,
    we have also initiated a trade study to identify the advantages and
    disadvantages of various options such as Government corporations, joint
    ventures, direct contracts, or cooperative agreements.
        The 21st century holds the promise of an expanded presence both in
    Earth orbit and beyond. Through our collective efforts, we will be able
    to view horizons previously unseen by human eyes and invest in ventures
    unparalleled by prior human experience.
                           cost for the crew vehicle
        Question. I understand that your current estimate for the Crew
    Return Vehicle, needed to bring crews home from space station in an
    emergency, is just over $1 billion. Why is it so expensive?
        Answer. Human safety continues to be of foremost importance in
    NASA's manned space programs. To ensure human safety requires high
    reliability of vehicles through painstaking design, parts screening,
    validation and testing of extremely complex interactive systems. The
    CRV is no exception. NASA chooses to set high goals and achieve them at
    minimum cost, but will not compromise prudent levels of human safety.
        Providing redundancy of critical functions is a key design approach
    used to achieve high reliability and safety. Redundancy requires not
    only multiple like components which perform identical functions, but
    multiple, independent supporting resources. For example, a spacecraft
    guidance function requires not only multiple guidance system components
    such as gyroscopes and accelerometers, but also requires multiple,
    independent sources of electrical power, computer processing, and
    thermal cooling. This multiplicity of components capable of performing
    identical functions multiplies cost significantly. Additionally,
    complex and expensive computer code is required to ``manage'' the use
    of redundant systems, which entails fault detection, isolation and
    recovery.
        A second major cost driver for manned space projects is NASA's
    stringent requirements for testing and validation of human-rated
    systems. Testing and validation helps to verify that systems will
    function as intended in their real operational environment. This
    requires the use of test hardware and software for destructive and non-
    destructive testing, simulations of operational conditions and
    scenarios, and detailed analyses of test results that sometimes lead to
    expensive redesign.
        Another area of expense not related to vehicle development and
    testing is operations. Operations include ground controller and crew
    training, logistics and maintenance, sustaining engineering, safety and
    mission assurance, and actual real-time mission operations support by
    ground controllers. Operations usually require extensive support
    personnel, hardware sparing and repair, and software maintenance for
    most of the operational life of a system or vehicle.
        Most of NASA's missions are anything but routine. Systems and
    vehicles typically have unique design and operational requirements.
    This leads to the need to develop new technologies and methods never
    before attempted. The CRV must remain attached to ISS in a dormant mode
    for up to three years, be ready to separate and fly home within three
    minutes of recognition of need, and fly without pilot assistance to a
    landing site of less than five miles radius in nine hours. NASA's on-
    going X-38 ``rapid prototype'' project is providing the design and
    technology basis for the CRV.
        The CRV will provide a shirtsleeve flight environment for a crew of
    seven--this is based on the crew size supportable aboard ISS. If a
    catastrophic event occurs aboard Station, or if the Space Shuttle is
    grounded for some reason, the CRV must have the capacity to evacuate
    the entire crew. The funding estimate in the fiscal year 2000 budget
    and runout is about $880 million through fiscal year 2004 for design,
    development, test, and evaluation of four production vehicles and
    operations estimates of about $161 million. Numerous independent
    assessment groups within and outside of NASA have reviewed the CRV
    project in its entirety. These groups are comprised of experienced
    specialists from all facets of spacecraft development and operations.
    They have concluded, without exception, that the CRV budget and
    schedule are ambitious but achievable.
        NASA believes developing a manned spacecraft with the capabilities
    of the CRV at a cost of just over one billion dollars will set a low
    cost precedent upon which future human-rated projects will be judged.
    The ambitious cost target is being made possible by a non-traditional
    paradigm in which NASA performs a large part of the initial concept
    development and testing internally. Three atmospheric test vehicles and
    one space flight test vehicle are being designed and built for a cost
    of around $90 million on the X-38 project. The CRV will benefit from
    knowledge gained through the X-38 vehicles and the results of multiple
    atmospheric flight tests and one (or two) space flight reentry tests.
        After an extensive five month assessment by a panel of 25
    specialists from industry and government, NASA's Langley Research
    Center Independent Program Assessment Office concluded that the
    paradigm employed by the X-38/CRV Project could save over one billion
    dollars compared to traditional methods. NASA would have serious
    reservations about any proposals claiming to provide the ISS emergency
    crew return function at a cost lower than the current CRV budget.
                                      crv
        Question. It has been suggested that you are delaying designing the
    CRV until the potential to design it as a Crew Transport Vehicle--able
    to take people into space as well as return them--has been fully
    evaluated. What decisions have you made about building a one-way CRV
    that later could be modified as a two way CTV? What are the cost and
    schedule trade-offs between building a two-way version from the
    beginning versus building a one-way version now and modifying it later?
        Answer. Development of requirements and architectural studies on
    the CTV are on-going. These studies will assess the most effective
    approach to development, and assess cost and schedule tradeoffs
    relative to a potential evolution from a CRV design. NASA has not made
    any decisions yet regarding the CTV.
                                  crv schedule
        Question. You say that you're not certain you can get the Crew
    Return Vehicle ready by the end of 2003 as currently planned and
    therefore want to buy two Russian Soyuz vehicles in the case it is not
    ready. Why is that necessary? Why not simply maintain a three-man crew
    size until the CRV is ready? Is the CRV delay likely to be more than a
    few months? What is the urgency of increasing the space station crew
    size to six or seven?
        Answer. NASA has identified funding for the procurement of one
    Soyuz, that, along with the Soyuz provided by the Russians, would
    provide two Soyuz on-orbit and allow emergency return of six
    crewmembers for a period of about six months.
        The ability of ISS to perform effective research and
    experimentation is dependent on the crew size. The desire to maximize
    the research benefits of ISS leads NASA and its partners take full
    advantage of on-orbit time. NASA therefore plans to purchase at least
    one Soyuz craft that, along with the Soyuz provided by the Russians
    will allow emergency return of six crewmembers. If the ISS assembly
    sequence is delayed such that the CRV becomes available before ISS can
    accommodate six crew (that is, ahead of schedule relative to ISS need),
    the U.S. purchased Soyuz will be valuable as a contingency for other
    uses.
                             space station schedule
        Question. According to NASA, what is your current expected schedule
    for completion of the Space Station? How much slippage in schedule and
    cost do you expect?
        Answer. NASA has conducted an assessment of the likely cost and
    schedule range for ISS, both for development complete (support for 6
    crew) and assembly complete (support for 7 crew). The results of this
    assessment are summarized below. Minimum values are based on the Rev D
    assembly sequence that was the basis for the fiscal year 2000 submit.
    Maximum values are based on analytic estimates of delays up to 12
    months to development complete, or 15 months to assembly complete.
    These potential slip scenarios do not envision significant increases to
    planned annual funding levels.

                                                  [Dollars in billions]
    ----------------------------------------------------------------------------------------------------------------
                                                                        Minimum                 Maximum
                                                                       schedule      Cost      schedule      Cost
    ----------------------------------------------------------------------------------------------------------------
    Development Complete (6 crew)...................................   \1\ 09/03       $22.1       09/04       $23.7
    Assembly Complete (7 crew)......................................   \1\ 07/04        23.4       10/05        25.3
    ----------------------------------------------------------------------------------------------------------------
    \1\ Assembly Sequence, Revision E reflects: Development complete at 05/04 and Assembly complete at 11/04 10.

                       duplication of russian activities
        Question. NASA appears to view all activities performed by Russia
    for the ISS to be in the critical path and necessary for duplication.
    Provide a list of all activities that NASA intends to pursue that
    Russia is expected to complete, provide the cost estimates for each
    activity and the time frame for completion of each activity.
        Answer. In December 1993, Russia was invited to join the ISS
    partnership, bringing a unique and unmatched experience in human space
    flight into the Program. Russian participation in the ISS Program
    allowed acceleration of the assembly timetable through their provision
    of propulsion, navigation and crew habitation capabilities. For
    instance: prior to Russia's entry into the program the assembly plan
    for achieving permanent crew habitation was September 2003, rather than
    March 2000 as it is currently scheduled. Russia stands second only to
    the U.S. in its contribution to the final assembly of the ISS,
    providing significant on-orbit capabilities. For this reason, despite a
    number of NASA actions to reduce reliance on Russia, ISS program cost
    and schedule stability is highly dependent on Russia's ability to
    deliver on their commitments. Several Russian elements, however, have
    independent uses that do not impact overall ISS operations.
        A summary of significant Russian dependencies and the U.S.
    contingency strategy follows:
    Propulsion
        Russian partnership responsibilities have included propulsive
    guidance, navigation, and control since the inception of the
    International Space Station in 1994.
        Initial Risk.--Loss of ISS attitude control or reboost capability
    resulting from a failure of the Service Module to reach orbit or from a
    shortfall in planned Progress resupply flights.
        NASA Contingency Actions.--NASA has developed an Interim Control
    Module (ICM) to protect against a Service Module failure to achieve
    orbit, with a secondary focus to protect against Progress propellant
    resupply shortfalls. The ICM schedule supports a launch on need as
    early as 2000 and provides 1 to 3 years of ISS propulsive capability
    depending on its usage. NASA has developed an approach under which NASA
    can already offset a 30 percent shortfall in Progress vehicle
    propellant logistics, and the Agency is taking additional steps, such
    as the modification of the Orbiter fleet to enhance Shuttle reboost
    capability. The Orbiter fleet will be modified during scheduled Orbiter
    Maintenance Down periods, with fleet implementation completed by fiscal
    year 2003. Development of a permanent U.S. Propulsion Module is
    scheduled to conclude in 2002-2003, providing full U.S. propulsive
    redundancy.
        Remaining Russian Reliance.--NASA ICM requires Russian Pressurized
    Dome and integration support to deploy should the Service Module fail
    to reach orbit. NASA Propulsion Module requires Russian built docking
    system and integration support.
        Cost.--Approximately $0.9B from Russian Program Assurance.
    Command and Control
        The NASA Flight Director, located at Mission Control Center-Houston
    (MCC-H), will always maintain the leadership role for commanding.
    However, ISS protocol is for Russian and U.S. control centers to
    determine and issue commands to their respective on-orbit segments.
    This methodology is not expected to change significantly over the life
    of ISS. The ISS command and control system is designed to allow both
    Russian and U.S. mission control centers to transmit data and commands
    to the ISS and between their respective on-orbit segments. Each
    partner's segment can also send commands and receive data from its
    computer system via the partner's control center and communication
    system.
        Risk.--Until the arrival of the U.S. Lab, the Mission Control
    Center in Moscow (MCC-M) has the only capability for commanding the
    primary ISS systems. Although MCC-H gains the capability for commanding
    with the arrival of the U.S. Lab, GN&C and other critical Russian
    vehicle system expertise remains with MCC-M. Loss of our Russian
    partner for any reason, at any time places the remaining partners in a
    tenuous position. Unless Russian equipment, Russian FGB and Service
    Module technical knowledge, and Russian vehicle operational skills can
    be obtained, whatever Russian element exists at the time of a Russian
    departure may be assumed lost.
        NASA Contingency Actions.--It was determined in 1996, with the
    concurrence of congressional leadership that the costs for a Russian
    command capability for FGB in Houston were outside of the ISS budget.
    NASA is considering purchase of Service Module Control Data and other
    operational items for risk mitigation and operational effectiveness.
    The purchase of Service Module ground procedure and control data will
    assist NASA's mission control to be able to back-up Russian operations
    and perform operations in the event of loss of Russian mission control.
    This would also help to increase joint ability to work together if off-
    nominal flight conditions arise. The Program is reconsidering
    implementation of a Russian command capability in Houston.
        Remaining Russian Reliance.--The early U.S. communications systems
    implementation, which was not implemented as a Russian contingency,
    provides a very limited command, control and monitoring capability.
        Cost.--$TBD If purchased, Service Module data would be purchased
    within the confines of NASA's projected fiscal year 1999 $100M purchase
    of Russian goods and services.
    Crew Habitation
        The Russian-provided Service Module provides environmental control
    and life support systems (ECLSS) and living quarters for three crew
    throughout the life of the ISS. There is also a requirement for a
    Russian Crew Return Vehicle for the life of the program, unless the
    U.S. determines to place two U.S. CRVs on-orbit.
        Initial Risk.--The Service Module (SM) delivery schedule has
    slipped repeatedly due to Russian funding shortfalls. After launched,
    should Russia not support operations of the SM, the U.S. would be
    unable to maintain the SM without extensive technical insight and
    development of operational capabilities. Sustaining engineering and
    system spares development cannot be performed without extensive
    engineering knowledge of the vehicle. Soyuz crew vehicles are essential
    elements of the ISS prior to the arrival of the U.S. CRV. Without
    continued Soyuz availability, safety concerns would dictate that the
    ISS crew would need to be evacuated and permanent human presence
    postponed. Significant disruption in the assembly sequence would occur
    due to the unavailability of ISS-based EVA crews, causing postponement
    of assembly flights in lieu of logistics and reboost flights.
        NASA Contingency Actions.--NASA's $60M procurement of Russian Crew
    research hours and stowage provided funding stability for Service
    Module in fall 1998. NASA has planned for a $100M (U.S. dollars)
    purchase of Russian goods and services for this fall subject to
    operating plan approval, which will maintain RSA funding stability. As
    a part of this purchase, NASA desires to purchase a Soyuz vehicle for
    U.S. CRV risk mitigation to effectively increase crew size and maintain
    the ability to perform effective research and experimentation. If the
    U. S. CRV becomes available before ISS can accommodate six crew (that
    is, ahead of schedule relative to ISS need), the U.S. purchased Soyuz
    will be valuable as a contingency for other uses.
        Remaining Russian Reliance.--While it appears that RSA is receiving
    adequate funding to cover delivery of the SM, NASA remains concerned
    that funding may not be sufficient for Russian upgrades to their
    mission control center, ground stations, and associated communications
    systems. NASA is also concerned with the adequacy of Russian funding
    for Service Module, long-term Soyuz support, and spares.
        Costs.--Approximately $0.2 billion from Russian Program Assurance.
    Logistical Dependencies
        Partnership agreements call for the Russians to provide dry cargo
    and Russian segment propellant via the Progress cargo ship. One of the
    basic tenets of our agreements with the Russian Federation is the
    availability of a backup launch capability. Having choices of different
    launch vehicles available greatly diminishes the risks when dealing
    with unforeseen events.
        Initial Risk.--Loss of this important Progress resupply function
    would amount to approximately two shuttle flights per year in addition
    to or in lieu of assembly flights. The only vehicles capable of
    providing fuel to the SM and FGB are the Russian Progress cargo ship
    and the European Space Agency (ESA) Automated Transfer Vehicle (ATV). A
    provision of the U.S. contingency plan allows for the ICM to be used as
    a backup for Progress flight deficiencies.
        NASA Contingency Actions.--NASA actions to reduce propulsion
    dependencies have direct positive impact. In addition to the activities
    noted above, NASA has budgeted funds for logistics support to offset a
    reduction in the number of Progress vehicles. NASA's planned $100
    million procurement of goods and services would provide funding
    stability to maintain long-term production of Progress vehicles.
        Remaining Russian Reliance.--Additional Shuttle flights will likely
    be required if RSA can not meet their commitments.
        Cost.--Approximately $0.1 billion from Russian Program Assurance.
                                 space shuttle
                              space shuttle safety
        Question. Regarding the space shuttle, the Aerospace Safety
    Advisory Panel (ASAP) issued a report last month that raised serious
    questions about future shuttle safety. Three of them are particularly
    troubling:
        1. Budget and personnel constraints on the hiring of engineers,
    scientists, and technical workers are moving NASA toward a crisis of
    losing the core competencies needed to conduct the Nation's space
    flight and aerospace programs in a safe and effective manner.
        2. Shortfalls in workforce training within both NASA and USA
    [United Space Alliance], caused by downsizing and the related
    difficulty of hiring new people to fill skill shortages, can jeopardize
    otherwise safe operations.
        The combined effect of workforce downsizing, the recent hiring
    freeze, and the SFOC [Space Flight Operations Contract] transition,
    especially at KSC [Kennedy Space Center], has raised the possibility
    that NASA senior managers in the future will lack the necessary hands-
    on technical knowledge and in-line experience to provide effective
    insight of operations.
        These findings sound quite alarming. Should Congress be alarmed?
    What is your response to these findings?''
        Answer. NASA has and will continue to take the appropriate actions
    to minimize the combined effects of budget reductions and downsizing.
    We will address each of the mentioned ASAP findings below.
        With respect to item number one (Finding # 1 in the ASAP report),
    NASA has provided our human space flight Field Centers with the
    budgetary resources and administrative flexibility needed to strengthen
    their human resource capabilities. To accomplish this we have allowed
    the OSF Centers to hire additional FTEs through the fiscal year 2000
    budget process as follows: fiscal year 1999--153 FTE; fiscal year
    2000--110 FTE; fiscal year 2001--103 FTE; fiscal year 2002--59; and
    fiscal year 2003--68 FTE. This relief has enabled the innovative use of
    temporary and extended term appointments, as well as increasing the
    number of permanent hires available to fill critical skill positions.
        With respect to item number two (Finding # 2 in the ASAP report),
    NASA continues to work with USA to review critical skills training and
    certification requirements and institute programs to ensure the full
    proficiency of the workforce and the safety of the products being
    released. The review for flight controllers, training instructors, and
    other key operating positions has already been completed. Training
    plans and certification requirements for critical positions have been
    documented. Training capacity for new employees, both NASA and
    contractor, was increased through intensive simulator training at a new
    USA ``training academy.'' In training and orientation programs, NASA
    emphasizes and will continue to emphasize the priority of safety and
    the responsibility of employees to voice their concerns about
    inadequate assurances of safe products.
        With respect to item number three (Finding # 3 in the ASAP report),
    NASA is intensifying and refocusing its efforts in training and in
    support of career development at all levels to ensure that future
    managers will possess the range of skills and experience required for
    effective insight of the SFOC.
        At the operating level, NASA managers are instructed to take
    advantage of all opportunities to obtain operational experience
    including co-op assignments; direct observation or procedure review of
    critical tasks; management of Shuttle launch countdown, launch, and
    landing/recovery; etc. Additionally, employees are provided cross
    training and specialized training as needed and strongly encouraged to
    take advantage of program related training.
        Recognizing that the key to developing future generations of senior
    managers is to provide hands-on experience, NASA is taking the action
    to provide broad training and hands-on operational and technical job
    assignments and opportunities for promising candidates for future
    senior management positions. Career broadening opportunities with
    Boeing, Newport News Shipbuilding, and USA have been implemented.
        At the Agency planning level, the training budget has provided for
    an increase of 20 percent for the Office of Space Flight from fiscal
    year 1997 through fiscal year 2000. Current agency Program Operating
    Plan guidelines call for funding training at 2-3.25 percent of salary
    levels; levels that rival progressive private sector organizations.
        These cumulative measures should ensure competent senior managers
    for NASA in the years to come.
                       minimum number of shuttle flights
        Question. In the past, you have said that you need a minimum of 4-6
    shuttle flights per year to ensure it can be operated safely and
    effectively. Is that still your estimate of the minimum number of
    shuttle flights needed each year?''
        Answer. Changes in flight rate have not and will not adversely
    affect safety. NASA does not have a threshold number of annual flights
    required to maintain safety. We will not fly unless it is safe to do
    so.
        Effective flight rate within any given year has varied dramatically
    during the course of the program. Both NASA and United Space Alliance
    (USA) have sound processes for vehicle turnaround and flight
    certification in place to maintain a robust and safe system. Some
    examples are:
      --1. Existing Certification of Flight Readiness process is rigorous
            and demanding
      --2. Testing requirements are well documented and controlled
      --3. Personnel qualification standards are high
      --4. The Human Space Flight Centers and the SFOC are ISO 9000
            compliant
      --5. Full action simulations are used to maintain readiness at KSC
            and JSC
        Payload availability rather than vehicle processing flow or mission
    preparation time have driven the recent (fiscal year 1998 and fiscal
    year 1999) Space Shuttle flight rate.
        Reductions in flight rate affect the program's efficient use of the
    workforce, not safety. The Space Shuttle program maintains a highly
    dedicated and motivated workforce of both civil servants and
    contractors. Additionally, there are checks and balances in the program
    structure and processes, as well as individual knowledge, which serve
    to stop work, as appropriate, should unusual occurrences arise.
        Outside reviews by the Aerospace Safety Advisory Panel and the NASA
    Advisory Committee continue to emphasize NASA's commitment to--Safety
    First.
                                shuttle upgrades
        Question. What is the status of needed upgrades to the Shuttle?
    Have you begun implementing the phase III upgrades? If not, when is
    that anticipated? What is the total expected cost of the phase III
    upgrades and what impact will that have on the expected safety and
    longevity of the Shuttle system?''
        Shuttle Upgrades--Phase IV.--Will you proceed with the Phase IV
    upgrades only if you decide that a new reusable launch vehicle will not
    be available in the next 5 years or so? When will that decision be
    made? What would be included in the Phase IV upgrades if they did
    proceed, and how much will they cost?''
        Liquid Fly-Back Booster.--What decision have you made about
    developing a Liquid Fly-Back Booster versus an upgraded version of the
    solid rocket booster now in use?''
        Answer. NASA is prudently proceeding with necessary safety and
    mission supportability (phase II) upgrades. Approval of candidate
    upgrades is an on-going continuous improvement process. Specific
    measurable objectives are established, followed by an evaluation of
    potential candidate upgrades. The selection, approval and
    implementation process involves screening against goals and objectives
    as well as value/impact analysis. An upgrades control board reviews
    each candidate before incorporation into the annual upgrade plan.
        Decisions on future Shuttle upgrades will be made as part of
    Administration decisions this fall on NASA's long-term integrated space
    transportation strategy.
        The 1994 National Space Transportation Policy (NSTC-4) calls for
    ``government and private sector decisions by the end of this decade on
    development of an operational, next-generation reusable launch
    system.'' To support these decisions, NASA is undertaking industry-led
    Space Transportation Architecture Studies to identify private sector
    options for reducing NASA's launch costs. These studies incorporate
    separate efforts being undertaken by NASA, DOD and industry including:
    Space Shuttle safety upgrades; X-33 and other NASA technology
    demonstrators (X-34, X-37, and X-38), the Evolved Expendable Launch
    Vehicle (EELV); existing and future commercial launch vehicles; and the
    Crew Return Vehicle for the International Space Station. As part of the
    fiscal year 2001 budget process, the Administration intends to use the
    results of these studies and inputs to develop a strategy that
    encompasses the decisions, some near-term and some far-term, required
    to meet an end-date goal of transitioning NASA to lower-cost, private-
    sector, space transportation. Decisions on future Shuttle upgrades will
    be made in the context of this overall strategy. Details will be
    provided in the fiscal year 2001 budget submit.
                    space transportation architecture study
        Question. What are the results of your Space Transportation
    Architecture study?
        Answer. The Space Transportation Architecture Study was conducted
    to how best to meet NASA's mission requirement through 2020 with
    increased safety and reliability and reduced cost. Industry
    participants identified a number of second generation Reusable Launch
    Vehicles (RLV) including both an upgraded Shuttle and new RLV's that
    could replace the existing Space Shuttle in the 2008-2010 time period.
    The results of the study were integrated into a space transportation
    architecture with roadmaps that identified a series of decisions
    required to select a follow-on system to the current Space Shuttle. The
    architecture consists of: a first generation RLV (Space Shuttle with
    necessary safety and obsolescence upgrades), a second generation RLV (a
    significantly upgraded Space Shuttle or new RLV with significantly
    improved safety, reliability, and reduced costs), and a third
    generation RLV (operational system beyond 2020 that will further
    improve system safety and lower cost).
        In the near term, NASA will establish the requirements and
    selection criteria for a decision to proceed with the second generation
    RLV in 2004-2005. Over the next 5 years NASA will invest in space
    transportation technologies to reduce the risk for second generation
    RLV's and initiate longer term technology programs for third generation
    systems with significantly improved safety and reliability that
    approach the levels of commercial aircraft operations.
                     contract consolidation--space shuttle
        Question. In response to recommendations to consolidate activities,
    NASA, on September 26, 1996, signed a $7 billion, 6-year contract with
    the United Space Alliance to manage the Space Shuttle operations. The
    contract consolidates 12 major existing contracts into one. It also
    includes two, 2-year extension options that could bring the potential
    value of the contract to $12 billion over 12 years. Can you assess the
    success of the United Space Alliance contract in managing the Space
    Shuttle operations, including the impact on safety? What are the
    savings realized from consolidating the space shuttle contracts?''
        Answer. United Space Alliance performance in managing their portion
    of Space Shuttle operations has been very good. Their overall
    performance as reflected in NASA award fee evaluations is very good.
    Their scores on safety performance have also been very good. There have
    been several initiatives on the part of United Space Alliance which
    have resulted in more efficient operations. Relative to fiscal year
    1996 performance, United Space Alliance has reduced the cost of their
    operations by $125 million per year (about 13 percent). At the same
    time civil service workforce reductions have occurred in those same
    areas resulting in $40 million per year reductions. Some examples
    include consolidation of logistics operations in Florida. Flight
    hardware and ground processing hardware logistics are now provided by a
    single organization. This has led to cost savings as a result of more
    efficient operations. Another example is the Solid Rocket Booster
    contract, which was added to the Space Flight Operations Contract
    (SFOC) last year. United Space Alliance has decided to perform the
    Solid Rocket Booster work within their company. This offers the
    opportunity for more efficient workforce utilization in Florida between
    Solid Rocket Booster tasks and other flight hardware processing. This
    has also allowed the distribution of United Space Alliance overhead
    costs over a larger business base and eliminated the overheads from the
    Solid Rocket Booster contractor United Space Boosters Inc.
        Safety of operations has been a major emphasis of both NASA and
    United Space Alliance. There have been numerous independent reviews to
    examine the safety implications of United Space Alliance management of
    operations. These include a review by the Aerospace Safety Advisory
    Panel and two reviews by the NASA Headquarters Safety Office. Each of
    these reviews has concluded that operations are safe at the present
    time.
               privatization or commercialization of the shuttle
        Question. Where is NASA in its decision-making process regarding
    ``privatization'' or ``commercialization'' of the shuttle? How do you
    distinguish between the two concepts? If the shuttle is
    ``commercialized,'' does that mean NASA no longer is involved in any
    aspect of its operation--it is just a user? If so, how many years will
    it be before that stage is reached? Will the astronauts of the future
    be private sector employees?''
        Answer. Our definition of ``privatization'' is where the private
    sector is performing the vast majority of operations of the shuttle.
    However, in that scenario the federal government and NASA in particular
    is almost exclusively the customer of the shuttle missions. Therefore,
    NASA retains ownership of assets and most of the risks associated with
    shuttle flights are carried by NASA.
        In the case of commercialization, significantly more ownership and
    risk would be assumed by the private sector and the federal government
    would be a customer. This is one option that is being considered in
    future launch studies (see answer to question 3).
                            space and earth science
                                   priorities
        Question. One mission of the Space Science Enterprise is to ``solve
    the mysteries of the universe.'' How does NASA establish priorities for
    the science needed to approach this mission? How will your Strategic
    Plan update contribute to the priority setting? How do you involve the
    space science community in that planning? To what degree do budget
    considerations constrain those priorities?
        Answer. Guidance on strategic science goals is obtained
    periodically from the National Research Council. This guidance is used
    by OSS's Space Science Advisory Committee, working with NASA
    headquarters program staff and scientific and technical staff at the
    field centers, to assemble a portfolio of possible future missions that
    will advance knowledge in our science mission areas. Thus, the research
    community plays key roles in both goal-setting and identification of
    implementation options. The portfolio is then analyzed by Headquarters
    management for technical and cost feasibility, probability of success,
    program balance, and policy considerations. The resulting provisional
    program, constrained to be achievable under prevailing budget
    projections, is documented in the enterprise strategic plan and
    circulated for additional comment to the research community before its
    main features are incorporated in the NASA strategic plan.
                               follow-up missions
        Question. What mechanisms do you have to follow-up on new
    discoveries about the nature of the universe such as the one made last
    year that its rate of expansion is accelerating? Is it possible to
    design space science missions to be more flexible in this context?
        Answer. The Space Science Enterprise has a variety of missions,
    both ground-based and space-based, that enable us to make new
    discoveries and build upon past scientific revelations. Some of these
    missions, such as the Hubble Space Telescope and Chandra X-ray
    Observatory, are highly flexible in the types and targets of their
    observations, thus they have potential for a broad range of discovery.
    Other missions, particularly the smaller missions in the Explorer and
    Discovery programs, are more focused in scope, but they often produce
    results that allow very revealing comparative analyses with data
    gleaned from other NASA missions (as well as those pursued by NSF,
    academia, and other interested partners). Moreover, Explorer and
    Discovery missions are competitively selected on one-to-two-year
    cycles, utilizing external peer review; therefore, they enable the
    Agency to react to the latest discoveries and new ideas from the
    science community. So while we do have flexibility in the design and
    scope of some missions, it is the overall layout of the Space Science
    Enterprise, with its mix of large and small missions and its
    collaborative interaction with other science entities, that affords us
    overall flexibility.
        In regard to your specific inquiry regarding the expansion of the
    universe discovery, we have a variety of mechanisms to follow up and
    enhance our initial findings. On the ground we have the Keck
    Interferometer and ground-based observatories involved in supernovae
    searches. In addition, we have many space-based missions including the
    Japanese/American venture ASCA, the Hubble Space Telescope, and the
    newest of NASA's Great Observatories, Chandra, launched on July 23,
    1999. We continue to look forward to the new science insights this
    suite of instruments will provide.
                           increases in space science
        Question. The Space Science budget is projected to increase from
    $2.1 billion in the current fiscal year to almost $2.9 billion in
    fiscal year 2004. This projected increase is somewhat larger than the
    one appearing in the fiscal year 1999 budget request and substantially
    larger than previous budget requests. What accounts for this emphasis
    on space science? How critical is each mission and what applications
    are expected to come out of these missions?
        Answer. The emphasis on Space Science reflects Administration
    priorities, as outlined in the National Space Policy of September 1996
    and other directives to NASA. The largest budget increases are planned
    for programs that address the question of whether life has existed or
    exists now elsewhere in the universe, including the search for planets
    around other stars and the study of Mars. Europa, and other locations
    in our solar system that are likely to have harbor extinct or extant
    life or the building blocks for life. These programs have broad
    support, not only within the Administration, but also in Congress, the
    science community, and the general public.
        The budgeted growth also reflects the demonstrated ability of the
    Space Science Enterprise to deliver cost-effective programs that answer
    critical scientific questions while contributing to education and the
    public understanding of science through a highly effective and
    innovative Education and Public Outreach program. NASA's Space Science
    Enterprise gets results and brings those results directly to
    schoolchildren and the public.
        Without attempting to define the term ``critical'', each mission in
    our current plan provides pieces of information that contribute to our
    overall understanding of the universe. In addition, many of our
    missions work together or build on one another to achieve a set of
    research goals by employing simultaneous observations, interrelated
    technology development tasks, and/or concomitant science objectives.
    Some of our missions even have limited windows of time for launch to a
    target, such as an outer planet in our solar a system, that may not
    recur for years or even decades. Therefore, each mission is important
    for the achievement of our scientific goals.
        Most of the non-Space Science applications that will arise from
    Space Science missions will be unforeseen. However, we expect to see
    important advances in the areas of advanced medical imaging and
    miniature biological sensors; JPL has established a joint program in
    biosensors with the National Cancer Institute to aid in technology
    transfer to medical applications. The forensic sciences will also
    benefit; GSFC and the National Institute of Justice have agreed to
    investigate applying miniaturized NASA instrument technology to
    portable instruments that could be used at crime scenes--starting with
    x-ray flouroscopy developed for NEAR instruments--to identify gunshot
    residue. In addition, forensic scientists have interest in the Mars
    sample return technology to preserve biological crime scene samples
    while awaiting trials (which sometimes drag on for years) as well as
    infrared sensors (NGST, etc.) for arson detection. Other applications
    are likely to arise in high tech manufacturing, which could benefit
    from the more precise metrology techniques being developed for NASA
    missions; and our robotic rover technology could help automate farming
    and nuclear plant cleanup efforts as was demonstrated recently.
                          use of iss for space science
        Question. Does the Space Science Enterprise have any plans to use
    the International Space Station as a platform for any of its research
    missions?
        Answer. It is the policy of the Space Science Enterprise to treat
    the ISS as another platform that may be quite useful for certain space
    science missions, although it is not appropriate for instruments that
    require high fidelity pointing. The ISS will be allowed to compete on
    equal footing with all other platforms in our strategic planning
    process and within our various Explorer Program Announcements of
    Opportunities (AO). The limited number of ISS payload sites are
    allocated by the Space Station Utilization Board, which is comprised of
    the relevant Associate Administrators, and the Space Science Enterprise
    expects to use about 25 percent of the external attached payload sites.
    In order to meet the scheduled availability of those sites, they will
    be solicited explicitly as Missions-of-Opportunity in timely Explorer
    AO's, beginning with the Small Explorer (SMEX) AO to be released in
    late CY 1999.
                                   satellites
        Question. You seem to have a great number of space science projects
    planned at the moment. Exactly how many space science satellites are
    you planning to launch in the next five years? What is their collective
    cost?
        Are you requesting sufficient funds not just to build and launch
    these satellites, but to analyze the data from them?
        Answer. An exact number of missions to be launched in the next five
    years cannot be given because several new Explorer and Discovery
    missions will be selected in the next year or two. Approximately 35
    Space Science missions are planned for launch from August 1999 through
    July 2004. In addition, we will provide major components for about 5
    foreign-led international collaborations. The U.S. budget for all of
    these missions, including sufficient funds for development, launch
    services, operations, and data analysis, is approximately $5.5 billion.
                                  success rate
        Question. What is the success rate on your ``faster, better,
    cheaper'' satellites? You've had at least two total failures (Lewis and
    WIRE), another was canceled because of cost overruns (Clark), and an
    engine malfunction on NEAR meant it had to fly past its target and now
    must spend a year getting back to it. You've also had problems with the
    solar array on Mars Global Surveyor. Is there a common thread to these
    failures? Did the need to meet challenging schedules and stay within
    strict cost caps lead to these failures?
        Answer.
    Total faster/better/cheaper missions between 1995 to Present (20)
    Successful missions (15)
    XTE
    MPF
    Lunar Prospector
    DS-1
    MCO
    FAST
    ACE
    TRACE
    DS-2
    STARDUST
    POLAR
    SNOE
    SWAS
    MPL
    FUSE

    Missions with significant problems (3)
        MGS (Solar array deployment damper utilization problem)
        NEAR (Engine controller S/W execution problem)
        TERRIERS (Attitude Control System S/W problem)
    Failed missions (2)
        HETE-1 (Launch Vehicle/Spacecraft separation problem)
        WIRE (Pyrotechnic circuit design problem)
        The 3 spacecraft anomalies and two mission failures are all
    unrelated; there are no common threads to these problems.
        The problems with MGS, NEAR, and TERRIERS are not mission
    catastrophic and we anticipate that all 3 will fully achieve their
    mission and science objectives.
        The challenging schedules and stringent cost caps were not a factor
    in the 2 total mission failures nor were they a factor leading to the
    anomalies with MGS, NEAR, or TERRIERS.
        No testing was deleted nor compromised in any way for any of the
    missions.
        Success Rate--18/20 = 90 percent
        It is important to note that two of the missions, Lewis and Clark,
    referred to in your question are NASA Earth Science missions, not Space
    Science missions.
        In addition to the above data, as reported in the September 6 issue
    of Space News, an independent Aerospace Corporation study recently
    confirmed that NASA's ``faster, better, cheaper'' approach to science
    spacecraft design and development is paying off not only in terms of
    cost and schedule, but also in terms of science returned per dollar
    spent. The study finds that the cost effectiveness of NASA's ``faster,
    better, cheaper'' approach, as measured in number of operational
    instrument months per dollar spent, is about 50 percent better than
    NASA's old ways of doing business.
                   study on smaller, faster, cheaper, better
        Question. Last year we directed you to contract with the National
    Research Council for a study ``across all space science and Earth
    science disciplines to identify missions that cannot be accomplished
    within the parameters imposed by the smaller, faster, cheaper better
    regimes.'' What is the status of that study?
        Answer. The Office of Space Science and the Office of Earth Science
    have jointly requested this study by the Space Studies Board of the
    National Academy of Sciences. NASA's request asks the Space Studies
    Board for their views on: (1) the general criteria for assessing
    strengths and limitations of small, medium, and large missions in terms
    of scientific productivity; and (2) which science goals in our
    strategic plans will require the use of medium and large missions.
        NASA understands that this study is already under way, and will be
    led by the Space Studies Board in collaboration with the Aeronautics
    and Space Engineering Board.
        In addition to the National Research Council Study, we have also
    reviewed the objectives and accomplishments of application of the
    Faster, Better, Cheaper (FBC) approach with the NASA Advisory Council.
    Their recommendation was to identify the key attributes of FBC and how
    they have been applied within NASA, other government agencies and
    Industry, and to focus on adopting an FBC approach that has broad
    application across the Agency. We have initiated an effort to establish
    an Agency-wide FBC approach that will provide guidelines for the entire
    range of NASA missions. This activity is planned for completion by the
    end of this calendar year.
                                data mortuaries
        Question. To what extent is the data collected from the Space
    Science missions being utilized? Please quantify the amount of data
    used in research currently.
        Answer. Science data acquired from NASA space missions are analyzed
    and interpreted, with results published in scientific journals, as well
    as being shared with the public through news media and other forums.
    The exciting science results and furtherance of our knowledge and
    understanding of the Universe from missions such as the Hubble Space
    Telescope, the Galileo mission to Jupiter and its moons, Mars
    Pathfinder, Mars Global Surveyor, Solar Heliospheric Observatory, etc.
    are the best witness to this.
        NASA selects and funds principal investigators, via peer-reviewed
    competitions, to build the instruments flown on the missions, to
    process and analyze that data, and to archive the data products so that
    they can subsequently be accessible to the broader science community
    for analysis and interpretation. NASA also funds guest observers and
    investigators for its missions; they are also selected via peer-
    reviewed competitions to analyze and fully exploit the science data. In
    addition, NASA funds peer-reviewed research and analysis using data
    from the open archives, including data from missions no longer
    operating. All told this involves several hundred investigators.
        The space science data archives open to the research community and
    general public contain over a million observations and data sets with a
    total volume greater than 35 terabytes. These data are available in
    several data centers across the country as organized by science
    discipline (HST Science Institute for Optical/UV; High Energy Science
    Archive Center at Goddard; Planetary Data Nodes at 10 university sites;
    National Space Science Data Center at Goddard; Infrared Science Archive
    at Caltech, etc.). These archives are accessible via the Internet.
        Utilization of these data continues to increase rapidly. A good
    indicator of this is the fact that the total volume of data being
    downloaded from even active mission archives such as HST for subsequent
    use by researchers, educators, and the general public far exceed the
    volume of data being ingested into the archive from the principal
    investigators. Overall there are nearly 4 million web accesses a month
    to space science data archives with approximately 25,000 observations
    or data sets downloaded or transferred in response to user requests.
    This represents approximately 750 gigabytes of data per month.
                             hubble repair mission
        Question. How serious are the problems with the Hubble Space
    Telescope? How much of a priority is this ``rescue'' mission in
    October? Why wasn't the cost of these repairs and the mission budgeted
    for within Hubble reserves?
        Answer. The loss of another of HST's remaining 3 functional gyros
    would result in the inability to perform science observations until a
    repair could be made. Maintaining HST's scientific productivity is an
    extremely high priority for Space Science. The HST program budgets
    sufficient contingency to cover ``normal'' problems, which we believe,
    is prudent. But the cost of this additional mission has more than
    exhausted available reserves.
        Question. Assuming the failure of additional gyroscopes, what data
    will be lost if we do not send a Hubble repair mission in October?
    Please describe the potential data loss and quantify the impact on
    research.
        Answer. In the event of further gyro failure on HST, all science
    operations will cease, although the observatory will be in no physical
    danger. The amount and quality of data lost will, of course, depend
    upon when a repair mission is sent to replace the failed gyros. If,
    hypothetically, such a repair mission follows about a year later, then
    an amount of data equal to about 15 percent of all that which has been
    obtained to date will be lost. Perhaps most seriously, however, will be
    the potential loss of serendipitous or unanticipated observations: rare
    events such as comets, planetary storms, or supernova explosions.
        Question. How much will the Hubble rescue mission cost and where
    will the money come from? What other NASA programs will be adversely
    affected by shifting this funding into the Hubble mission?
        Answer. The Hubble SM3A mission will cost the Office of Space
    Science approximately $26M. We propose to resolve the impact of this
    unexpected cost during the fiscal year 2000 Operating Plan process.
        Question. Please provide an accounting of reserves for all space
    and earth science programs and the priority of each of these missions
    or programs within NASA.
        Answer. In the fiscal year 2000 President's Budget, total OSS
    reserves for are $77.8M. The breakout of these funds is as follows:

                             [In million of dollars]

    SIRTF.............................................................  34.6
    TIMED.............................................................   1.3
    Genesis...........................................................   7.3
    Contour...........................................................   2.5
    Mars 01 Orbiter/Lander............................................  11.0
    New Millennium....................................................   5.2
    Chandra...........................................................   4.6
    HST O&S...........................................................  11.3

        The Space Science Enterprise has missions both operational and in
    planning in each of our four science themes. Our prioritization follows
    the balanced program presented in our published Strategic Plan. Space
    Science programs must compete with Earth Science, Human Exploration and
    Development of Space, and Aeronautics and Space Technology programs in
    terms of priority. Overall agency priority is established by the
    Administrator's office in conjunction with the Administration.
                                  eos program
        Question. What is the status of the EOS program?
        Answer. The EOS program is proceeding as currently baselined both
    programmatically and technically.
        Question. Are you still planning to launch the first EOS spacecraft
    this year?
        Answer. Yes, the first EOS spacecraft, Terra (formerly AM-1), will
    be launched no earlier than November 1999.
        Question. Have all the problems with EOSDIS been resolved?
        Answer. All technical and programmatic problems associated with the
    EOSDIS have been resolved. The EOSDIS is currently successfully
    supporting pre-launch operations for the Terra spacecraft (formerly AM-
    1). Implementation of the EOSDIS to support flight operations and data
    archiving for the remaining mission (PM-1, ICESat, and CHEM-1) is also
    proceeding without incident.
        EOSDIS is a multifaceted, state-of-the-art information system that
    will allow free and open access to the Earth Observing System (EOS)
    data archives to a diverse national and international user community.
    This community includes users from the public and private sectors,
    including research scientists, educators, students, users in public
    agencies responsible for operational applications such as weather
    forecasts and environmental monitoring, policy makers, and the public
    in general.
        Since 1997, different components of EOSDIS have experienced certain
    difficulties.
      --The Flight Operations System (FOS), the component that supports
            operation and control of satellites in orbit, experienced
            significant problems in March 1998 relating to stability and
            performance of the system.
      --The Science Data Processing System (SDPS), the component that
            converts instrument measurements into geophysical parameters,
            experienced a schedule slip that threatened the readiness of
            the system to meet the EOS schedule.
      --These technical problems were exacerbated by multiple
            restructurings of the EOS flight system, rapid changes to
            information technology and high job turnover rate (i.e., up to
            30 percent annually) at the contractor level.
        In 1998, NASA worked collaboratively with the contractor, Raytheon,
    and the EOSDIS user community to develop a plan that would refine the
    EOSDIS approach to meet a basic set of requirements. This plan, also
    known as Option A+, outlined the appropriate level of requirements
    needed to meet a fundamental set of requirements that support safe
    control and operation of satellites in orbit as well as allow efficient
    processing, archive, and distribution of the resulting data and
    information. The goal was to build a reliable development schedule
    while minimizing the remaining cost of implementing the EOSDIS.
        Toward this goal, NASA decided to use a commercially available
    Flight Operations System (FOS) to support EOS Terra and follow-on
    satellites. Option A+ has reduced a number of the lower-priority
    requirements. These decisions helped us achieve cost and schedule
    goals. In addition, NASA and Raytheon infused new leadership and
    processes into the overall management of the system and into the day-
    to-day execution of procedures. The result is a functioning system that
    is supporting Landsat 7 data processing, archive and distribution, and
    is ready to support the launch, control and operation of EOS Terra.
        Despite earlier problems, the Science Data Processing System (SDPS)
    and the Flight Operations Segment (FOS) are now ready to support EOS
    Terra later this year.
        Full EOSDIS functionality for Terra is being phased to meet cost
    constraints and will not be complete until approximately 18 months
    after launch of the Terra spacecraft. This phased implementation
    assures that full functionality will be in place to support PM, CHEM,
    ICESat, and other EOS satellites in 2000 and beyond. It is important to
    reiterate that EOSDIS is presently supporting Landsat 7 data
    processing, archive and distribution, and is ready to support the
    launch, control and operation of EOS Terra.
        While every attempt was made to scope the program within the
    available budget, an additional $11.6 million was needed in fiscal year
    1999 (already approved and implemented) and an additional $30-50
    million is needed in fiscal year 2000. The ECS contract is presently
    valued to cost $868.6 million through completion. The transition to
    Option A+ in the ECS contract is presently being negotiated. While
    negotiations are not yet complete, we anticipate a renegotiated
    contract within the next two months. The final amount will be known
    once the restructuring of the Raytheon contract to reflect Option A+ is
    complete. These funds will better ensure implementation of EOSDIS for
    missions following Terra, within the level of requirements specified in
    Option A+.
        It should be recognized that EOSDIS is providing nearly the same
    functionality for a budget that is less than originally proposed in
    1996. The savings have been achieved by a more focused use of funds,
    reducing or eliminating requirements of limited value (principal result
    of Option A+), implementing the adaptive architecture to allow more
    economical processing of science data, and management and process
    changes to improve performance.
        Question. What is the total projected life-cycle cost of the EOS
    program?
        Answer. The EOS lifecycle cost through fiscal year 2004 for the
    first series measurements is $10.0 billion. This amount is the funding
    needed to complete the initial set of EOS missions which include Terra,
    CHEM, PM-1, QuikScat, Landsat-7, and Special spacecraft (e.g. IceSAT,
    Seawinds, Jason, SAGE III, ACRIM). Also included is the funding for
    technology infusion, science, algorithm development, and information
    systems necessary to support those missions. The development of the
    first series will be completed with the launch of the Chemistry
    spacecraft in December 2002. Operations of some of these missions will
    continue beyond the current budget projections, which extend to 2004.
    We are in the process of defining our implementation strategy for the
    follow-on measurements concentrating on shortening development time and
    the incorporation of instrument technology infusion.
        The successful transition to the ``faster, better, cheaper''
    approach to implementation of the program will allow a lower total cost
    for the EOS follow-on measurements. Our current estimate of the costs
    for follow-on missions through 2010 is in the range of $5-5.5 billion.
    NASA's Earth Science program will continue to strive to reduce costs to
    the taxpayer and to provide policy relevant environmental information.
    We will do this through technology investments that reduce future
    mission costs, the leveraging of commercial resources and other federal
    resources, increased international partnerships, and the use of the
    International Space Station as an observing platform.
                              toms program status
        Question. Has Russia definitely decided not to launch your next
    TOMS (Total Ozone Mapping Spectrometer) instrument next year as it had
    promised?
        Answer. Russia definitely will not be launching the TOMS instrument
    next year. Russia has put a great deal of support into the SAGE mission
    and, consequently, has not been able to meet their goals for producing
    a second spacecraft for the TOMS instrument. Because Russia's future
    schedule is indefinite and NASA's science requirements preclude a
    lengthy development effort, a mutual agreement was reached to cancel
    cooperative agreement for the launch of a second instrument.
        Question. How is your existing TOMS instrument holding out? Will it
    last until you can find an alternative spacecraft to host a new TOMS?
        Answer. The TOMS instrument currently in orbit was launched on July
    3, 1996 on the EP/TOMS spacecraft. The mission had a design lifetime of
    2 years. The instrument is currently performing well. However, the
    spacecraft lost all of its reserve fuel last year due to an anomaly in
    the control system, and earlier this year the primary transmitter
    failed. The spacecraft is performing adequately on the backup systems,
    but it has very little redundancy left. Fortunately, the QuickTOMS
    mission has been selected as the alternative host to fly the TOMS
    Flight Model 5 instrument. There is a good chance that the TOMS/EP
    instrument will last at least until the launch of this instrument in
    the year 2000.
        Question. How seriously would ozone research be impacted if we did
    not have a TOMS instrument in orbit?
        Answer. TOMS is currently our only source for a total map of ozone,
    and our only reliable source for estimating global change in surface UV
    radiation. TOMS provides a continuous map of stratospheric ozone
    concentrations, clouds, and other constituents which are necessary to
    reliably estimate the UV radiation reaching the earth's surface. The
    continuous map that TOMS provides is being used in conjunction with the
    worldwide Dobson network (an international supported ground-based
    network used for ozone measurement and validation studies) to establish
    the observed changes in stratospheric ozone for the WMO/UNEP (World
    Meteorological Organization/United Nations Environmental Program) Ozone
    Assessments. These assessments in turn provide the science background
    for Montreal Protocol considerations. The Montreal Protocol has
    predicted that around the year 2000 the ozone loss in the stratosphere
    will begin a recovery process. The only way to verify this prediction
    is to obtain real-time measurements of ozone continuing through the
    first part of the century. Without a TOMS mission, the continuity of
    the ozone mapping would be lost and it would be extremely difficult to
    determine if the ozone layer is recovering as predicted by the models,
    and whether this recovery is having the expected effects on the surface
    UV radiation.
                                  aeronautics
                       termination of high speed research
        Question. You have requested termination of your high-speed
    research (HSR) program. This is the second time in the last 30 years
    that the United States has ended a research effort directed at
    development of technology for supersonic transport. What are you doing
    to ensure that if we start up such research again within the next few
    decades, we won't have to start over? Do you have sufficient resources
    to archive the knowledge gained in the current program in such a way to
    make it readily useable if and when we start another HSR program?
        Why didn't NASA propose to continue with HSR at a much reduced
    level rather than terminate it altogether?
        Answer. Supersonic transport research is continuing at a lower
    level in NASA's aeronautics research and technology (R&T) base program.
    This level of effort activity will provide the basis for ramping up
    supersonic research activities should industry interest in a commercial
    supersonic transport revive.
        Despite the cancellation of the HSR program, previous work in HSR
    can be leveraged to support new initiatives. Two areas in particular
    are being directly leveraged to continue work in fiscal year 2000:
    synthetic vision system (SVS) and propulsion technology. The SVS was
    being developed as part of the HSR program to give pilots forward
    vision without incurring a weight penalty on supersonic jetliners
    associated with the mechanisms needed to drop the noses of these
    aircraft. This display technology is being combined with other
    technologies in the Aviation Safety program to augment pilot vision in
    conditions of low visibility. The propulsion technology development in
    will be leveraged to support the Ultra-Efficient Engine Technology
    program. Technology from the HSR program and other programs will be
    used to reduce emissions of nitrogen oxides to meet a goal of 70
    percent emissions reductions. Similarly, HSR technology development in
    the area of turbomachinery (fans, compressors and turbines) will be
    leveraged to develop methods to simplify engines by reducing the number
    of stages. The result will be improved engine efficiency leading to a
    15 percent reduction in fuel use and similar reductions in
    CO2. Also, high temperature engine materials development
    will be leveraged.
        We are, also archiving the knowledge gained in the current program
    in such a way to make it readily useable at a future date. $150 million
    in fiscal year 1999 will be allocated within HSR so that the efforts to
    date can be used in the future. Specifically, these funds will be used
    to (in priority order):
        1. Archive technology development details and write summary
    documents of technology development including lessons learned and
    dispose of excess materials, equipment, and tooling.
        2. Identify far-term (2025) High Speed Civil Transport (HSCT)
    economic and environmental requirements and make recommendations of
    technology paths to direct and/or complement future NASA programs.
        3. Position HSR technology for transfer to industry near-term
    applications, IRAD investments and cooperative agreements.
        4. For generic applications, complete tests of models already
    fabricated and complete development of engineering tools that can be
    fully documented by September 1999.
                       ultra-efficient engine initiative
        Question. What is the rationale behind the ultra-efficient engine
    initiative and how does it differ from comparable efforts in the
    advanced subsonic research program? Will the initiative carry on any of
    the research now being supported by the HSR or advance subsonic
    research programs?
        Answer. The objective of the Ultra-Efficient Engine Technology
    (UEET) program is to address the most critical propulsion issues
    related to environmental emissions: performance and efficiency. The
    overall objective is to develop technology to enable a dramatic
    increase in turbine engine performance and efficiency while reducing
    the impact on the environment. High temperature turbomachinery
    components, materials and structures, and novel concepts for
    significantly improved propulsion airframe integration through advanced
    technology concepts will be addressed. The primary benefits to these
    technologies will be to improve efficiency and reduce emissions for a
    wide range of applications, civil and military.
        UEET resources will be used to develop technology to the component
    level (combustors, fans, compressors and turbines). System level
    validation will be performed using DOD and/or industry test engines. We
    anticipate that 80 percent of the resources will be used in support of
    in-house research at NASA Centers. The remaining resources will be used
    on contracts with the two U.S. aircraft engine manufacturers to ensure
    technology transfer. Given the Agency's priorities, we believe the UEET
    program represents an appropriate balance.
        The propulsion technology development in both AST and HSR will be
    leveraged to support the Ultra-Efficient Engine Technology program. In
    AST, the use of low emission combustors to reduce emissions of nitrogen
    oxides will be continued to meet a goal of 70 percent reduction in
    these emissions. Technology from the HSR program in this area will also
    be used to support this goal. Similarly, in both programs, technology
    development in the area of turbomachinery (fans, compressors and
    turbines) will be leveraged to develop methods to simplify engines by
    reducing the number of stages. The result will be improved engine
    efficiency leading to a 15 percent reduction in fuel use and similar
    reductions in CO2. Also, high temperature engine materials
    development will be leveraged.
        In addition, the fiscal year 2000 budget initiates a new Aviation
    Systems Capacity program based on the Advanced Subsonic Transport
    program to address issues of crowding in the nation's air traffic
    system.
                            reusable launch vehicles
                                   rlv costs
        Question. The budget projection for future space launch development
    grows dramatically between fiscal year 2001 and fiscal year 2004. We
    have been told that those funds constitute a placeholder for future,
    to-be-determined RLV commitments. If those commitments are not
    currently defined, how did you arrive at the amounts appearing in the
    out-year budget? What do you intend to do in fiscal year 2000 to
    clarify the picture?
        Answer. NASA spends a substantial portion of its annual budget to
    meet its launch needs. To lower these costs, the 1994 National Space
    Transportation Policy (NSTC-4) calls for ``government and private
    sector decisions by the end of this decade on development of an
    operational, next generation reusable launch system.'' NASA has set
    aside an outyear wedge of funding to support these decisions. NASA is
    also undertaking industry-led Space Transportation Architecture Studies
    to identify private sector options for reducing NASA's launch costs.
    These studies incorporate separate efforts being undertaken by NASA,
    DOD and industry including: Space Shuttle safety upgrades; X-33 and
    other NASA technology demonstrators (X-34, X-37, and X-38), the Evolved
    Expendable Launch Vehicle for the International Space Station. As part
    of the fiscal year 2001 budget process, the Administration intends to
    use the results of these studies and inputs to develop a strategy that
    encompasses the decisions, some near-term and some far-term, required
    to meet an end-date goal of transitioning all of NASA's launch
    requirements, including human space flight, to lower-cost, privately
    owned and operated space transportation systems. Decisions on future
    RLV funding, the transition from the Space Shuttle to privately owned
    and operated vehicles, private sector incentives, and related issues
    will be decided this fall in the context of this integrated space
    transportation strategy. Details will be provided in the fiscal year
    2001 budget submit.
                                shuttle vs. rlv
        Question. Do you still anticipate being able to make a decision
    ``at the end of the decade'' as to whether to make a major upgrade to
    the space shuttle or to rely on the private sector to build a new
    reusable launch vehicle (RLV) like VentureStar?
        Answer. NASA spends a substantial portion of its annual budget to
    meet its launch needs. To lower these costs, the 1994 National Space
    Transportation Policy (NSTC-4) calls for ``government and private
    sector decisions by the end of this decade on development of an
    operational, next generation reusable launch system.'' NASA has set
    aside an outyear wedge of funding to support these decisions. NASA is
    also undertaking industry-led Space Transportation Architecture Studies
    to identify private sector options for reducing NASA's launch costs.
    These studies incorporate separate efforts being undertaken by NASA,
    DOD and industry including: Space Shuttle safety upgrades; X-33 and
    other NASA technology demonstrators (X-34, X-37, and X-38), the Evolved
    Expendable Launch Vehicle for the International Space Station. As part
    of the fiscal year 2001 budget process, the Administration intends to
    use the results of these studies and inputs to develop a strategy that
    encompasses the decisions, some near-term and some far-term, required
    to meet an end-date goal of transitioning all of NASA's launch
    requirements, including human space flight, to lower-cost, privately
    owned and operated space transportation systems. Decisions on future
    RLV funding, the transition from the Space Shuttle to privately owned
    and operated vehicles, private sector incentives, and related issues
    will be decided this fall in the context of this integrated space
    transportation strategy. Details will be provided in the fiscal year
    2001 budget submit.
                                cost comparison
        Question. NASA's Reusable Launch Vehicle (RLV) program is designed
    to reduce the cost of space launches. What does NASA expect the launch
    and operations costs of a reusable launch vehicle to be compared to the
    launch and operation costs of the shuttle? Does NASA expect to support
    both a shuttle program and an operational Reusable Launch Vehicle
    program at the same time? If so, how and what are the cost projections?
        Answer. NASA spends a substantial portion of its annual budget to
    meet its launch needs. To lower these costs, the 1994 National Space
    Transportation Policy (NSTC-4) calls for ``government and private
    sector decisions by the end of this decade on development of an
    operational, next generation reusable launch system.'' NASA has set
    aside an outyear wedge of funding to support these decisions. NASA is
    also undertaking industry-led Space Transportation Architecture Studies
    to identify private sector options for reducing NASA's launch costs.
    These studies incorporate separate efforts being undertaken by NASA,
    DOD and industry including: Space Shuttle safety upgrades; X-33 and
    other NASA technology demonstrators (X-34, X-37, and X-38), the Evolved
    Expendable Launch Vehicle for the International Space Station. As part
    of the fiscal year 2001 budget process, the Administration intends to
    use the results of these studies and inputs to develop a strategy that
    encompasses the decisions, some near-term and some far-term, required
    to meet an end-date goal of transitioning all of NASA's launch
    requirements, including human space flight, to lower-cost, privately
    owned and operated space transportation systems. Decisions on future
    RLV funding, the transition from the Space Shuttle to privately owned
    and operated vehicles, private sector incentives, and related issues
    will be decided this fall in the context of this integrated space
    transportation strategy. Details will be provided in the fiscal year
    2001 budget submit.
                           private sector incentives
        Question. What incentives do you think would be needed to convince
    the private sector to fund an operational RLV? There has been some talk
    of federal loan guarantees. Is that necessary? What would be the
    budgetary impact of such a proposal?
        Answer. NASA spends a substantial portion of its annual budget to
    meet its launch needs. To lower these costs, the 1994 National Space
    Transportation Policy (NSTC-4) calls for ``government and private
    sector decisions by the end of this decade on development of an
    operational, next generation reusable launch system.'' NASA has set
    aside an outyear wedge of funding to support these decisions. NASA is
    also undertaking industry-led Space Transportation Architecture Studies
    to identify private sector options for reducing NASA's launch costs.
    These studies incorporate separate efforts being undertaken by NASA,
    DOD and industry including: Space Shuttle safety upgrades; X-33 and
    other NASA technology demonstrators (X-34, X-37, and X-38), the Evolved
    Expendable Launch Vehicle for the International Space Station. As part
    of the fiscal year 2001 budget process, the Administration intends to
    use the results of these studies and inputs to develop a strategy that
    encompasses the decisions, some near-term and some far-term, required
    to meet an end-date goal of transitioning all of NASA's launch
    requirements, including human space flight, to lower-cost, privately
    owned and operated space transportation systems. Decisions on future
    RLV funding, the transition from the Space Shuttle to privately owned
    and operated vehicles, private sector incentives, and related issues
    will be decided this fall in the context of this integrated space
    transportation strategy. Details will be provided in the fiscal year
    2001 budget submit.
                             likelihood of success
        Question. How do you rate the likelihood that one or more of the
    private sector companies now developing their own RLVs will be
    successful-companies like Kistler, or Kelly, or Space Access? Are all
    of them arguing that they need federal loan guarantees or other
    government-based incentives to succeed?
        Answer. Several start-up, entrepreneurial launch companies emerged
    in recent years that are developing or plan to develop new launch
    vehicles, mostly aimed at the commercial launch market using private
    sector sources of financing. We know that the fresh ideas and
    innovative approaches come from such entrepreneurial activities and
    hope that the companies that prove their systems reliable and cost
    competitive will be successful. Because each company's business plan is
    dependent on non-technical factors, such as launch market forecasts,
    NASA cannot rate the likelihood that one or more of these companies
    will be successful. NASA is taking steps, however, to support these new
    entrants and long-term competition in the U.S. launch market. First,
    several of these companies have been contracted as participants in the
    Space Transportation Architecture Studies mentioned in the above
    answer. NASA is also providing Space Act agreement resources to these
    companies, when requested, such as wind tunnel work, airborne testing,
    alternative engine designs, and NASA Center expertise. Finally, NASA is
    asking for industry comments on a potential future procurement of
    launch services on new, untested launch vehicles for those NASA
    payloads that can be risked on such vehicles. Because each company has
    a different business plan with different market projections, financing
    techniques, and payback estimates, some companies are in favor of loan
    guarantees as a private sector incentive whereas others are not.
                            x-33 technical problems
        Question. What are the technical problems that have slowed the X-33
    program? Are more schedule threatening technical problems likely? Is
    single-stage-to-orbit technology simply too immature at this time?
        Answer. The X-33 has suffered manufacturing difficulties with two
    of its many technologies: the composite liquid hydrogen fuel tank and
    the aerospike engine. We considered the composite cryogenic fuel tank
    to be the most significant technical challenge from the time that the
    program was initiated. The X-33's lifting body shape required that the
    tank geometry be complex, with each of the two composite LH2
    fuel tanks being assembled in a quad-lobe design. Each tank required
    four large lobe skins that were manufactured as sandwich structures
    with graphite epoxy inner and outer skins bonded to a phenolic
    honeycomb core (trade name ``Corex''). The lobe skins were then bonded
    to four longerons (which were themselves composite woven ``y''
    preforms) and to small and large Cee-shaped members (also woven
    preforms) which join the top and bottom of the lobe skins to the
    forward and aft bulkheads, respectively. The first serious difficulty
    was encountered when areas were found on the first composite tank where
    the lobe skin bonding to the longerons was inadequate. Repairs were
    made to the bonds, and manufacturing processes were found that
    prevented subsequent problems of this type. The next major tank problem
    involved debonding of an inner lobe skin to the core material on the
    first of a total of eight lobe skins. The history of the manufacturing
    process used for this particular lobe skin (the first) and for the
    second lobe skin slightly differed somewhat from that used on the
    remaining six lobe skins. Accordingly, a decision was made to
    manufacture replacement lobe skins to replace both of these skins. The
    other skins were carefully tested and bondline integrity was determined
    to be adequate. Manufacturing and assembly of both hydrogen tanks is
    now complete, and the starboard tank is now in cryogenic cycling and
    loads testing at NASA Marshall Space Flight Center (MSFC). Some leaks
    were discovered (as had been expected), but all leaks are repairable in
    the field. The left tank will follow the starboard tank into the same
    facility for similar testing while the starboard tank is being
    installed in the vehicle at Lockheed Martin Skunk Works in Palmdale.
        Engineers at MSFC conducted the second pressure test on the
    composite tank by filling it completely with liquid hydrogen at -423
    degrees Fahrenheit on September 21. One of the objectives of the test
    was to pinpoint seepage areas on the composite tank. When the tank was
    pressurized to 20m psi, as expected some hydrogen seepage was noted.
    Technicians are applying sealant or patchwork to affected areas before
    resuming pressure tests. The tank passed an earlier pressure test with
    liquid nitrogen and also a 5-psi helium leak test when it was shipped.
        Similar patchwork was completed on the X-33's earlier five-foot
    composite test tank or the ``Double D'' tank. The five-foot tank has
    since successfully completed approximately 30 cryogenic cycles
    involving the filling, draining, and filling again of liquid hydrogen
    at pressure. As a result of the manufacturing difficulties encountered
    on these fuel tanks, we have a better understanding and insight into
    this critical technology area. This is consistent with the X-33
    Program's overall goal of giving us the opportunity to develop and
    prove these cutting-edge, revolutionary technologies.
        The linear aerospike engines also encountered manufacturing
    problems in three areas: the expansion ramps, the thrust ``ladder'' and
    the thrust cells. Bonding high-temperature steel alloy sheets onto a
    copper alloy (trade name ``Narloy Z'') core with machined cooling slots
    form the expansion ramps. Liquid hydrogen is circulated through the
    slots to regeneratively cool the ramps. Manufacturing the cores and
    brazing the facing sheets to the cores proved to be a time-consuming
    activity. The brazing process itself was slowed by competing with other
    applications (e.g., SSME nozzles) for the only available brazing
    furnace large enough for this purpose. The thrust ladders to which the
    thrust cells are attached proved to be a more challenging design and
    manufacturing task than anticipated. Originally the copper ramp was
    conceived as a passive thermal design, but multi-cell hot fire testing
    and subsequent analysis indicated that it is a more complicated thermal
    problem. The ramp had to be redesigned as an actively cooled structure,
    and this increased the manufacturing time. The thrust cells, which are
    also actively cooled, took longer than originally anticipated to
    manufacture. These problems have been overcome, but have delayed the
    engine delivery schedule. However, the first of the four engines being
    built under the X-33 program--a test engine--is currently in test at
    NASA Stennis Space Center, Mississippi. The second engine, a flight
    unit, is nearing completion. Both flight engines will be delivered to
    Palmdale early next calendar year.
        We are confident that the manufacturing difficulties, which have
    delayed the X-33 program, are all behind us. It also is important to
    note that these were manufacturing difficulties and not design
    problems. However, much work remains to be accomplished as the program
    has transitioned into its test and validation phase. The very purpose
    of the X-33 program is to do things that haven't previously been done
    to reduce the technology risk for future operational vehicles. The
    first fuel tank and first development engine are still in their
    respective test series. We cannot offer assurance that further
    difficulties will not be encountered during these critical tests, or in
    other areas, that will further delay the program. However, at the same
    time, we want to thoroughly test and validate these critical components
    before installing them in the X-33.
        All of the difficulties that we have encountered to date have been
    successfully overcome. We are smarter today as a result of the problems
    that we faced. Accordingly, we do not believe that single-stage-to-
    orbit is too immature for proceeding with development of an operational
    RLV. We still have a lot of work ahead of us, and expect to learn a
    great deal from the remainder of the X-33 buildup stage and from the
    subsequent flight test program. However, our experiences to date lead
    us to believe SSTO is achievable with the United States' current
    technology base. Successful test flight of the X-33 next year will go a
    long way in proving this assertion.
                            x-34 technical problems
        Question. What are the technical problems that have slowed the X-34
    program? Are more schedule-threatening delays likely?
        Answer. The X-34 has also suffered from manufacturing delays in its
    composite tanks and structures. More recently, the program has been
    impacted by an Air Force determination that extra series of
    environmental analyses are necessary to launch and land the X-34 at
    Holloman AFB.
                     private investment in the rlv program
        Question. Assuming private investment, creation of an operational
    space launch system derived from NASA's RLV program, such as the
    proposed Lockheed-Martin VentureStar, will require private firms to
    fund a follow-up development and construction program estimated to cost
    several billion dollars.
        Given the large investment required and the Air Force's recent
    decision to fund the development two Evolved Expendable Launch
    Vehicles, are private firms willing to invest in development of the
    VentureStar?
        Even though the NASA RLV programs were designed for private
    investment, does NASA foresee a need to provide funding, payload
    guarantees, loan guarantees, or other government subsidies for a
    follow-on development program to produce operational RLVs?
        Answer. NASA spends a substantial portion of its annual budget to
    meet its launch needs. To lower these costs, the 1994 National Space
    Transportation Policy (NSTC-4) calls for ``government and private
    sector decisions by the end of this decade on development of an
    operational, next generation reusable launch system.'' NASA has set
    aside an outyear wedge of funding to support these decisions. NASA is
    also undertaking industry-led Space Transportation Architecture Studies
    to identify private sector options for reducing NASA's launch costs.
    These studies incorporate separate efforts being undertaken by NASA,
    DOD and industry including: Space Shuttle safety upgrades; X-33 and
    other NASA technology demonstrators (X-34, X-37, and X-38), the Evolved
    Expendable Launch Vehicle for the International Space Station. As part
    of the fiscal year 2001 budget process, the Administration intends to
    use the results of these studies and inputs to develop a strategy that
    encompasses the decisions, some near-term and some far-term, required
    to meet an end-date goal of transitioning all of NASA's launch
    requirements, including human space flight, to lower-cost, privately
    owned and operated space transportation systems. Decisions on future
    RLV funding, the transition from the Space Shuttle to privately owned
    and operated vehicles, private sector incentives, and related issues
    will be decided this fall in the context of this integrated space
    transportation strategy. Details will be provided in the fiscal year
    2001 budget submit.
                           aerospace test facilities
                nasa and dod cooperation in aerospace investment
        Question. In June 1995, NASA and DOD agreed to identify cooperative
    actions that could lead to significant reductions in investments and
    cost of operations in major aerospace test facilities.
        Have you identified any such actions and, if so, what has been the
    amount of savings so far?
        Answer. In the 1995 timeframe, NASA and the DOD--under the auspices
    of the joint Aeronautics and Astronautics Coordinating Board (AACB)--
    formed several Integrated Product Teams (IPTs) to assess potential
    cooperative efforts in areas of mutual interest. These IPTs made
    numerous recommendations aimed at increasing the efficiency and
    effectiveness of NASA/DOD activities in research, operations, and
    management (including additional personnel exchanges).
        In the area of aeronautical research and technology, the IPT
    activity has helped lead to increased coordination in several key
    research areas. For example, common military and civil turbine engine
    technology goals have been identified and responsive technology
    development activities were embodied within the complementary DOD, NASA
    and industry programs. The Department of Defense's Integrated High
    Performance Turbine Engine Technology (IHPTET) program is addressing
    technology responsive to the needs of DOD for military aviation
    superiority. This program has been closely coordinated with propulsion
    technology projects in NASA's Advanced Subsonic Technology and High
    Speed Research programs. Although these particular programs are being
    terminated in fiscal year 1999, NASA planning for its Ultra-Efficient
    Engine Technology (UEET) effort has been coordinated with DOD's IHPTET
    program and during implementation of UEET the coordination and transfer
    of technology will continue. The strongest collaboration between DOD
    and NASA will continue to be in the development of high temperature
    engine materials technology. Military and civil engines differ in the
    number of stages and configurations, typically the life and durability
    of military engines are less, but the underlying materials are similar.
        In another example, NASA's Aviation Safety Program began in fiscal
    year 1999 and DOD had been involved in the NASA Safety Research
    initiative from the beginning. In response to the White House
    Commission on Aviation Safety and Security, NASA formed a team
    comprised of NASA, FAA, DOD, NWS and industry to define the highest
    priority research and technology investment areas to meet the national
    safety goal. DOD participated throughout the process to contribute and
    to ensure that there was no duplication of effort. Human factors, aging
    aircraft, and weather research are among the programs where DOD is
    contributing significantly to civil aviation safety. Each of the
    resulting NASA safety project managers has an identified DOD focal
    point to ensure close collaboration and sharing of information. NASA,
    FAA and DOD are currently defining a coordinated safety research
    program under the direction of the National Science Technology Council.
        The AACB/IPT effort also resulted in the establishment of six NASA/
    DOD facility alliances, including the National Wind Tunnel Alliance
    (NWTA). (The creation of the NWTA was also spurred by the 1995 release
    of the President's National Science and Technology Council report
    entitled, ``Goals for a National Partnership in Aeronautics Research
    and Technology.'' Among other findings, the report concluded that,
    ``newer European wind tunnels focused on aircraft development testing
    are generally superior to comparable U.S. facilities in overall
    capability'' and that, as a consequence, there had been increasing
    utilization of European facilities for U.S. commercial and military
    aircraft development testing. NASA and DOD shared several concerns
    regarding this practice, including facilities access and data security
    risks. There have been also been a number of other studies addressing
    these and related issues, i.e., the National Facility Study (1993), the
    NASA/DOD Cooperation Study (1996), and the DOD Aeronautical Test
    Facilities Assessment Study (1997).)
        The NWTA as well as the Air Breathing Propulsion Test Facilities
    Alliance (ABPTFA) was established, therefore, to identify, study and
    implement measures to strengthen the national infrastructure of
    aerodynamic and air breathing propulsion test facilities that support
    NASA and DOD missions and the domestic aeronautics industry. The
    Alliance has been active in identifying and addressing several facility
    issues. For example, the NWTA formed a team to develop a common set of
    metrics for measuring facility performance, and has conducted a
    benchmarking analysis of a typical commercial test in both NASA and DOD
    tunnels. These types of ``normalizing'' activities are important pre-
    cursors to making comparative investment decisions, and have also led
    to a sharing of lessons-learned between the two organizations. The
    Alliance has also been successful in addressing specific investment
    decisions. For example, the Air Force HyTech program determined that no
    existing NASA or DOD facility could meet the program's technical
    requirements. Review of the situation by members of the NWTA led to a
    decision to invest in a DOD facility, and not a NASA facility, as the
    most cost effective approach for the Nation.
        In addition, NASA and DOD, under the auspices of the NWTA, are
    participating jointly in the planning and execution of wind tunnel test
    technology efforts. In particular, the Integrated Instrumentation and
    Testing Systems (IITS) element of NASA's information technology program
    is working closely with DOD with the objective of leveraging NASA and
    DOD funding in wind test technology development. This activity (roughly
    $4M per year) is in its second year and both agencies are continuing to
    increase the integration of their test technology development efforts.
    Most recently, the Alliance has been working in concert with NASA's
    Core Capability Assessment to identify future DOD requirements for NASA
    facilities.
        Based on the activities of the NWTA, NASA and DOD have proposed
    that the NWTA and ABPTA be combined and expanded into a National
    Aeronautical Test Alliance (NATA). NATA, once established, will provide
    strategic management of the Nation's aerodynamic, aerothermodynamic,
    and aeropropulsion facilities in the areas of (1) capital investment
    planning; (2) test technology investment; (3) operations policies; and
    (4) business management. Day-to-day operations and management of NATA
    facilities, located at the Ames Research Center (NASA), the Arnold
    Engineering and Development Center (DOD/USAF), the Glenn Research
    Center (NASA), and the Langley Research Center (NASA), will remain the
    responsibility of the respective organizations. The NATA charter is
    currently under review by the DOD.
                                  dod subsidy
        Question. What activities does NASA conduct with DOD and how are
    the costs allocated? Does NASA subsidize any DOD or other agency
    activities? Please quantify.
        Answer. NASA and DOD cooperatively plan and conduct many Aero-Space
    research activities that are pertinent to the objectives of both
    agencies. Generally, the terms of the cooperation are governed by a
    Memorandum of Understanding (MOU), Memorandum of Agreement (MOA), or
    InterAgency Agreement (IAA). For mutual-interest activities such as
    Aging Aircraft research, each agency pays its own costs and the results
    are shared. Another example is where the military service provides the
    wind tunnel model (of a generic configuration) or research flight
    hardware and NASA provides the testing and data reduction. For the
    Abrupt Wing Stall project, the F-18 configuration is of interest to the
    military but the NASA objective goes beyond that to examine the
    fundamental physical phenomenon. On the other hand, when a specific
    developmental aircraft is the subject, such as JSF, wind tunnel testing
    is done on a reimbursible basis.
        Other activities, in which NASA and the DOD, DoE, FAA, or other
    agencies jointly participate, which would include Steering Committees,
    Partnership Councils, Technical Coordination Groups, and Executive
    Committees, generally involve only personnel costs, which are borne by
    the respective agency. NASA resources are not used to subsidize the DOD
    or any other agency.
                                nasa downsizing.
        Question. What is the status of NASA's downsizing efforts at each
    NASA center? Has each center met its staffing reduction targets? If
    not, why not?
        Answer. Thus far, each NASA Center has been able to meet or exceed
    the aggressive reduction targets established both internally and by the
    Administration and Congress. Furthermore, 7 out of 10 Centers have
    reached their outyear FTE targets ahead of schedule. These 7 Centers
    can now begin to replenish and rebalance the skills that were drained
    during the severe hiring constraints of the last 6 years. The remaining
    3 Centers, JSC, KSC, and MSFC, still need to downsize further to meet
    their outyear targets as losses have not materialized as planned. (See
    attached chart for graphic depiction of outyear targets).
                             aging physical plants
        Question. Through the years NASA has built an extensive physical
    infrastructure at its centers located throughout the nation. During
    times of budget constraints, the physical plant of agencies is often
    neglected.
        Does the agency have a plan to maintain the capability of its
    physical plant?
        Answer. NASA completed an extensive Facility Investment Study in
    fiscal year 1997. In this study, we classified our facilities as
    mission direct, mission support, and center support. Each field center
    used a team of research and mission managers to determine the capital
    repair deficiencies of its facilities in each category (from the
    perspective of high, moderate, and low risk). This study showed us that
    we had, indeed, been underinvesting in our facilities maintenance and
    revitalization.
        NASA's physical infrastructure exceeds 5,000 buildings and other
    structures consisting of roughly 43 million square feet. These
    facilities average over 40 years in age with 7 million square feet at
    60 years old and 3 million square feet up to 70 years old. To assure
    that the highest priority needs relative to accomplishment of NASA's
    Strategic Plan are addressed in future facility budgets, NASA is now in
    the closing phase of an agency-wide core capabilities study. This study
    will enable us to direct our limited facilities maintenance and
    revitalization dollars to only those facilities that will be needed
    from here on out. The results of this study will be available in time
    to incorporate into the fiscal year 2001 budget submission to OMB.
        Question. How much is requested in fiscal year 2000 for such
    efforts and what are the future year projected costs?
        Answer. NASA's fiscal year 2000 budget request includes $141
    million in Construction of Facilities (CoF) in fiscal year 2000 and
    $140 million per year thereafter for revitalization of some critical
    facilities. Considering the potential risk of known facility
    deficiencies on Agency research and operations, the investment level is
    less than the amount recommended by the Facility Investment Study and
    significantly below what is needed to revitalize all of NASA's current
    facility inventory. The $140 million, however, will mitigate the most
    critical facilities deficiencies and safety risks known to NASA at this
    time. The results of the core capability study will likely identify a
    greater need for facility revitalization investment. In the meantime,
    NASA centers plan to spend over $200 million in non-CoF dollars
    annually for routine, day-to-day maintenance of the Agency's physical
    plant.
                           year 2000 computer problem
        Question. What is the status of NASA's Year 2000 computer problems?
        Answer. As of April 30, 1999, NASA has essentially completed all
    Y2K repairs on mission-critical and non-mission-critical systems. We
    have one remaining mission-critical system that will complete
    implementation in June (we deferred SOHO Y2K repairs until the
    spacecraft was recovered) and one mission-critical system left to
    retire in August 1999. We have a modest amount of work that we will
    complete this summer for non-mission-critical systems, primarily in
    ensuring our desktop environments are Y2K compliant.
        Meeting the Government-wide goals for Y2K work has required the
    most extensive ``top down'' and ``bottom up'' review of the Agency's
    information technology assets supporting missions, systems, and common
    infrastructure and facilities undertaken to date. No significant Agency
    asset has been untouched--we have tested and remediated (where
    necessary) our ground control systems, flight hardware and software
    supporting human and robotic programs, mission operations support
    systems, common infrastructure systems, and institutional systems. The
    results of this extensive Agency-wide effort is evidenced by the
    following:
      --Repaired, replaced or retired 158 mission-critical systems and 350
            non-mission-critical systems, representing thousands of complex
            hardware and software modules and components (including ground
            control systems, flight hardware and software, mission
            operations support, institutional systems).
      --Validated over 6000 commercial products used on the Agency's
            supercomputing, mainframe, midrange, desktop, and network
            assets.
      --Tested over 52,000 workstations and servers.
      --Tested in-flight system software and hardware for NASA's wide range
            of spacecraft, satellites, instruments, and aircraft.
      --Tested NASA's unique research and development infrastructure--
            hundreds of simulators including wind tunnels, testbeds,
            computational facilities, and propulsion and flight-test
            facilities.
        While these accomplishments are significant, NASA is going beyond
    stated requirements to ensure we are ready for the new millennium.
    Throughout 1999, we will be conducting mission-specific end-to-end
    tests to demonstrate Y2K readiness. End-to-end tests will be conducted
    for the Space Shuttle Program; the International Space Station; and
    NASA's command, tracking, telemetry, and data services supporting all
    satellites and spacecraft. Major missions supporting the Space and
    Earth Science Enterprises are also conducting end-to-end tests
    throughout the summer to demonstrate Y2K readiness. We have also
    prepared plans that address operating contingencies for our missions,
    programs, and systems to ensure we are prepared for a Y2K-related
    failure of internal assets or national infrastructure. Our plans build
    on existing and proven flight rules, operations, disaster recovery, and
    contingency procedures.
        Question. What about the impact on the numerous satellites, which
    are currently operational?
        Answer. Satellite timers do not keep track of calendar dates, so
    there are no date dependent elements provided in most satellite or
    spacecraft hardware. However, NASA satellites do have many time-related
    functions in onboard flight software. These times related functions are
    necessary for many operational activities and include ephemeris
    processing, processing of stored commands, and other scheduled
    processes. The format of time used by flight software is not stored or
    processed as a calendar date, with days or years. Instead, onboard
    satellite times are kept via counters that begin to accrue time
    starting with a given event or epoch and are thus unaware of calendar
    perturbations. As the satellite data is received at the ground station
    via telemetry and processed by the ground systems, the relation between
    the onboard time and the ``wall-clock'' time is established. I would
    like to emphasize, however, that NASA has assessed and tested or
    validated that all flight software and hardware is Y2K compliant. As
    expected, no changes to flight software or hardware have been required.
        I would like to use NASA's Hubble Space Telescope (Hubble) as an
    example to highlight actions we have taken to assure the health and
    safety of NASA spacecraft relative to Y2K. As you know, Hubble was
    launched in April 1990, and is one of NASA's great observatories of
    astronomical observations in space. Hubble provides an excellent
    illustration of how time is processed for spacecraft. All of the
    computers on board the observatory depend only on the Hubble onboard
    clock for time information. The Hubble onboard clock is a free running
    125 millisecond counter that has been incrementing since launch. This
    clock does not contain any date information but expresses time using 32
    bits. Rollover to zero occurs after 17.024 years (from launch) and will
    occur in the year 2007. Rollovers of stored command time occur
    approximately every 24 days and are routine. Embedded systems planned
    for installation during servicing missions are designed to be Y2K
    compliant. Time correlation to calendar date for all Hubble commands
    and telemetry (engineering and science data) is performed in the ground
    systems. As we have validated on all NASA spacecraft, the Y2K is not an
    issue for the Hubble onboard computers and embedded microprocessors.
        Ground systems, the commercial utility infrastructure, the
    commercial telecommunications infrastructure, and NASA's data
    distribution systems on the ground do, however, use calendar dates and
    are potentially affected by Y2K. Let me address briefly how we have
    mitigated Y2K risks associated with each of these elements that are so
    critical to maintaining the health and safety of NASA spacecraft.
        As part of NASA's ongoing Y2K assessment, we have identified Y2K
    problems for ground systems primarily in the areas of ground system
    operating systems, Commercial-off-the-Shelf (COTS) components, and
    mission-unique custom software. Ground systems do rely on calendar
    dates, for example, to include date and time labeling of received data
    and to make various operational events occur at specific dates and
    times. If the applications, computer operating systems, or computers do
    not recognize or interpret certain dates correctly, the systems may
    produce erroneous data, malfunction, or simply stop working.
        NASA established a very aggressive Y2K program in August 1996. Our
    program is modeled on the General Accounting Office framework for Y2K
    awareness, assessment, renovation, validation, and implementation. We
    have established specific Agency-wide requirements and guidelines that
    have been consistently followed by all NASA Centers. As part of our
    initial assessment, we inspected software code and/or conducted
    preliminary testing for NASA systems to determine Y2K remediation
    requirements. We have renovated custom-developed code and made
    necessary COTS upgrades or replacements for supporting ground systems.
    As part of our validation phase, systems have been tested against
    specific Agency-wide test requirements and must be formally certified
    as Y2K compliant by a NASA employee. Consistent with our rigorous
    systems management practices, validated ground systems were run in
    parallel with operational non-Y2K compliant systems using ``current
    time'' operational data to ensure operational functions were not
    impacted by Y2K upgrades. Only after satisfactory operational and
    independent test team checkout were systems transitioned to operations.
        In addition to these requirements, NASA missions have executed or
    will execute end-to-end Y2K test plans that include testing or
    simulation of critical mission functions supported by the instruments
    on board, the spacecraft itself, and the ground systems. While the
    testing details vary from mission to mission, testing involves setting
    the clock forward and rolling through the millennium roll-over and
    other key Y2K dates. For those missions to be launched in the latter
    part of 2000, Y2K compliance tests will be incorporated as a natural
    part of routine integration and acceptance testing. An example of an
    end-to-end test recently completed was the Space Science/Deep Space
    Network test. For this test, we advanced the clocks to February 25,
    2000, and tested the data flows from the Cassini spacecraft (a mission
    to explore Saturn) to the Deep Space Network-Goldstone Deep Space
    tracking station, through the Cassini test bed, and finally to two
    participating Cassini Principal Investigators. The Principal
    Investigators were at remote sites in Baltimore, Maryland, and the
    United Kingdom. The test accomplished all of its objectives and
    instilled confidence that NASA will not experience Y2K anomalies in
    tracking planetary spacecraft in the year 2000 and beyond.
        Let me again use the Hubble Space Telescope as an example. The
    Hubble ground system actually consists of 36 mission-critical and 20
    non-mission-critical computer systems, comprised mainly of COTS
    computer hardware and software, some government off-the-shelf software,
    and several million lines of applications software unique to Hubble.
    Each of these computer systems contains an internal clock with calendar
    date information. Correct time and calendar date capability is vitally
    important to Hubble mission-critical operations activities such as the
    execution of commands by the observatory; proper and accurate telescope
    pointing; communications between the observatory and the Space
    Telescope Operations Control Center; and time tagging of science data.
        In early 1997, Hubble initiated a comprehensive and thorough effort
    spanning the operations, ground systems, and flight software to ensure
    operability in the year 2000 and beyond. All systems were assessed,
    remediated (where required), and rigorously tested. In addition, Hubble
    end-to-end tests were executed to independently verify Y2K compliance
    for all mission-critical systems. To conduct this test, we used a
    facility that replicates the Hubble electrical and electronics systems
    that is comprised of the actual flight spare components used for on-
    orbit servicing of the observatory. All final testing of any changes to
    flight hardware and software is conducted using this facility because
    it is the most faithful and highest fidelity replica of Hubble flight
    systems. During the end-to-end testing, all mission-critical ground
    system components and Y2K critical dates were exercised using a set of
    observation proposals, planned observations, and stored command loads
    to accurately simulate the full range of mission operations with the
    observatory. Based on these successful tests, Hubble was certified Y2K
    compliant in March 1999.
        Another example I would like to share relates to NASA's Tracking
    and Data Relay Satellite System (TDRSS). TDRSS is a communication
    signal relay system that provides tracking and data acquisition
    services between low earth orbiting spacecraft and NASA/customer
    control center and data processing facilities. Customers which rely on
    TDRSS to deliver command and telemetry data include the Hubble Space
    Telescope, the Space Shuttle, the Compton Gamma Ray Observatory,
    Landsat, the International Space Station as well as other current and
    planned low earth orbiting satellites.
        The TDRSS is comprised of a space and ground segment. The existing
    space segment was developed by TRW, and consists of six on-orbit
    satellites located in geosynchronous orbit. These spacecraft are
    vintage 1970's design that has a very primitive 8-bit processing
    capability that does not maintain or use a clock on-board the
    spacecraft. Instead, the ground station sends real-time commands to
    configure the spacecraft to support user services and to step the
    antennas to track both user spacecraft and the Ground Station at White
    Sands, NM.
        Currently under development are three replenishment satellites that
    are being designed and built by Hughes Space and Communications. These
    satellites are based upon their standard HS601 series of satellites.
    The first of this series, TDRS-H, is presently undergoing factory test
    and integration. Although the launch is planned for the fall of 1999,
    the satellite will not be placed into operational service until after
    the century transition. Hughes has performed specific testing of the
    flight software on the three replenishment satellites to ensure that no
    problems exist with respect to Y2K.
        The TDRSS ground segment is located in New Mexico and consists of
    two functionally identical ground terminals known collectively as the
    White Sands Complex. The communications traffic between low-earth
    orbiting satellites being supported by the TDRSS--uplink and downlink--
    pass through the White Sands facility. Work to remediate TDRSS ground
    systems is complete and verified to be Y2K compliant. In summary, the
    entire TDRSS--existing satellites, replenishment satellites, and ground
    systems--has been successfully verified to be Y2K compliant.
        A technical problem similar to but not directly related to Y2K
    involves the US Space Command Global Positioning System (GPS). As I am
    sure you are aware, GPS is based on about two dozen satellites that
    orbit the Earth and send navigational signals. Two upcoming events may
    affect civil GPS users and government users of commercially procured
    receivers--GPS End of Week rollover and Y2K issues. GPS End of Week
    rollover happens every 20 years because GPS system time counted in
    weeks started counting on January 6, 1980. At midnight between August
    21 and 22, 1999 the GPS week will rollover from week 1023 to 0000. This
    could be interpreted as an invalid date in GPS receivers that were not
    designed to meet GPS specification. The Department of Defense is the
    service provider for GPS and has verified that all generations of GPS
    satellites and ground support systems are Y2K and End of Week rollover
    compliant. NASA has assessed the impact of this known problem with GPS
    receivers, and has replaced or upgraded a small number of GPS receivers
    where required, either for this GPS-unique problem, or due to Y2K
    reasons. We do not anticipate problems with GPS receivers on August 21,
    1999 or on January 1, 2000.
        NASA remains confident that the probability of a Y2K-related
    failure of NASA-controlled assets and systems is very low. We are,
    however, reliant on national and local infrastructure such as
    telecommunications and electrical power for spacecraft operations. All
    NASA missions routinely develop contingency plans to deal with the
    unexpected, including on-orbit anomalies. Each NASA Center has
    developed Y2K business continuity plans for NASA operating missions and
    supporting infrastructure that are based on these existing and proven
    plans. NASA's critical ground systems currently include provisions to
    mitigate the impact of short-term failures of the commercial power and
    telecommunications infrastructure which occur during day-to-day
    operations. Independent power sources such as batteries and generators
    exist to support continuing operations in the event of a commercial
    power failure. Diverse routing of communications traffic within our
    primary commercial telecommunications service provider and the
    capability to route data across other commercial telecommunications
    service providers exists to support continuing operations in the event
    of a commercial telecommunications failure. NASA plans have been used
    in actual utility outage conditions, systems failures, and recoveries.
    We know these plans work and believe that these contingencies will work
    during the Y2K rollover.
        As an added precaution, NASA missions are implementing additional
    measures during important Y2K dates. Prior to the rollover, we will
    backup critical data and ensure that adequate storage exists to save
    data that may not be able to be processed in the event a Y2K problem is
    encountered. For the most part, missions will be put in a quiescent
    state, and we are evaluating strategies to minimize data gathering or
    scheduled operations activities. New orbital parameters may be uploaded
    just prior to the rollover to allow the mission to proceed with minimal
    ground contact during the first few days or hours of 2000. During the
    rollover weekend, we will have key operations staff at each NASA Center
    to monitor and support critical operations, and resolve and report any
    anomaly, Y2K or otherwise, through established operational procedures
    and management processes. In addition, we will have extra staff at each
    NASA Center to communicate frequent Y2K status of all NASA assets and
    systems to my Office at NASA Headquarters, both affirmations of
    positive status and problem reporting. To ensure a coordinated, well-
    planned, and appropriate response to any Y2K anomaly, priorities for
    problem resolution across missions are:
      --Health and safety of the spacecraft
      --Health and safety of the onboard instruments
      --Real-time mission operations (command uplink and telemetry
            downlink)
      --Non-real time mission operations including spacecraft system
            analysis, sequence
      --Generation, and navigation
      --Science data capture
      --Science data product generation and archiving
        The impact on NASA if there is a Y2K-related failure depends, of
    course, on the nature of the failure and the duration of the failure.
    Many of the possible failures would be inconvenient, but would not
    necessarily result in permanent loss of data. All NASA operating
    missions have standard operational procedures in place to handle ground
    contingencies, and would be placed in ``safehold'' status until the
    contingency was resolved. The likelihood of a Y2K failure causing
    damage to spacecraft or causing an extended period of downtime is
    considered to be very remote.
        In summary, NASA believes it has taken aggressive steps to assure
    the safety and integrity of our spacecraft, satellites, and supporting
    ground systems and infrastructure. In addition, we have adequate plans
    in place to address operational anomalies due to Y2K problems, and we
    will continue to validate and refine these plans throughout the
    remainder of 1999. NASA is committed to ensuring that NASA's missions
    and programs move smoothly into the new millennium.
                  russian missile technology transfer problem
        Question. A number of concerns have been raised about the
    possibility of and continuing risk that Russia is transferring
    sensitive missile technology to countries like Iran and Communist
    China.
        This is critical and what steps is NASA taking to curtail such
    activity. For example, what is the scope of this problem? What specific
    steps is the Administration taking to modify Russian behavior?
        Answer. Over the past three years, the Administration has placed
    nonproliferation at the top of the U.S.-Russian agenda and has pressed
    an intensive effort at the highest levels in the Russian government to
    prevent Russian entities from aiding Iran's missile program. President
    Clinton discussed this issue at length with Russian President Yeltsin
    and Prime Minister Stepashin at the G-8 Summit in Cologne in June of
    this year. The Vice President, also made this matter a major theme of
    his recent talks with Prime Minister Stepashin. Members of the Cabinet,
    including Secretary of State Albright and National Security Advisor
    Berger, all have active dialogues ongoing with their Russian
    counterparts about nonproliferation as part of the Administration's
    full court press on this issue. Further, the Department of State and
    National Security Council staff work closely with NASA and keep NASA
    apprised of nonproliferation developments as they relate to Russia.
        This effort has achieved results. Russia has taken positive steps
    such as enacting a new export control law (signed by President Yeltsin
    at the end of July), instituting sweeping export control regulations
    (including ``catch all'' provisions), and investigating and stopping
    some activities of concern. Russia has not yet succeeded in completely
    cutting off the flow of sensitive materials and technology to Iran.
    Russian authorities, particularly those with responsibility for law
    enforcement and security matters, must now use these new tools to crack
    down on violators and to demonstrate that Russia's is building an
    effective export control system.
        The Clinton Administration continues to mount a strong, high-level
    diplomatic effort to urge action by the Government of Russia to end
    cooperation by Russian entities with the Iranian missile program. The
    key is to find the right mixture of carrots and sticks to convince
    entities that there are benefits from avoiding cooperation with Iran
    and to apply tough penalties against entities that engage in activities
    of proliferation concern.
        In the last few months, U.S. and Russian experts have developed an
    action plan aimed at curtailing cooperation by Russian entities with
    Iran's missile program. The plan includes enhanced export control
    measures, including development on a priority basis of internal
    compliance offices at several entities of concern, and other
    transparency measures. U.S. and Russian experts have met several times
    in recent months to discuss implementation of these plans. We have also
    offered technical assistance to help Russian entities set up necessary
    export control regimes.
        While NASA is not directly involved in these important discussions
    with the Russian Government on missile proliferation concerns, we are
    actively engaged with the Department of State and the National Security
    Council staff to ensure that we are vigorously supporting overall U.S.
    foreign policy and security objectives. NASA Administrator Goldin has
    frequently emphasized to Russian Space Agency (RSA) General Director
    Koptev and other senior Russian Government and industry officials the
    importance of adhering to Missile Technology Control Regime guidelines
    in their activities with other countries. In their interactions with
    RSA and its contractors at all levels, NASA officials emphasize that
    NASA fully supports and implements the U.S. Government's
    nonproliferation and security objectives.
        Question. What guidance has the Administration given NASA and what
    role do you expect NASA to play relative to its relationship with
    Russia?
        Answer. NASA will continue to adhere to the established U.S.
    Government export control guidelines and regulations in its dealings
    with Russia.
        The International Space Station (ISS) is one of the most visible
    symbols of our engagement with Russia. It has created an opportunity
    for unprecedented interaction and cooperation with Russian government
    personnel, aerospace enterprises, and academic experts.
        Moreover, continued Russian participation in the ISS serves one of
    our major nonproliferation objectives by ensuring that key Russian
    scientists, technicians and enterprises are productively engaged in
    programs that are mutually beneficial to the United States and Russia,
    instead of activities that give rise to proliferation concerns. U.S.-
    Russian cooperation in ISS helps provide legitimate alternatives to
    engaging in activities harmful to world peace and stability.
        Question. What steps will NASA take if it is clear that Russian/
    Iran cooperation on technology transfer continues?
        Answer. We share the concern of the Congress regarding Iran's
    efforts to acquire technology and expertise related to its WMD and
    missile programs. Hindering Iran's efforts is a top priority of the
    Administration's Iran policy and of our wider regional and
    nonproliferation policies. NASA is prepared to undertake whatever steps
    are deemed necessary by the Administration to address this potential
    concern.
                                  contracting
                      fixed cost vs. cost plus contracting
        Question. Please describe the circumstances in which fixed cost
    contracting and cost plus contracting are used.
        Answer. Two common types of Federal contracts are fixed-price
    contracts and cost reimbursement contracts. Federal Acquisition
    Regulation (FAR) 16.202-2 provides that:
        A firm-fixed-price contract is suitable for acquiring commercial
    items (see FAR Parts 2 and 12) or for acquiring other supplies or
    services on the basis of reasonably definite functional or detailed
    specifications (see FAR Part 11) when the contracting officer can
    establish fair and reasonable prices at the outset, such as when--(a)
    There is adequate price competition; (b) There are reasonable price
    comparisons with prior purchases of the same or similar supplies or
    services made on a competitive basis or supported by valid cost or
    pricing data; (c) Available cost or pricing information permits
    realistic estimates of the probable costs of performance; or (d)
    Performance uncertainties can be identified and reasonable estimates of
    their cost impact can be made, and the contractor is willing to accept
    a firm fixed price representing assumption of the risks involved.
        In addition to firm-fixed-price contracts, there are other types of
    fixed-price contracts that allow adjustment of the contract price based
    on inflationary indices or contractor performance, e.g., fixed-price-
    incentive contracts allow for adjusting the profit earned by the
    contractor and the final contract price based on a negotiated formula,
    or that contemplate redetermination of the contract price, e.g., when a
    fair and reasonable firm-fixed price cannot be negotiated for more than
    the initial period of contract performance.
        Cost-reimbursement contracts (include cost-plus-fixed-fee
    contracts, cost-plus-award fee contracts, cost-plus-incentive-fee
    contracts) are suitable for use only when uncertainties involved in
    contract performance do not permit costs to be estimated with
    sufficient accuracy to use any type of fixed-price contract (FAR
    16.301-2). For instance, a cost reimbursable contract typically would
    be used for research and development contracts, such as the development
    of a Space Shuttle.
    nasa comments on gao report entitled ``information security: many nasa
                 mission-critical systems face serious risks''
        NASA has reviewed the final GAO report and, as with the draft
    report, agrees with many of the findings and all of the
    recommendations. We find the final report to be very useful to the
    Agency. It reinforces the recommendations made by our recent Agencywide
    Information Technology (IT) Security review and provides additional
    recommendations which assist in better protecting NASA's IT assets. We
    reiterate our appreciation of the professional quality of the GAO
    review and the productive working relationship established between the
    auditors and NASA officials.
        In our response to the draft report we expressed two concerns. The
    first was triggered by a statement in the Conclusions section of the
    report that, ``NASA's mission-critical systems are vulnerable to
    unauthorized access and sabotage.'' We believed that this statement
    could have been misunderstood to mean that all of NASA's mission-
    critical systems at all of its Centers could be penetrated. We note
    that the final report was changed to, ``Many of NASA's mission-critical
    systems are vulnerable to unauthorized access and sabotage * * * ''. We
    appreciate the change that was made. However, NASA does take
    extraordinary steps, not noted in the study, to protect certain systems
    and networks prior to events such as launches. We believe that these
    steps are very effective, but due to the increasing capabilities and
    motivation of those who would harm NASA, we are not complacent and
    continue to make improvements. NASA takes very seriously the GAO
    findings in the area of IT Security management, and we will correct our
    deficiencies. We agree that the Agency must manage IT Security more
    effectively, and by doing so will provide better protection for all of
    our mission-critical systems.
        The second concern we expressed in our response to the draft report
    still exists in regard to the final report. Namely, that because the
    GAO audit, like any audit, is a snapshot in time, the reader may
    conclude that NASA is doing little to improve its IT Security posture.
    We are far from indifferent to IT Security which, after the Year 2000
    effort, is our highest IT priority. As a result, we are working
    diligently to implement the 33 recommendations made in our Agencywide
    IT Security review and each of the recommendations contained in the GAO
    report. GAO is correct that some of our recommendations will take up to
    2 years to implement fully. That is largely because we are making
    fundamental improvements in the skills of both our civil service
    personnel and contractors. Suitable training curricula in some areas,
    for example, are just now becoming available. We believe the result
    will be worth the required investment in time and resources, and we are
    making that investment.
        NASA is also taking near-term action to make the following
    improvements:
      --In December 1998, we purchased Public Key Infrastructure (PHI)
            digital certificates for every NASA employee that will allow us
            to encrypt sensitive data, provide digital signature
            capabilities, and perform strong authentication. We are
            implementing the PKI capabilities Agencywide this fiscal year.
            We are the first civilian federal agency to pursue Agencywide
            PKI capability.
      --This fiscal year, we have purchased and are now implementing
            Agencywide a common set of auditing and monitoring tools that
            will allow us to better monitor the security status of all our
            systems, better detect intruders, and, because the tools are
            common, better coordinate our response to attacks against
            multiple Centers.
      --In October 1998, the NASA Administrator issued a letter to Center
            Directors reinforcing the policy concerning reporting of IT
            Security incidents to the NASA Automated Systems Incident
            Response Capability (NASIRC). Shortly thereafter, the NASA CIO
            provided additional, detailed guidance in this regard to the
            Center Directors. Incident reporting to NASIRC is improving as
            a result, but we continue to require better compliance in this
            area.
      --We have successfully completed penetration testing of one of our
            Centers by another Center to allow us to determine, through
            testing much like GAO conducted at one NASA Center, the
            effectiveness of NASA's protection of its IT assets. We will
            use the lessons-learned from this year's experience to both
            better secure our systems and perform independent penetration
            tests in succeeding years.
      --NASA's IT Security training plan has been approved and is being
            implemented. It includes training activities consistent with
            recommendations contained in the GAO report. As noted in the
            GAO report, in 1998 NASA developed a multimedia CD-ROM which we
            believe provides excellent IT Security awareness training. We
            have distributed the CD-ROM to all the Centers.
      --NASA has completed the review process for its revised, detailed IT
            Security guidance, including final legal review, and is
            preparing it for signature by the Associate Deputy
            Administrator.
      --We are conducting IT Security workshops on a regular basis so that
            the Center IT Security Managers, network engineering/operations
            personnel, and outsourcers can exchange information and develop
            approaches to improving NASA's IT Security.
      --The NASA Administrator issued a message to all employees in May
            1999, entitled ``The Safety of Information Technology Begins
            With You'', stating that IT Security is part of the Agency's
            safety campaign and that `` * * * I want to emphasize one area
            where we can and must improve: assuring that our computer
            systems and data are safe and secure.''
      --The NASA CIO issued a letter to all Center Directors in May 1999,
            giving direction on adherence to IT Security policy. The letter
            addressed IT Security plans, IT security training, auditing and
            monitoring tools, PKI rollout, assessing Center compliance with
            IT Security policy, NASA information made available through the
            Internet, and IT security incident reporting.
      --The NASA CIO, as part of the Agency's security campaign, has
            visited and briefed two of our Centers on the need for IT
            Security and the requirement to adhere to the Agency's policies
            in that area. The Center Directors at the two Centers mandated
            attendance by all Center senior and line management, civil
            service and contractor, at the briefings. The NASA CIO will
            brief all Centers by the end of the fiscal year.
      --The field Center involved in the GAO/NSA penetration test has made
            very good progress in repairing the vulnerabilities documented
            in the penetration test report. Most of the vulnerabilities
            have been repaired or dispositioned. The remaining
            vulnerabilities will be repaired by January 31, 2000.
            Completing repair of the remaining vulnerabilities earlier
            would introduce unacceptable risk to the missions which depend
            upon the affected systems.
        NASA believes that the actions taken since the completion of the
    GAO audit and issuance of the draft report, those that are in process
    and planned as a result of our Agencywide review, and those initiated
    as a result of the GAO review will make NASA a leading agency in IT
    Security. We acknowledge the timely assistance that GAO provided
    through the assessment documented in its final report.
        Following is our detailed response to the specific recommendations
    provided in the GAO final report. Our response is generally the same as
    that to the draft report, with a status field added to indicate our
    progress since our comments on the draft report.
                    specific response to gao recommendations
        NASA concurs with all the recommendations of the GAO report. The
    table below provides our response for specific elements of the first
    high-level GAO recommendation: ``We recommend that the NASA
    Administrator with support from NASA's CIO, implement an effective IT
    security program that is consistent across NASA's field centers and
    incorporates the following key elements:''

    ----------------------------------------------------------------------------------------------------------------
                                                                                   Projected
             Recommendation                Concur?        Corrective actions     timeframe for       Action status
                                                                                  completion
    ----------------------------------------------------------------------------------------------------------------
    1. Assessing risks and           Y.................
     evaluating needs which
     includes the following.
        a. Develop and instituting                       During the last      NPG 2810 issuance:  All reviews of NPG
         a review process to ensure                       quarter of fiscal    July 30, 1999.      2810, including
         that managers conduct                            year 1998, we       Letter to Center     legal review
         complete risk assessments                        implemented, and     Directors stating   completed. In
         for all major systems                            the revised          responsibilities    preparation for
         prior to the systems                             detailed IT          in IT Security      signature by the
         becoming operational upon                        Security guidance    area: 3rd           Associate Deputy
         significant change, or at                        (NPG 2810) will      Quarter, fiscal     Administrator.
         least every 3 years.                             reinforce the        year 1999.         Completed. Letter
                                                          requirement for                          by NASA CIO to
                                                          reporting of                             Center Directors
                                                          metrics in this                          issued May 12,
                                                          area to the NASA                         1999.
                                                          IT Security
                                                          Principal Center
                                                          who presents the
                                                          information to the
                                                          NASA CIO. Metrics
                                                          will be collected
                                                          each quarter.
                                                         In addition
                                                          consistent with
                                                          the NASA
                                                          management model
                                                          we will require
                                                          Center Directors
                                                          working through
                                                          Center CIO's, to
                                                          implement a review
                                                          process to ensure
                                                          that the risk
                                                          assessment policy,
                                                          as with all IT
                                                          Security policies
                                                          and procedures, is
                                                          adhered to at
                                                          their Centers.
        b. Formally authorizing all                      NPG 2810, when       NPG 2810 issuance:  All reviews of NPG
         systems before they become                       issued, will         July 30, 1999.      2810, including
         operational and at least                         include this                             legal review,
         every 3 years thereafter.                        requirement.                             completed. In
                                                          Metrics will be                          preparation for
                                                          collected each                           signature by the
                                                          quarter.                                 Associate Deputy
                                                                                                   Administrator.
    2. Implementing policies and     Y.................
     controls, which includes the
     following.
        a. Streamlining the                              Since NPG 2810 has   4th Quarter,        On track.
         policies-making and                              taken longer to      fiscal year 1999.
         standards-setting process                        implement than we
         for IT security so that                          had planned, we
         guidance can be issued and                       have issued a
         modified promptly to                             number of
         address changes in threats                       management letters
         and vulnerabilities                              giving guidance in
         introduced by rapidly                            specific areas
         evolving computer and                            that required
         telecommunication                                immediate
         technologies.                                    attention. We will
                                                          develop and
                                                          implement a more
                                                          streamlined
                                                          process for IT
                                                          Security guidance
                                                          to supplement our
                                                          existing policy
                                                          process.
        b. Developing and issuing                        NASA will issue      4th Quarter,        On track.
         guidance that specifies                          guidance in this     fiscal year 1999.
         information that is                              area. Since one of
         appropriate for posting on                       NASA's primary
         public World Wide Web                            missions is
         sites and distinguishes                          dissemination of
         this from information that                       knowledge to the
         is sensitive and should be                       American public,
         more closely controlled.                         our policy must be
                                                          carefully crafted
                                                          to ensure that we
                                                          are excluding,
                                                          from World Wide
                                                          Web posting, only
                                                          that information
                                                          that must be kept
                                                          from public
                                                          dissemination. We
                                                          must take the time
                                                          necessary to
                                                          develop
                                                          appropriate
                                                          guidance
                                                          consistent with
                                                          our mission.
    3. Developing and issuing        Y.................  NPG 2810, when       NPG 2810 issuance:  All reviews of NPG
     guidance that identifies                             issued, will         July 30, 1999.      2810, including
     critical systems, including                          include this                             legal review,
     those involved in the command                        guidance.                                completed. In
     and control of orbiting                              Consistent with                          preparation for
     spacecraft, that require                             OMB A-130 and                            signature by the
     strong user authentication.                          NASA's approach to                       Associate Deputy
                                                          unclassified IT                          Administrator.
                                                          Security, guidance
                                                          in this area will
                                                          be based on risk
                                                          assessments.
    4. Monitoring compliance with    Y.................  Consistent with the  Letter to Center    Completed. Letter
     policy and effectiveness of                          NASA management      Directors stating   by NASA CIO to
     controls, which includes (he                         model, we will       responsibilities    Center Directors
     following.                                           require Center       in IT Security      issued May 12,
      a. Developing and                                   Directors, working   area: 3rd           1999.
     implementing a management                            through Center       Quarter, fiscal
     oversight process to                                 CID's, to            year 1999.
     periodically monitor and                             implement a review
     enforce field centers'                               process to ensure
     compliance with agencywide                           that all IT
     policy.                                              Security policies
      b. Ensuring that independent                        and procedures,
     audits or reviews of systems'                        including those
     security controls are                                related to audits/
     performed at least every 3                           reviews and
     years and that identified                            correction of
     weaknesses are expeditiously                         weaknesses, are
     corrected.                                           adhered to at
                                                          their Centers.
                                                          Metrics will be
                                                          collected each
                                                          quarter and
                                                          reported to the
                                                          Principal Center
                                                          for IT Security
                                                          and to the NASA
                                                          CIO to monitor
                                                          Centers'
                                                          compliance with
                                                          Agencywide policy.
    5. Providing required computer   Y.................  NASA's IT Security
     security training, which                             Training Plan has
     includes the following.                              been approved and
                                                          includes
                                                          requirements for
                                                          training
                                                          consistent with
                                                          GAO's
                                                          recommendations.
        a. Developing and                                Our IT Security      4th Quarter,        On track.
         implementing a structured                        training approach    fiscal year 2000.
         program for ensuring that                        includes two        Intermediate
         NASA employees receive                           components: (1)      milestones exist/
         periodic training in                             end-use awareness    under development
         computer security to                             and training,        for
         provide them with the                            training for         implementation of
         awareness, knowledge, and                        program/project      portions of the
         skills necessary to                              managers in risk     program and
         protect sensitive                                management           training
         information and mission-                         (including risk      percentages of
         critical systems.                                analysis), and       users.
                                                          training for
                                                          Center IT Security
                                                          Managers; (2)
                                                          training for civil
                                                          service and
                                                          contractor system/
                                                          network
                                                          administrators
                                                          which we interpret
                                                          to be GAO
                                                          recommendation
                                                          5.c. The time-
                                                          frame for this
                                                          recommendation
                                                          refers to the
                                                          first component..
    5. Providing required computer   Y.................  NASA's IT Security
     security training, which                             Training Plan has
     includes the following.                              been approved and
                                                          includes
                                                          requirements for
                                                          training
                                                          consistent with
                                                          GAO's
                                                          recommendations.
        b. Modifying relevant                                                 Modification of     On track.
         contracts to include                                                  existing
         provisions for ensuring                                               contracts: 3rd
         that NASA contract                                                    Quarter, fiscal
         personnel are similarly                                               year 2000.
         trained.                                                              Language for
                                                                               inclusion in new
                                                                               contracts to be
                                                                               developed in 4th
                                                                               Quarter, fiscal
                                                                               year 1999.
        c. Developing and                                                     All civil service   On track.
         implementing a program for                                            and contractor     ..................
         certifying that NASA civil                                            system/network     ..................
         servants and contract                                                 administrators:    On track.
         employees are competent to                                            3rd Quarter,
         discharge their IT                                                    fiscal year 2001.
         security-related                                                     50 percent of all
         responsibilities.                                                     civil service
                                                                               system/network
                                                                               administrators:
                                                                               4th Quarter,
                                                                               fiscal year 2000.
    6. Coordinating responses to     Y.................
     security incidents, which
     includes the following.
        a. Clarifying policy and                         This action was      Clarification of    Completed.
         procedures for mandatory                         completed via a      policies is        All reviews of NPG
         reporting of security                            letter from the      complete..          2810, including
         incidents to NASIRC.                             NASA Administrator  Clarification of     legal review,
                                                          to the Center        procedures will     completed. In
                                                          Directors in         be provided in      preparation for
                                                          October 1998. A      NPG 2810, when      signature by the
                                                          subsequent letter    issued: July 30,    Associate Deputy
                                                          from the NASA CIO    1999.               Administrator.
                                                          provided more
                                                          details in this
                                                          regard.
        b. Strengthening the role                        This action is in    4th Quarter,        On track.
         of NASIRC in disseminating                       progress as a        fiscal year 1999.
         vulnerability information                        result of our
         within NASA, analyzing                           Agencywide IT
         threats in real time, and                        Security Program
         developing effective                             Review.
         countermeasures for                              Improvements will
         ongoing attacks.                                 be incremental
                                                          with some aspects
                                                          of the action in
                                                          place before the
                                                          completion date
                                                          noted.
    ----------------------------------------------------------------------------------------------------------------

        The second high-level GAO recommendation is: ``We also recommend
    that the NASA CIO review the specific vulnerabilities and suggested
    actions provided to field center officials at the conclusion of our
    penetration testing, determine and implement appropriate security
    countermeasures, and track the implementation and/or disposition of
    these actions''.
        The NASA CIO has reviewed the vulnerabilities and suggested actions
    GAO provided to field Center officials and has met with the field
    Center Director to discuss vulnerabilities and the need for corrective
    action. In addition, the field Center has conducted an extensive
    internal study of its IT Security and has issued a comprehensive report
    and set of recommendations for improvements.
        The NASA CIO on June 18, 1999, conducted a review of the field
    Center's progress in tracking the resolution of vulnerabilities and
    recommendations noted in the GAO study. The NASA Acting Deputy CIO
    conducted a follow-up review on July 12, 1999. The field Center
    involved in the GAO/NSA penetration test has made very good progress in
    repairing the vulnerabilities documented in the penetration test
    report. Most of the vulnerabilities have been repaired or
    dispositioned. The remaining open vulnerabilities will be repaired by
    January 31, 2000. Completing repair of the remaining open
    vulnerabilities earlier would introduce unacceptable risk to the
    missions which depend upon the affected systems. The NASA CIO is
    tracking the implementation and/or disposition of the remaining
    actions.

                          Letter From Roberta L. Gross

                 National Aeronautics and Space Administration,
                                      Washington, DC, October 18, 1999.
    Hon. Christopher S. Bond,
    Chairman, Senate Committee on Appropriations Subcommittee,
    Washington, DC.
        Dear Mr. Chairman: I am responding to written questions from you,
    regarding the March 18, 1999, hearing before the Senate Subcommittee on
    VA-HUD-Independent Agencies. I apologize for the late response. I did
    not receive a copy of your questions until October 6, 1999. The
    questions are set forth below. You specifically asked for an Inspector
    General assessment of the priority of the following NASA activities:
                                security actions
        Question. In light of recent reports of spying of technology at
    DOE, what steps has NASA taken to ensure that sensitive NASA technology
    is not being transferred, even innocently, to a foreign country?
        Answer. NASA has an active export control program but needs to
    establish additional internal controls to prevent unlawful technology
    transfer. In order to test the effectiveness of NASA's controls, we
    have initiated a series of audits and inspections. Our work has
    revealed that NASA has vulnerabilities to improper transfer of
    sensitive technologies. We recently published an audit on NASA's
    Control of Export-Controlled Technologies. We found that NASA has not
    identified all export-controlled technologies related to its major
    programs. NASA also does not maintain a catalog of classifications for
    transfers of export-controlled technologies in order to provide for
    consistency across the Centers. Also, Agency oversight of and training
    for personnel in the Export Control Program need improvement.
    Specifically, annual Agency audits of each Center's export control
    system were not adequately performed and NASA personnel lack training
    in controlling and documenting export-controlled technologies. As a
    result, NASA may not have adequate control over export-controlled
    technologies to preclude unauthorized or unlicensed transfers. The
    Agency was fully cooperative and responsive to our recommendations to
    correct deficiencies and improve controls.
        We also found that NASA does not always observe some basic controls
    that could prevent unauthorized transfers of technology. For example,
    during a review at a NASA center, we found that foreign nationals were
    unescorted and were not properly identified as foreign visitors. We
    alerted the Center Director of that issue and he took action to correct
    the situation. I also reminded senior NASA management of the Agency's
    responsibilities in this regard. We are currently conducting an audit
    of contractor control of sensitive technologies and have found
    deficiencies in NASA's oversight and contractors' practices. The
    objectives of this audit, which is currently in progress, are to (1)
    evaluate whether major contractors have established adequate controls
    over NASA's sensitive technologies to preclude unauthorized or
    unlicensed transfers, and (2) assess government oversight of contractor
    processes for control of sensitive technologies. Based on our review to
    date, we plan to issue a report to recommend that the Agency improve
    controls and oversight. We are also performing an audit of the
    Management and Administration of International Agreements. The
    objectives of the audit are to (1) determine whether NASA's
    international agreements are properly executed and monitored, (2)
    appropriate clearances are obtained for foreign personnel with access
    to NASA facilities and information, and (3) controls over release of
    information are established. We will also be conducting an audit of
    deemed export \1\ of NASA Information and Technology. Finally, we are
    beginning a review by a team of auditors and inspectors into NASA's
    Special Access Program to ensure integrity in security, procurement,
    and financial administration. I would be happy to brief your staff on
    the purpose and approaches of our ongoing work.
    ---------------------------------------------------------------------------
        \1\ Any release of technology or source code subject to the Export
    Administration Regulation to foreign national is deemed to be an export
    to the home country or countries of the foreign national. This deemed
    export rule does not apply to persons lawfully admitted for permanent
    residence in the United States and does not apply to persons who are
    protected individuals under the Immigration and Naturalization Act (8
    U.S.C. 1324b(a)(3)). Technology or software is ``released'' for export
    through: visual inspection by foreign nationals of U.S.-origin
    equipment and facilities; oral exchanges of information in the U.S. or
    abroad; or the application to situations abroad of personal knowledge
    or technical experience acquired in the U.S.
    ---------------------------------------------------------------------------
        My Computer Crimes Division conducts criminal investigations
    concerning felonious intrusions into NASA computer systems. Through our
    assessments of these intrusions, we observe that NASA is at risk for
    loss of sensitive technologies. There are instances in which our
    investigators have found poorly administered systems, with improper
    configurations and current patches not applied. NASA too often lacks
    properly configured firewalls and dedicated skilled security staff. At
    some field locations, central direction is lacking and there is poor
    intrusion reporting both to NASA's incident response center and the
    Office of Inspector General (OIG) Computer Crimes Division.
        Loss of sensitive technology may also occur during the process of
    excessing computers. My inspections staff has found that NASA has
    failed to adequately wipe excess computers clean of controlled or
    proprietary data. We have alerted the Agency to this problem over the
    last several years and continue to conduct spot-check inspections of
    the Agency's practices.
        The Agency has taken steps to address many of these
    vulnerabilities. For example, the Chief Information Officers, along
    with security personnel, have addressed NASA centers on their
    responsibilities for network security and sensitive technologies. NASA
    has moved forward in its attempts at strong security through the use of
    a Public Key Infrastructure (PKI). NASA selected one vendor to meet its
    public key encryption requirements. However, the distribution and
    training of the PKI has been slow. Also, the NASA Administrator has
    requested the FBI conduct surveys at each of NASA's principle field
    centers to help assure that the Agency's counterintelligence and
    technology transfer postures are sufficient to face the security
    challenges of the future. The FBI plans to use the information obtained
    from these surveys to make recommendations on how the Agency can
    strengthen its counterintelligence programs, ensure consistent high
    standards at all centers, and effectively link the programs with
    intelligence and law enforcement communities. We provided the FBI with
    recent OIG reports that we believe will be helpful to their efforts. I
    also wrote to Neil Gallagher, Assistant Director, National Security
    Division (FBI), and offered to assist his staffing this assessment.
                              internet protection
        Question. What steps has NASA taken to ensure the integrity and
    protection of its computer systems and data banks?
        Answer. NASA's missions and programs depend on properly managed
    information resources. Moreover, NASA is a significant investor in
    Information Technology (IT) ($2.1 billion in fiscal year 1999). To
    streamline operations, NASA is consolidating and outsourcing various IT
    operations, including local area networks and desktop computers, mid-
    range computing, administrative mainframe computer operations, and
    supercomputing. Outsourcing may bring fiscal and administrative
    benefits, but it also increases risks because of dependency on the
    vendor for technological direction; IT security; vulnerability of
    strategic information to outsiders; and dependency on the viability of
    the vendor.
        For the past three years, I have identified IT security as a
    material weakness of NASA for inclusion in the Agency's annual Federal
    Manager's Financial Integrity Act (FMFIA) Report. NASA, however,
    characterizes IT security only as a ``significant concern.'' I also
    list IT security as one of the top ten challenges facing NASA
    management. This information has been shared with NASA's oversight and
    appropriation Chairs and Ranking Minority members, as well as Chairman
    Fred Thompson of the Senate Governmental Affairs Committee, Chairman
    Dan Burton of the House Committee on Government Reform and Oversight,
    and Representative Dick Armey, the House Majority Leader. The top ten
    management challenges are also shared with NASA and posted to the
    Internet (http://www.hq.nasa.gov/office/oig/hq/reports.html and look
    under ``Memoranda and Letters--PDF.'').
        Our concerns focus on the fragmentation of the IT security program,
    the lack of up-to-date policies and guidance, network physical and
    system security weaknesses, the lack of properly trained personnel, and
    lack of adequate threat analysis. In May 1998, the Acting Deputy
    Administrator, acknowledging significant IT security issues raised by
    the OIG, requested a review of NASA's IT security program. The final
    report recognized numerous deficiencies. The Agency is committed to
    implementing a wide range of improvements but implementation is slow.
    Some no-cost and very low-cost steps can be taken but often are not
    (e.g., properly configuring networks and firewalls and applying current
    patches are inexpensive fixes.)
        A synopsis of some of our work in these areas is enclosed as
    Enclosure 1. Also, a list of our planned work in these areas for fiscal
    year 2000 is also enclosed as Enclosure 2. I will be pleased to meet
    with you and your staff to discuss our work and assessments in these
    areas.
        If you need additional information, or would like copies of any of
    the listed reports, please call me at (202) 358-1220.
                Sincerely,
                                              Roberta L. Gross,
                                                     Inspector General.

                                  Enclosure 1

                       INFORMATION TECHNOLOGY--PRIOR WORK
    ------------------------------------------------------------------------
              Program area                 Reports             Results
    ------------------------------------------------------------------------
    Audits.........................  Disaster Recovery   The NASA Automated
                                      Planning at         Data Processing
                                      Marshall Space      Consolidation
                                      Flight Center's     Center (NACC) has
                                      Automated Data      implemented a
                                      Processing          disaster recovery
                                      Consolidation       plan that includes
                                      Center (IG-99-      most of the
                                      043).               necessary
                                                          provisions for
                                                          emergency
                                                          response, extended
                                                          backup operations,
                                                          and testing.
                                                          However,
                                                          improvements are
                                                          needed in the
                                                          areas of disaster
                                                          recovery strategy,
                                                          procedures, and
                                                          training. The NACC
                                                          is addressing the
                                                          issues.
    Audits.........................  Ames Research       The NAS Facility at
                                      Center's (ARC's)    ARC houses 30 to
                                      Numerical           40 percent of
                                      Aerospace           NASA's
                                      Simulation (NAS)    supercomputing
                                      Facility Disaster   capability. The
                                      Recovery Plan (IG-  NAS does not have
                                      99-032).            a management-
                                                          approved disaster
                                                          recovery plan that
                                                          meets applicable
                                                          federal and NASA
                                                          requirements for
                                                          emergency response
                                                          procedures,
                                                          extended backup
                                                          operations, and
                                                          testing. ARC is
                                                          addressing the
                                                          issues.
    Audits.........................  Disaster Recovery   NASA has
                                      Planning at         established
                                      Kennedy Space       appropriate
                                      Center (KSC) (IG-   emergency response
                                      99-017).            procedures for the
                                                          Launch Processing
                                                          System and the
                                                          Shuttle Processing
                                                          Data Management
                                                          System. However,
                                                          neither system has
                                                          an extended backup
                                                          capability to
                                                          recover from a
                                                          local disaster if
                                                          the computer
                                                          hardware is
                                                          destroyed. KSC is
                                                          addressing the
                                                          issues.
    Audits.........................  Numerical           The overall
                                      Aerospace           management control
                                      Simulation (NAS)    structure for the
                                      Data Center         NAS facility is
                                      Controls at Ames    inadequate in
                                      Research Center     several areas
                                      (ARC) (IG-99-010).  including:
                                                          physical and
                                                          logical access
                                                          controls; computer
                                                          security controls;
                                                          file retention and
                                                          backup and
                                                          recovery
                                                          management
                                                          controls; software
                                                          change management
                                                          controls; system
                                                          accounting and
                                                          file auditing
                                                          controls; and risk
                                                          assessments. ARC
                                                          is addressing the
                                                          issues.
    Audits.........................  Disaster Recovery   The JPL disaster
                                      Planning at the     recovery plan
                                      Jet Propulsion      needs
                                      Laboratory (JPL)    improvements. The
                                      (IG-99-006).        plan does not:
                                                          identify the
                                                          relative
                                                          criticality of
                                                          each application
                                                          to the mission,
                                                          identify when
                                                          applications must
                                                          be back in
                                                          operation, or
                                                          address the
                                                          restoration of
                                                          normal operations.
                                                          JPL is addressing
                                                          the issues.
    Audits.........................  Disaster Recovery   The Shuttle
                                      Planning at the     Software
                                      Johnson Space       Production
                                      Center (JSC) (IG-   Facility (SPF)
                                      99-005).            disaster recovery
                                                          plan does not have
                                                          a strategy or
                                                          procedures in
                                                          place for extended
                                                          backup operations
                                                          in the event of a
                                                          disaster. The SPF
                                                          application users
                                                          have not developed
                                                          contingency plans.
                                                          JSC is addressing
                                                          the issues.
    Inspections....................  Assessment of the   The Office of
                                      NASA Automated      Inspector General
                                      Systems Incident    (OIG) assessed the
                                      Response            adequacy of NASA's
                                      Capability          incident
                                      (NASIRC) (G-99-     reporting,
                                      007).               response,
                                                          handling,
                                                          coordination, and
                                                          information-
                                                          sharing
                                                          capabilities. The
                                                          OIG found several
                                                          weaknesses and
                                                          vulnerabilities
                                                          and made
                                                          recommendations to
                                                          NASA management to
                                                          correct and
                                                          improve
                                                          deficiencies. NASA
                                                          concurred with all
                                                          OIG
                                                          recommendations
                                                          and identified an
                                                          action plan to
                                                          implement the
                                                          recommendations.
    Inspections....................  NASA's              The OIG reviewed
                                      Implementation of   the manner in
                                      a Public Key        which NASA was
                                      Infrastructure      implementing PKI
                                      (PKI) (G-99-006).   encryption
                                                          solutions by
                                                          selecting one
                                                          vendor's products
                                                          to meet key
                                                          requirements. The
                                                          OIG took exception
                                                          to the selection
                                                          process and dollar
                                                          amounts paid for
                                                          the PKI.
    Inspections....................  Inspection of       The OIG conducted
                                      Kennedy Space       an inspection of
                                      Center Computer     personal computer
                                      Hard Drives (G-99-  hard drives
                                      003).               designated for
                                                          transfer or
                                                          excess. We
                                                          discovered
                                                          residual user data
                                                          and copyrighted
                                                          software on the
                                                          hard drives
                                                          sampled and
                                                          determined that
                                                          procedures were
                                                          not being
                                                          followed. We made
                                                          recommendations to
                                                          improve the
                                                          implementation of
                                                          data deletion
                                                          procedures.
    Inspections....................  Dryden Flight       We highlighted
                                      Research Center     prudent steps that
                                      (Dryden) Network    Dryden took
                                      Intrusion--Lesson   overcoming an
                                      s Learned (G-99-    unauthorized
                                      002).               network intrusion.
                                                          We shared this
                                                          report with NASA
                                                          computer and
                                                          security officials
                                                          to communicate
                                                          lessons learned
                                                          from the Dryden
                                                          experience.
    Inspections....................  Flight Termination  The OIG conducted a
                                      Systems (FTS)       review of NASA's
                                      Assessment (G-98-   use of FTS. We
                                      011) CLASSIFIED.    found that NASA's
                                                          practices do not
                                                          conform to
                                                          national policy
                                                          and decisions are
                                                          not based on
                                                          appropriate risk-
                                                          based assessments.
                                                          We made
                                                          recommendations
                                                          that NASA should
                                                          comply with
                                                          national and
                                                          Agency guidance
                                                          and to move to a
                                                          more secure FTS.
                                                          The Agency agreed
                                                          to most of your
                                                          recommendations
                                                          and we are still
                                                          discussing the
                                                          remaining issues.
    Audits.........................  Data Center         System access
                                      General Controls    privileges were
                                      at Langley          not being removed
                                      Research Center     in a timely
                                      (LaRC) (IG-97-      manner. Physical
                                      035).               access privileges
                                                          to the data center
                                                          were not reviewed
                                                          and revalidated.
                                                          Computer security
                                                          plans were not
                                                          prepared and
                                                          system security
                                                          reviews had not
                                                          been performed.
                                                          Based on our
                                                          recommendations,
                                                          LaRC corrected
                                                          these problems.
    Audits.........................  Information         The NASA
                                      Technology          information
                                      Capital Planning    technology (IT)
                                      and Investment      investment process
                                      Control (IG-98-     does not satisfy
                                      034).               Clinger-Cohen Act
                                                          and OMB Circular A-
                                                          130, Management of
                                                          Federal
                                                          Information
                                                          Resources,
                                                          requirements for
                                                          post-
                                                          implementation
                                                          reviews of major,
                                                          new, IT
                                                          investments. NASA
                                                          initiated process
                                                          improvements which
                                                          should satisfy the
                                                          IT post-
                                                          implementation
                                                          review
                                                          requirements.
    Audits.........................  Improved Controls   NASA's CoSMO did
                                      Needed Over         not have an
                                      NASA's              accurate inventory
                                      Supercomputing      of NASA's
                                      Inventory (IG-98-   supercomputers and
                                      021).               supercomputing
                                                          time purchased.
                                                          NASA initiated
                                                          responsive
                                                          corrective
                                                          actions.
    Audits.........................  Data Center         We found control
                                      General Controls    weaknesses
                                      at Marshall Space   associated with
                                      Flight Center       the mainframe data
                                      (MSFC) (IG-97-      center's physical
                                      039).               security,
                                                          environmental
                                                          security,
                                                          technical
                                                          standards,
                                                          computer security
                                                          administration,
                                                          and software
                                                          change management.
                                                          Based on our
                                                          recommendations,
                                                          MSFC corrected the
                                                          weaknesses.
    Audits.........................  Physical Security   The NAS computing
                                      at Ames Research    facility did not
                                      Center (ARC's)      have adequate
                                      Numerical           backup or
                                      Aerospace           contingency
                                      Simulation (NAS)    procedures to deal
                                      Facility (IG-97-    with physical
                                      030).               access control
                                                          system failures.
                                                          ARC corrected the
                                                          problem.
    Audits.........................  Data Center         We found that
                                      General Controls    physical access
                                      at Johnson Space    controls to the
                                      Center (JSC) (IG-   Shuttle Software
                                      98-005).            Production
                                                          Facility needed
                                                          improvement.
                                                          Additionally, the
                                                          facility did not
                                                          have an
                                                          uninterruptable
                                                          power supply (UPS)
                                                          as a defense
                                                          against power
                                                          problems. JSC
                                                          corrected the
                                                          physical access
                                                          problem and agreed
                                                          to conduct a
                                                          feasibility study
                                                          and cost/benefit
                                                          on the UPS.
    Audits.........................  Data Center         Physical access
                                      General Controls    controls
                                      at Goddard Space    associated with
                                      Flight Center       the Hubble
                                      (GSFC) (IG-98-      Telescope Data
                                      006).               Operations Center
                                                          (HTDOC) and the
                                                          Hubble Telescope
                                                          Servicing and
                                                          Maintenance System
                                                          facility (SAMS)
                                                          were inadequate.
                                                          Additionally,
                                                          computer risk
                                                          management plans
                                                          had not been
                                                          conducted as
                                                          required. GSFC
                                                          corrected these
                                                          deficiencies.
    Audits.........................  Data Center         Computer security
                                      General Controls    implementation
                                      at Jet Propulsion   plans and reviews
                                      Laboratory (JPL)    had not been
                                      (IG-98-009).        developed or
                                                          conducted for
                                                          JPL's
                                                          Institutional
                                                          Business Systems
                                                          (IBS) as required
                                                          by JPL policy.
                                                          Additionally,
                                                          physical access
                                                          controls to the
                                                          IBS data center
                                                          were in need of
                                                          improvement. JPL
                                                          corrected these
                                                          deficiencies.
    Audits.........................  Data Center         Procedures for
                                      General Controls    monitoring
                                      at Kennedy Space    unauthorized
                                      Center (KSC) (IG-   access attempts to
                                      98-018).            the Shuttle
                                                          Processing Data
                                                          Management System
                                                          were inadequate.
                                                          KSC took
                                                          corrective action.
    Audits.........................  Data Center         The physical access
                                      General Controls    control system
                                      at Lewis Research   used to protect
                                      Center (LeRC) (IG-  LeRC's Research
                                      98-039).            Analysis Center
                                                          had not been
                                                          certified as
                                                          meeting security
                                                          requirements.
                                                          Physical access
                                                          procedures to the
                                                          facility were not
                                                          adequate. LeRC is
                                                          currently
                                                          addressing these
                                                          issues.
    Audits.........................  Disaster Recovery   The Solar
                                      Planning at         Heliospheric
                                      Goddard Space       Observatory
                                      Flight Center       Mission Operations
                                      (GSFC) (IG-98-      Center did not
                                      036).               have computer
                                                          contingency
                                                          capabilities in
                                                          place in the event
                                                          of a disaster.
                                                          Additionally,
                                                          contingency plans
                                                          for a data center
                                                          associated with
                                                          the Tropical
                                                          Rainfall
                                                          Measurement
                                                          Mission were
                                                          incomplete.
                                                          Finally, computer
                                                          risk assessments
                                                          did not analyze
                                                          the potential
                                                          effects of losses
                                                          caused by
                                                          disasters. GSFC
                                                          agreed to
                                                          implement
                                                          corrective actions
                                                          by March 1999.
    ------------------------------------------------------------------------

                                  Enclosure 2

             INFORMATION TECHNOLOGY--PLANNED WORK--FISCAL YEAR 2000
    ------------------------------------------------------------------------
              Program area               Assignment             Focus
    ------------------------------------------------------------------------
    Audits.........................  Deemed Export of    Determining whether
                                      NASA Information    NASA has
                                      and Technology.     appropriate
                                                          policies and
                                                          procedures in
                                                          place to ensure
                                                          that technology
                                                          and information is
                                                          not inadvertently
                                                          exported to
                                                          foreign nationals.
    Audits.........................  Review MVS/ESA OS/  Determination of
                                      390 Operating       whether the
                                      System Integrity    operating system
                                      and Security.       environments for
                                                          the Shuttle
                                                          Software
                                                          Production
                                                          facility and the
                                                          NASA ADP
                                                          Consolidation
                                                          Center at Marshall
                                                          Space Flight
                                                          Center have been
                                                          implemented to
                                                          provide for an
                                                          appropriate level
                                                          of security and
                                                          integrity.
    Audits.........................  UNIX Operating      Determining whether
                                      System Security     Kennedy Space
                                      at KSC              Center and the
                                      (Carryover).        United Space
                                                          Alliance have
                                                          implemented and
                                                          configured the
                                                          UNIX operating
                                                          system to provide
                                                          an appropriate
                                                          level of security
                                                          and integrity.
    Audits.........................  UNIX Operating      Determining whether
                                      System Security     Goddard Space
                                      at GSFC             Flight Center has
                                      (Carryover).        implemented and
                                                          configured the
                                                          UNIX operating
                                                          system to provide
                                                          an appropriate
                                                          level of security
                                                          and integrity.
    Audits.........................  General Controls    Evaluating the
                                      at JSC's Mission    adequacy of
                                      Control Center      physical access,
                                      (Carryover).        environmental
                                                          protection, and
                                                          disaster recovery
                                                          planning for JSC's
                                                          Mission Control
                                                          Center.
    Audits.........................  Implementation of   Evaluating whether
                                      Security Software   JSC and the United
                                      at JSC's Shuttle    Space Alliance
                                      Software            have appropriately
                                      Production          implemented and
                                      Facility            configured logical
                                      (Carryover).        security software
                                                          to protect Shuttle
                                                          Software
                                                          Production
                                                          Facility systems.
    Audits.........................  Windows NT          Evaluating whether
                                      Security and        Headquarters has
                                      Integrity           implemented and
                                      Controls at         configured
                                      Headquarters        selected NT
                                      (Carryover).        servers to provide
                                                          an appropriate
                                                          level of logical
                                                          security and
                                                          interoperability
                                                          for associated
                                                          automated systems.
    Audits.........................  Implementation of   Examining policies
                                      the Clinger-Cohen   and procedures
                                      Act (Carryover).    concerning the
                                                          duties and
                                                          responsibilities
                                                          of the Chief
                                                          Information
                                                          Officer relating
                                                          to information
                                                          resources
                                                          management,
                                                          information
                                                          technology
                                                          acquisition
                                                          including the
                                                          performance of IT
                                                          programs, and
                                                          maintenance of an
                                                          IT architecture.
    Audits.........................  Presidential        Evaluating whether
                                      Decision            NASA has developed
                                      Directive  63.      and implemented a
                                                          plan to protect
                                                          the Agency's cyber
                                                          assets consistent
                                                          with the
                                                          requirements of
                                                          PDD-63.
    Audits.........................  Certificate         Evaluating the
                                      Management.         adequacy and
                                                          effectiveness of
                                                          internal controls
                                                          established for
                                                          the Agency central
                                                          Certification
                                                          Authority located
                                                          at Ames Research
                                                          Center.
    Audits.........................  Information         Determining whether
                                      Technology          NASA and its
                                      Acquisitions.       contractors are
                                                          complying with
                                                          applicable IT
                                                          acquisition
                                                          requirements.
    Audits.........................  Telecommunications  Evaluating whether
                                      Manage-  ment.      NASA management
                                                          controls are
                                                          adequate regarding
                                                          the use of
                                                          telecommunication
                                                          services,
                                                          including voice,
                                                          data, and video
                                                          information
                                                          technology.
    Audits.........................  Operating System    Determining whether
                                      Controls in Major   the operating
                                      NASA Information    system environment
                                      Systems.            has been
                                                          configured and
                                                          implemented to
                                                          provide for an
                                                          appropriate level
                                                          of security and
                                                          integrity.
    Audits.........................  Database Controls   Determining whether
                                      in Major NASA       database security
                                      Information         and integrity
                                      Systems.            controls have been
                                                          adequately
                                                          implemented in the
                                                          major systems
                                                          selected for
                                                          audit.
    Audits.........................  Network Controls    Determining whether
                                      in Major NASA       controls in the
                                      Information         network
                                      Systems.            environment are
                                                          adequate to
                                                          protect against
                                                          unauthorized
                                                          access and
                                                          transmission
                                                          risks.
    Audits.........................  Systems             Evaluating control
                                      Development--Chec   issues associated
                                      kout and Launch     with: (1) project
                                      Control System.     management; (2)
                                                          systems
                                                          requirements
                                                          definitions; (3)
                                                          security
                                                          architecture and
                                                          requirements; and
                                                          (4) testing and
                                                          implementation of
                                                          application and
                                                          system software.
    Inspections....................  Use of COTS         Determining the
                                      Software in         cost, schedule,
                                      Ground Systems.     and operational
                                                          impacts of using
                                                          commercial-off-the-
                                                          shelf (COTS)
                                                          software in a
                                                          ground system.
    Inspections....................  Consolidated Space  To determine
                                      Operations          whether CSOC has
                                      Contract Security   anticipated
                                      (Carryover).        potential threats
                                                          and risks and has
                                                          solicited program
                                                          expertise from
                                                          appropriate ITS
                                                          and COMSEC
                                                          experts.
    Inspections....................  Computer Banner     To determine if the
                                      Inspection          requirement that
                                      (Ongoing).          banners be put on
                                                          NASA computers is
                                                          being followed.
    Inspections....................  Status of Johnson   To determine
                                      Space Center        whether NASA
                                      Station Program     management has
                                      Implementation of   accurately
                                      Communications      identified COMSEC
                                      Security (COMSEC)   and AIS
                                      and Automated       requirements
                                      Information         necessary for
                                      Security (AIS)      mission assurance
                                      Measures            and safe Space
                                      (Carryover).        Station
                                                          operations.
    Inspections....................  Hard Drive 99:      To determine
                                      Clearing            whether computers
                                      Controlled          in the process of
                                      Information from    being excessed
                                      Excessed Micro-     have been cleaned
                                      computers           of all data and
                                      (Ongoing).          software.
    Inspections....................  Information         To determine the
                                      Technology          minimum training,
                                      Security (ITS)      qualifications,
                                      Staff               and experience
                                      Qualifications.     necessary to
                                                          perform ITS
                                                          functions.
    Inspections....................  NASA's              To determine
                                      Communications      whether NASA's
                                      Security (COMSEC)   COMSEC program and
                                      Program.            its associated
                                                          organizational
                                                          structure are
                                                          adequate to ensure
                                                          compliance with
                                                          nationally
                                                          mandated COMSEC
                                                          policy.
    Inspections....................  NASA's Compliance   To determine if
                                      with the National   adequate COMSEC
                                      Policy on the       procedures and
                                      Application of      safeguards have
                                      Communications      been planned and
                                      Security to U.S.    applied.
                                      Civil and
                                      Commercial Space
                                      Systems.
    ------------------------------------------------------------------------

                                     ______

                     Questions Submitted by Senator Shelby

        Question. Mr. Goldin, I am pleased that we have a new director at
    the Marshall Space Flight Center. Art Stevenson is providing real
    leadership and has proven himself an effective advocate for a new space
    transportation system that can take the space program beyond the
    shuttle era. I believe we must focus now on the future, and I mean the
    future beyond the space station. We need to maintain our access to
    space after the shuttle wears out. Mr. Goldin, a new space
    transportation system requires a strong commitment from the NASA
    Administrator and the President. Do you think this country will see
    that kind of commitment in the near future?
        Answer. NASA spends a substantial portion of its annual budget to
    meet its launch needs. To lower these costs, the 1994 National Space
    Transportation Policy (NSTC-4) calls for ``government and private
    sector decisions by the end of this decade on development of an
    operational, next generation reusable launch system.'' NASA has set
    aside an outyear wedge of funding to support these decisions. NASA is
    also undertaking industry-led Space Transportation Architecture Studies
    to identify private sector options for reducing NASA's launch costs.
    These studies incorporate separate efforts being undertaken by NASA,
    DOD and industry including: Space Shuttle safety upgrades; X-33 and
    other NASA technology demonstrators (X-34, X-37, and X-38), the Evolved
    Expendable Launch Vehicle for the International Space Station. As part
    of the fiscal year 2001 budget process, the Administration intends to
    use the results of these studies and inputs to develop a strategy that
    encompasses the decisions, some near-term and some far-term, required
    to meet an end-date goal of transitioning all of NASA's launch
    requirements, including human space flight, to lower-cost, privately
    owned and operated space transportation systems. Decisions on future
    RLV funding, the transition from the Space Shuttle to privately owned
    and operated vehicles, private sector incentives, and related issues
    will be decided this fall in the context of this integrated space
    transportation strategy. Details will be provided in the fiscal year
    2001 budget submit.
        Question. Mr. Goldin, in your vision of the future, do you foresee
    a heavy launch vehicle for travel to planets such as Mars and beyond?
    What type of propulsion system do you envision for this vehicle?
        Answer. Per Section 3(a) of the Civil Space Guidelines in the 1996
    National Space Policy, ``the International Space Station will support
    future decisions on the feasibility and desirability of conducting
    further human exploration activities.'' NASA's human space flight
    programs are dedicated to completing development of the International
    Space Station before considering in detail systems for potential future
    human missions.
        Question. I realize the difficulty of trying to look a number of
    years into the future, but I think it is fair to ask what role you
    anticipate for the Marshall Space Flight Center in the development of
    new space transportation systems?
        Answer. Marshall is NASA's lead Center for space transportation
    technology and will play a central role in undertaking the development
    and demonstration of technologies to support continued launch cost
    reductions for NASA and other launch system users.
        Question. Mr. Goldin, like many others in this country who have an
    interest in seeing our space technology provide a boost to the
    commercial sector, I am concerned that we may be losing our commercial
    launch business to foreign competitors. As you look into your crystal
    ball, do you have a vision of how this nation can develop a viable and
    competitive low cost launch service to bring space launch business back
    to the United States?
        Answer. All of today's launchers are either totally expendable or
    partially expendable. Such systems require large workforces spread all
    over the country for manufacturing, shipment, assembly, test, and
    launch preparation. On the international marketplace, our systems are
    competitive, but not dominant, in such an environment. NASA's vision is
    to transition our human space flight requirements to fully reusable,
    privately owned and operated launchers. By opening NASA's human space
    flight market to commercial launch vehicles and with such advanced
    systems we can change the nature of the competition. We will not have
    to maintain the large expensive factories for continuous manufacture,
    assembly, and test of vehicles. Rather, our industry will have a huge
    advantage because it will only have to turn around a fully reusable
    vehicle between flights. Without the need for manufacturing, shipping,
    and assembling a new vehicle each launch, our industry will have a huge
    cost advantage.
        Question. Mr. Goldin, I am concerned that investment in space
    science research has been put on hold while NASA devotes its assets to
    completing the Space Station. Do you share my view that we need to
    continue investment in space science research while we are building the
    Space Station?
        Answer. The NASA Space Science Enterprise has a robust program
    spread across its four science themes: Astronomical Search for Origins
    and Planetary Systems, Solar System Exploration, Structure and
    Evolution of the Universe, and Sun-Earth Connection. The various
    programs in these themes have been extremely productive over the past
    few years, have yielded a wealth of new scientific discoveries, and
    have captured the imagination and interest of the American public and
    people around the world.
        NASA definitely believes that it is vital to maintain a robust and
    diverse Space Science program, while continuing its commitment to
    constructing the International Space Station. In fact, this year, NASA
    submitted a budget request that included a modest increase in Space
    Science. The favorable Space Science funding included in the Senate-
    House Conference on H.R. 2684, the fiscal year 2000 VA-HUD-Independent
    Agencies Appropriations Act, maintains the health of NASA's Space
    Science program and its ability to deliver the exciting, world-class
    science that the American taxpayer has come to expect.
        Question. Mr. Goldin, an area of your attention for some time has
    been in reducing the cost of going to orbit. Clearly this is an issue
    of national significance as we look toward the increased development
    and utilization of space. The DOD recently bought launch services from
    competing contractors rather than paying to develop and buy the launch
    vehicles themselves. Mr. Goldin, do you believe the next generation
    operational launch vehicle should be developed by the private sector or
    by the government?
        Answer. In order to focus our resources on science, technology, and
    exploration, NASA must turn over routine launch operations to the
    commercial sector. With the shuttle we have taken a first step in this
    move with the Consolidated Space Operations Contract. Additionally, we
    compete all of our robotic missions in the U.S. commercial launch
    marketplace. Both of these experiences have brought NASA savings in
    money and workforce. We are working to converge NASA's human space
    flight launch requirements with the commercial launch marketplace so
    NASA can get lower cost access to space and our commercial providers
    will have a larger market to service.
        The next generation operational launcher should be developed by the
    private sector in order to reap the benefits of this merging of NASA
    and commercial launch markets. However, NASA does have unique safety,
    reliability, and operational requirements, and we cannot jeopardize
    those requirements. Thus, while the launcher should be developed by the
    private sector, NASA may have to develop specific elements that satisfy
    our specific requirements. These might be a crew module, space taxi, or
    service modules for our unique requirements.
        Question. Mr. Goldin, to your knowledge will any of the reusable
    launch vehicle concepts currently under consideration replace the Space
    Shuttle in the next ten years?
        Answer. Our technology demonstration projects (X-33, X-34, X-37)
    have made immense progress. Depending on the continued success of these
    projects, we could see proven technology that could lead to a second
    generation Reusable Launch Vehicle within 10 years.
        Question. If so, which ones and under what schedule?
        Answer. NASA spends a substantial portion of its annual budget to
    meet its launch needs. To lower these costs, the 1994 National Space
    Transportation Policy (NSTC-4) calls for ``government and private
    sector decisions by the end of this decade on development of an
    operational, next generation reusable launch system.'' NASA has set
    aside an outyear wedge of funding to support these decisions. NASA is
    also undertaking industry-led Space Transportation Architecture Studies
    to identify private sector options for reducing NASA's launch costs.
    These studies incorporate separate efforts being undertaken by NASA,
    DOD and industry including: Space Shuttle safety upgrades; X-33 and
    other NASA technology demonstrators (X-34, X-37, and X-38), the Evolved
    Expendable Launch Vehicle for the International Space Station. As part
    of the fiscal year 2001 budget process, the Administration intends to
    use the results of these studies and inputs to develop a strategy that
    encompasses the decisions, some near-term and some far-term, required
    to meet an end-date goal of transitioning all of NASA's launch
    requirements, including human space flight, to lower-cost, privately
    owned and operated space transportation systems. Decisions on future
    RLV funding, the transition from the Space Shuttle to privately owned
    and operated vehicles, private sector incentives, and related issues
    will be decided this fall in the context of this integrated space
    transportation strategy. Details will be provided in the fiscal year
    2001 budget submit.
        Question. If not, what is NASA doing to maintain and upgrade the
    Shuttle to ensure the nation's investment is protected and human space
    access assured?
        Answer. In the interim, NASA will continue to make the safety
    upgrades necessary to keep the Space Shuttle safe and reliable.
                                     ______

                      Questions Submitted by Senator Craig

                                   education
        Question. There is currently much interest in education and how to
    improve it in our nation, especially in science, math, engineering, and
    technology-related fields. NASA has expertise in a number of these
    fields, and NASA projects capture the imagination of students. What is
    NASA's role in the effort to improve education in those areas critical
    to the U.S. maintaining its technological advantage, and how is that
    role expected to develop in the future?
        Answer. NASA is a mission Agency and uses its inspiring mission,
    unique world-class facilities, close working relationship with the
    research and development community, and specialized workforce to
    contribute to education improvement. Educational Excellence has been
    established as one of five national priorities to which NASA makes a
    significant contribution. Communicating knowledge to the educational
    community is embedded as a crosscutting process in all of NASA's work.
        There are three primary leadership strategies that are key
    components of NASA's role in educational improvement. These are: 1.
    Contribute to educational excellence by making a positive contribution
    to the goals of the educational community; 2. Develop alliances with
    key external constituencies to define, expand, and leverage our impact;
    and 3. Involve the educational community in the NASA mission.
        For the future, we have identified seven improvement initiatives.
    These are:
        1. Focus and Coordinate State-Based Efforts.--NASA's national
    Education Program is in one sense composed of 50 individual State
    programs. The reform of mathematics, science, technology, and geography
    in K-12 schools is inextricably linked to each State's higher education
    system and the States' agendas for economic development. Central to our
    State-based focus is the need for NASA to understand the State
    education agendas and place emphasis on coordinating our assets in a
    given State toward meeting that State's needs. By continuing existing
    and establishing new alliances, NASA seeks to connect NASA Principal
    Investigators, NASA-trained teachers, existing NASA education resources
    (for example, Educator Resource Centers and Space Grant Consortia), and
    commercial contractors with the State education leadership to determine
    how these assets may best be utilized within the State.
        2. Enhance Instructional Products and Dissemination.--NASA missions
    produce new data, images, and information that may be effectively
    included in textbooks, curricula, and supplementary instructional
    products. Working with professional education associations, State and
    local education authorities, universities, private enterprise, and
    other organizations, we will collaborate to develop instructional
    products consistent with the national curriculum standards and/or State
    or local curriculum frameworks. These products will be developed in
    multiple formats, with emphasis on innovative applications of
    educational technology and interactive strategies.
        3. Improve Education Program Integration and Coordination.--The
    NASA Education Program consists of many parts, which, when working
    together as a whole, can make a significant and positive contribution
    to the education community. The Implementation Plan is designed to
    ensure that the design, coordination, and implementation of NASA's
    numerous educational projects, programs, and activities achieve this
    vision of a single, unified Education Program.
        4. Facilitate NASA Research in the Higher Education Community.--
    Research relevant to NASA's four Strategic Enterprises is carried out
    primarily through NASA Strategic Enterprises, Field Centers, and the
    University community. However, some focused higher education programs
    are implemented by the Education Division and the Minority University
    Research and Education Division. Our goal is to streamline and focus
    these latter efforts so that they strongly support Agency research
    objectives as determined by the NASA Strategic Enterprises.
        5. Support Preservice Education.--Various national reports indicate
    that there will be a shortage of K-12 science, mathematics, and
    technology teachers over the next 5 years. Concomitantly, institutions
    responsible for training the next generation of teachers are aligning
    their preservice programs with new certification requirements and
    public policy expectations. While NASA's existing inservice programs
    need to continue at their present level, it is important for us to
    focus on new opportunities to support initiatives in the preservice
    area. NASA's significant investments in research and development with
    institutions of higher education provide a unique asset to consider in
    identifying such opportunities.
        6. Target Informal Education.--Museums, science and technology
    centers, and similar nonprofit education organizations support the
    formal education community and provide significant educational
    activities for learners of all ages. Most of these organizations are
    major community, regional, or national resources for science education.
    In addition, the informal education community has a tradition of
    presenting educational experiences using an inquiry, hands-on approach
    that is well aligned with the National Science Education Standards. We
    will work with and support these organizations.
        7. Implement NASA's Comprehensive Data Collection and Evaluation
    System.--In carrying out our aerospace mission, NASA strives to involve
    students and educators as both participants and partners. In conforming
    to the federal Government Performance and Results Act of 1993, NASA is
    committed to evaluating the performance of its programs and activities
    in order to report to the Congress and Administration and to provide
    for continual improvement of such involvement of the educational
    community in its missions, research, development, and achievements. To
    that end, the NASA Education Division is developing the NASA Education
    Evaluation System which includes an on-line, Internet based system for
    entry and collection of data from participants and program managers;
    follow-up studies; and briefing and statistical presentation materials
    to be used for analysis and reporting.
        Question. Half of the 20 EPSCoR states have never had a NASA grant.
    Idaho is one of the states which is eligible for NASA EPSCoR but which
    has never had an award. Our institutions believe that they are ready
    for an award and that they can develop expertise in a number of NASA
    research areas. Last year, Congress included $10 million to ensure that
    all eligible states receive funding, yet NASA persisted in awarding
    only limited planning grants to some states. How do you see those
    participating at a minimal level becoming more competitive? What is
    your vision for the future of this program, which basically helps
    nearly 40 percent of the state become more involved in NASA research
    activities?
        Answer. The $5 million increase in NASA EPSCoR funding enabled NASA
    to develop and implement a Preparation Grant Program for all 20 NASA
    EPSCoR eligible states, including Idaho. The Preparation Grant program
    was established as an interim program to allow all states the
    opportunity to initiate contacts, promote collaborative research
    programs with NASA Centers/Enterprises, and begin research activities
    in areas of strategic importance to the Agency. The Preparation Grant
    program was designed to increase the competitiveness of the EPSCoR
    states in anticipation of the rollout of the new NASA EPSCoR program in
    fiscal year 2001. We have enclosed a copy of the March 1999 EPSCoR
    Report to Congress that further outlines our plans for the new EPSCoR
    program.
        While the specific details of the new NASA EPSCoR program are still
    being developed, the program will require more direct connections and
    collaborations with NASA Centers than does the current NASA EPSCoR
    program.
        Question. Researchers at the University of Idaho have expertise
    which should be of interest to NASA in a number of areas, including
    lightweight materials (titanium) and remote sensing, yet we have found
    it difficult to become involved in NASA research. As noted above,
    EPSCoR appears to offer only a limited opportunity to do so. What are
    you doing and can you do to broaden opportunities for all parts of the
    country to participate in NASA missions and objectives?
        Answer. A number of NASA programs offer opportunities for states to
    become more involved in NASA missions and research activities.
        1. Research Opportunities.--NASA supports a comprehensive website
    that offers links to NASA Offices and Centers, and current research
    opportunities. Information can be found at the following web site:
    http://www.hq.nasa.gov/office/procurement/grants/#oss
        This is one of the best sources of information about areas of
    research that are important to NASA.
        2. Summer Faculty Fellowship Program.--Each summer, NASA awards
    research fellowships to university faculty through the NASA/American
    Society for Engineering Education (ASEE) Summer Faculty Fellowship
    Program. This program was designed to stimulate an exchange of ideas
    between university faculties and NASA scientists and engineers.
    Selected participants in fields of science, engineering, math, and
    other disciplines spend approximately 10 weeks working with their
    professional peers on research projects at NASA facilities. Addition
    information about this program can be obtained from the Education
    Division, NASA Headquarters, Code FE, Washington, DC 20546.
        Currently, at least one University of Idaho researcher is spending
    the summer at the Jet Propulsion Laboratory as part of the NASA/ASEE
    Summer Faculty Fellowship Program.
        3. Graduate Student Researchers Program.--The Graduate Student
    Researchers Program (GSRP) cultivates additional research ties to the
    academic community and provides support to promising students pursuing
    advanced degrees in science and engineering in areas aligned with
    NASA's Strategic Enterprises and Field Centers. Additional information
    can be obtained from the Education Division, NASA Headquarters, Code
    FE, Washington, DC 20546
        4. Reduced Gravity Student Flight Opportunity Program.--The reduced
    gravity student flight opportunity program is sponsored by NASA and
    administered by the Texas Space Grant Consortium. Through the Reduced
    Gravity program, teams of undergraduate students, working with
    university researchers, propose, design, fabricate, fly and assess a
    reduced-gravity experiment. The experiments are flown on NASA's KC-135
    aircraft that can simulate zero gravity conditions for up to 25
    seconds.
        In 1998 Idaho had two teams selected to participate in the Reduced
    Gravity Program, and each has successfully flown experiments on the KC-
    135. The Spring, 1998 University of Idaho team was sponsored by a
    faculty member in the University of Idaho Department of Mechanical
    Engineering. The Fall, 1998 team, also from the University of Idaho,
    conducted research in the field of advanced materials entitled
    ``Combustion Synthesis of Ceramic-Metal Composites in Microgravity''
    and was sponsored by the UI departments of Metallurgical Engineering,
    Chemical Engineering, and Electrical Engineering.
        5. NASA EPSCoR Preparation Grants.--The long term goal of the NASA
    EPSCoR Program is to develop research infrastructure in areas of
    strategic interest to NASA within states that have historically been
    unsuccessful in competing nationally for NASA funds. In 1999 NASA
    introduced the NASA EPSCoR Preparation Grant program. Funding from this
    program can be used in part to support the travel of State researchers
    to NASA field centers to interact directly with NASA engineers and
    scientists.
        In Idaho the 1999 NASA EPSCoR Preparation Grant program is
    currently funding the following projects:
    Cluster Grants ($25,000 each)
        Electro-Optic Holography and Passive Vibration and Acoustic
    Suppression Systems--Jonathan Blotter (ISU), Tony Anderson (UI) and
    Michael Anderson (UI)--collaboration with Langley Research Center.
        Intelligent Control of Nonlinear Dynamic Systems--Touraj Assefi
    (UI), Dean Edwards (UI), Joseph Feeley (UI), Desineni Naidu (ISU) and
    James Peterson (UI)--Collaboration with the Jet Propulsion Laboratory.
        Catalytic Ignitors for Clean-Burning, Flexible Fueled Aircraft
    Engines--Judi Steciak (UI), Dave McIlroy (UI), Steve Beyerlein (UI),
    Don Blackketter (UI)--Collaboration with Ames Research Center.
        Low Cost Synthesis of TiAl Base Intermetallic Compounds--Keith
    Prisbrey (UI), E. Baburaj (UI), S.B. Bhaduri (UI), S. Bhaduri (UI) and
    D. Bunnell (BSU)--Collaboration with Glenn Research Center.
        Survivability of Computer Systems in Hostile Environments--Deb
    Frincke (UI), Jim Alves-Foss (UI), James Foster (UI), Jeff Harkins
    (UI)--Collaboration with NASA Ames Research Center.
    Collaboration Development Grants ($4,000 each)
        Production of Alloys--Sam Froes (UI), V. J. Jabotinski (UI)--John
    Glenn Research Center--Collaboration with Glenn Research Center.
        Parallel Computing--Amit Jain (BSU), John Lusth (BSU), Robert
    Sulanke (BSU).
        Determination of Rates of Turbulent Diffusion--Solomon Leung (ISU)
    and G. E. Start (ISU)--Collaboration with Langley Research Center.
        NMR Imaging and Planametric Analysis of the Corpus Callosum
    Comparing Gifted Individuals with Control Groups--Tom McKean (UI) and
    Terry Armstrong (UI)--Collaboration with Ames Research Center.
        Development of Micropower Devices and Power Management Networks for
    Systems on a Chip for Space Applications--Siddhartha Duttagupta (BSU),
    J. R. Ferguson (BSU), S. B. Bhaduri (UI), N. I. Rafla (BSU), S. A.
    Parke (BSU), and S. Ahmed-Zaid (BSU)--Collaboration with the Jet
    Propulsion Laboratory.
        6. NASA Space Grant College and Fellowship Program.--The National
    Space Grant College and Fellowship Program was authorized by Congress
    in 1988 to utilize the nation's universities to help maintain the
    United State's capabilities in aerospace Science and technology. In the
    area of research the objective of the Space Grant program is to
    establish and maintain a national network of universities with
    interests and capabilities in aeronautics, space, and related fields,
    to encourage cooperative programs among universities, aerospace
    industry, and federal, state, and local governments, and to encourage
    interdisciplinary training, research, and public-service programs
    related to aerospace.
        As you can see, Idaho has participated in and benefited from many
    of these programs. In particular, over the past four years Idaho has
    been represented at NASA Headquarters by two Space Grant Fellows. Both
    Fellows are faculty members at the University of Idaho and have had
    significant involvement NASA's Education programs, specifically the
    NASA Space Grant College and Fellowship Program and NASA EPSCoR.
        Currently Dr. David Atkinson is the Space Grant Fellow in residence
    at NASA Headquarters, working primarily on the redesign of the NASA
    EPSCoR Program.
        We would be happy to further discuss these opportunities with
    members of your staff or the Idaho higher education community at an
    appropriate time.

                              subcommittee recess

        Senator Mikulski. This subcommittee stands in recess until
    Tuesday, at 9:30, when we will be listening to the National
    Science Foundation and the Office of the Science Advisor to the
    President.
        Mr. Goldin. Thank you.
        [Whereupon, at 11:02 a.m., Thursday, March 18, the
    subcommittee recessed, to reconvene at 9:30 a.m., Tuesday,
    March 23.]

     DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2000

                                  ----------

                            TUESDAY, MARCH 23, 1999

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:35 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Christopher S. Bond (chairman)
    presiding.
        Present: Senators Bond, Burns, and Mikulski.

                       EXECUTIVE OFFICE OF THE PRESIDENT

                    Office of Science and Technology Policy

    STATEMENT OF NEAL LANE, DIRECTOR

                          NATIONAL SCIENCE FOUNDATION

    STATEMENT OF RITA COLWELL, PH.D., DIRECTOR
    ACCOMPANIED BY EAMON M. KELLY, PH.D., CHAIRMAN, NATIONAL SCIENCE BOARD

                    OPENING STATEMENT OF CHRISTOPHER S. BOND

        Senator Bond. Good morning. The hearing of the Subcommittee
    on VA, HUD and Independent Agencies will come to order.
        The subcommittee meets today to review the fiscal year 2000
    budget request of the Office of Science and Technology Policy
    and the National Science Foundation. We welcome back former NSF
    Director, Dr. Neal Lane, now the President's Science Advisor
    and Director of OSTP. And it is a pleasure to welcome the new
    Director of the National Science Foundation, Dr. Rita Colwell.
    We are very pleased to have you with us. And we also thank Dr.
    Eamon Kelly, Chairman of the National Science Board, for
    joining us today.
        This is certainly one of the most distinguished scientific
    panels that we will have the opportunity in this committee, or
    perhaps any other, to listen to. So we are looking forward to
    the testimony this morning.
        We are happy to have the three of you here today, and we
    feel quite fortunate to have your expertise and perspective on
    the funding needs and priorities of NSF, as well as your views
    on the role of OSTP in formulating the science and research and
    development priorities of the Federal Government. I am very
    pleased to convene the hearing this morning on the Office of
    Science and Technology Policy and the National Science
    Foundation. Under both Senator Mikulski's leadership and mine,
    this subcommittee has been, we would like to think, a strong
    supporter of a Federal commitment and our role in the Nation's
    scientific endeavors.
        I believe we all agree that research and development is a
    positive and critical investment for the economic and
    intellectual growth and well-being of our Nation. I have to say
    this is one of the most exciting areas that we have to deal
    with. And certainly the work that is being done ought to be of
    great interest to all Americans who want to see us continue to
    make progress in the 21st century.
        First, I commend the continuing efforts of OSTP to provide
    policy leadership on the important issues facing the scientific
    community. And, at the same time, I commend NSF for pushing the
    boundaries of scientific research, and acting as the catalyst
    for new and exciting cutting-edge research.
        It is almost in its 50th year for NSF. And during that
    time, it has been responsible for numerous important scientific
    advances across many disciplines, ranging from information
    technology to biology. Science Magazine recently noted that
    NSF-supported research projects led to two of the most
    important scientific advances in 1998.
        One of those projects helps us better understand the
    origins of the universe. Specifically, NSF-supported
    researchers discovered that the expansion of the universe is
    actually speeding up instead of slowing down, as previously
    thought. The other research project uncovered new information
    about circadian rhythms, or internal clocks, which helps us
    better understand how genes function and react to the
    environment. This sort of information can be potentially
    applied to health care research. And I am hoping it will
    explain why an 18-year-old son of mine just cannot get out of
    bed on Saturday morning before 11 o'clock.
        NSF has also been a major driver of connecting high-speed
    computer networks to our educational institutions, which has
    been an area of interest to this subcommittee. I applaud NSF's
    recent efforts to fund new high-speed network connections. With
    these recent awards, institutions in every State, including
    those in remote areas such as Alaska and Hawaii, will be
    connected to the Internet. And on this committee, we think it
    is a really good idea to connect Alaska and Hawaii. It makes a
    lot of sense as far as we are concerned.
        As chair of this subcommittee, I will be particularly
    interested in exploring the Federal investment in
    biotechnology, particularly as it applies to the agricultural
    sector. I believe it is imperative for us to maintain the long-
    term sustainability and competitiveness of U.S. agriculture.
    And I strongly believe that plant genome research is vital to
    this effort.
        One example of the potential benefits of plant genome
    research is work being performed in my home State at the
    University of Missouri. Researchers at the University are
    looking at the gene selection in maize, and linking new
    information to a maize genome database. The benefits of this
    research will improve crop yields, reduce fertilizer
    requirements and produce better quality food.
        And, just incidentally, I was visiting some of the medical
    researchers, who were dealing with diseases affecting children.
    And they found that soybeans provided apparently some very
    beneficial treatment to children suffering from cystic
    fibrosis. And we hope when we get the genome mapped, we will be
    able to identify what it is that makes the soybean apparently a
    beneficial treatment for cystic fibrosis. So there are many
    exciting things going on there. And I know Dr. Colwell had the
    opportunity to visit the University a couple of weeks ago. And
    I want to learn more about your trip. And I thank you for
    coming. And I was certainly pleased to have Dr. Lane visit a
    couple of years ago.
        I am very pleased that the administration is proposing a $5
    million increase for the plant genome program. I think it is a
    good start. I know that I can count on both OSTP and the
    National Science Foundation to provide even greater support in
    this important area. Both agencies have requested additional
    funding for fiscal year 2000. OSTP's budget request totals $5.2
    million, and increase of $175,000 over last year's enacted
    level. NSF's budget request for fiscal year 2000 is $3.92
    billion, a $250 million, or 7 percent, increase over the fiscal
    year 1999 enacted level.
        I recognize that we are not far enough along in the budget
    process to have an allocation for this subcommittee, so it is
    premature for us to discuss absolute levels of funding that may
    be available for our science initiatives and efforts.
    Nevertheless, I must tell you, the reality is that this will be
    a very difficult year for the subcommittee.
        As I have told other agencies that have come before us, we
    have major funding needs, ranging from medical care for
    veterans to housing for low-income Americans, and disaster
    relief through the Federal Emergency Management Agency. We also
    know that under the budget caps established under the Balanced
    Budget Act, the Federal Government will have some $29 billion
    less to spend for discretionary activities in fiscal year 2000
    than what was available this past year.
        Our purpose today is to discuss the funding priorities of
    the Nation's scientific endeavors and how these priorities are
    reflected in OSTP and NSF's fiscal year 2000 budget request.
    The centerpiece of the President's R&D budget is a six-agency
    information technology initiative, dubbed Information
    Technology for the 21st century, or IT2. We have not
    exactly figured out how the IT2 worked in, but I
    will work on that.
        The President is proposing $366 million for the
    IT2 initiative in fiscal year 2000. He has also
    proposed to tap the NSF as the lead agency for the effort and,
    within the NSF budget, has asked for $146 million in additional
    funding. Although the goals of this initiative may be laudable,
    I have some questions about it.
        First, I need to understand how IT2 fits into
    the overall Federal information technology framework, and
    particularly how this initiative differs from other information
    technology efforts, such as last year's theme of Knowledge and
    Distributed Intelligence, and existing programs such as the
    High Performance Computing and Communications, or HPCC,
    program, the Next Generation Internet, or NGI, initiative. Both
    HPCC and NGI are heavily supported already by NSF and other
    Federal agencies, and would receive significant funding for
    fiscal year 2000 under the President's budget.
        Second, I am interested in learning how NSF and the
    administration, with OSTP as its lead, will manage this major
    initiative. IT2 seems to envision long-term, multi-
    researcher, large-sized grants, while the traditional NSF work
    has been with short-term, single-researcher, small-sized
    grants. That leads me to ask: Does NSF have the internal
    capacity to administer this kind of initiative, especially one
    that is more complex than what NSF has traditionally funded? I
    would be interested to hear how OSTP plans to oversee this
    initiative, as well.
        Last, I would like to know how committed the agencies and
    the scientific community are to the initiative. The President's
    5-year budget flat-funds NSF, and raises some serious questions
    about its commitment over the long term to IT2 and
    NSF. The President's special panel recommended a Strategic
    Information Technology Initiative, pointing out that while
    IT2 is a vital first step, further increased and
    continued oversight are needed to remedy the shortfall in long-
    term research investments that have accrued.
        Unfortunately, with the tight budgets our subcommittee is
    facing, there will be some very difficult choices. And I would
    be interested in hearing how the administration plans to deal
    with these realities. I am interested in the implementation of
    the Results Act, which requires agencies to think strategically
    about their goals and to measure performance against the goals
    they have set. We have to be responsible for the Federal
    dollars that we have.
        And I have one further issue concerning the subcommittee,
    which is the disparity in Federal research and development
    funding between large and small institutions. A recent NSF
    survey found that the top 50 recipients of university-based
    research received about 60 percent of all available Federal R&D
    funds. Many of them also received significant Federal resources
    to manage large research and development centers.
        I support the work of these large and successful
    institutions, but we have to find better ways to invest scarce
    Federal dollars throughout the country so that all areas of
    America can prosper. I do not want to see just the rich keep
    getting richer, even though other areas are being shortchanged.
        I recognize and congratulate NSF's attempts to address the
    problem with EPSCoR, but its funding is minimal compared to the
    budget of NSF. And I think that the initiatives are not enough.
    I look forward to working with you in addressing this problem.
        I am now going to turn the microphone over to my
    distinguished ranking member, Senator Mikulski. And, with some
    trepidation, I will turn the gavel over to my colleague,
    Senator Burns.
        Senator Burns. What does that mean?
        Senator Bond. That means I am nervous about it, Conrad.
        Senator Burns. Fear not.
        Senator Bond. And I have to do a brief interview and I will
    return very shortly. As always, we accept your full written
    statement. We will look forward to having the summaries that
    you wish to provide us. And we will obviously have an
    opportunity in the question-and-answer part of the program to
    discuss these further.
        So, with that, Senator Mikulski.

                    STATEMENT OF Senator BARBARA A. MIKULSKI

        Senator Mikulski. Thank you very much, Mr. Chairman. My own
    remarks are going to be brief, so we can move quickly to the
    witnesses.
        I want to, of course, welcome once again Dr. Neal Lane, now
    in his new position as the Science and Technology Advisor to
    the President. And a really warm and affectionate welcome to
    Dr. Rita Colwell, who was the lead at the University of
    Maryland in marine biotechnology.
        Senator Burns, you might find it interesting that our
    relationship goes back to the mid-1980's. I was on the Merchant
    Marine and Fisheries Committee, and chaired the Oceanography
    Subcommittee. And we held a hearing on the oceans and its
    future in a very new, emerging field called marine biotech. And
    now here we are, a decade later, where the United States of
    America is really the lead in the world in terms of
    biotechnology. And, of course, we rival our intellectual
    competitors around the world in marine biotechnology. Dr.
    Colwell comes with strong administrative skills and excellent
    idea.
        And, Dr. Kelly, of course, we are looking forward to
    hearing from you in terms of what the Science Board would
    advise us in terms of policy and direction and how we can set
    the priorities in our funding.
        Dr. Lane and others in the scientific community are long
    familiar with my comments that I have always been concerned
    that the United States of America wins the Nobel Prize and that
    other nations win the markets. And that is why I have
    encouraged the National Science Foundation and other agencies
    to focus on strategic national interest--not to have winners
    and losers in industrial policy, but to see where we were
    going.
        And I recall that there was a report called ``Losing
    Ground,'' by the National Competitive Council, which outlined
    the 20 technologies that would drive the 21st century, and
    where the United States of America was. And, of course, we were
    leads in infotech at the time, long before the world, and also
    in biotech. Well, I want us to continue to stay up there. But
    in order to maximize our resources, I do believe that we will
    be effective through interagency cooperation. And this is why I
    am so excited to learn more about the President's initiative
    for the Infotech 2 initiative. Because it will be a multi-
    agency and then, ultimately, a multi-disciplinary approach
    between Department of Defense, Energy, NASA, NIH, and NOAA.
        And, quite frankly, ladies and gentlemen of the panel and
    also in the audience, if I had my way on appropriations, we
    would have a separate subcommittee just on science and
    technology. Because it is what my dear colleague, Senator Bond,
    has said--while we are looking at the educational and work
    force needs of the future, we are also going to be foraging for
    how to change the very nature of public housing and meet our
    commitments to the veterans. And while we want to move ahead on
    your biodiversity initiative, or certainly consider it very
    carefully, we have EPA that, through this Congress, cannot even
    get its Superfund legislation authorized.
        But the idea of interagency work really appeals to me. And
    what I want to hear is will the new initiative--are the funding
    request, number one, adequate? Number two, will we end up
    starving other programs that are already funded at a basic
    level, so that new initiatives, with glitz and promise, are not
    funded at the expense of those things that are part of our
    traditional must-do list? And then, what this will also mean in
    terms of work force readiness.
        I really want America to come up with the new ideas that
    the private sector can develop into new products that create
    new jobs. But everywhere I travel in my State, and as we meet
    with national leaders, there is a work starvation, if you will,
    a work force deficit, in terms of people who are ready for the
    new economy. And of course I think everyone knows my own
    longstanding, life-long work about the concern about people who
    are always left out and left behind.
        And I am concerned that as we move ahead into the dazzling
    future of information technology and how it will help even
    other science that, as Bill Gates says, we will create a
    digital divide between those who are either in it or those who
    are not. And I want to be sure that Americans are not left out
    or left behind, and that no group of Americans is left out or
    left behind.
        So, we will be interested to see what that coordination
    means. And we will be able to ask more of those questions, and
    then, even specific things related to interagency coordination.
    Both NOAA and FEMA have talked about the need for new maps.
    FEMA wants to map the vulnerable areas of the United States,
    particularly in flood-prone areas. Dr. Colwell, you know what
    happened in western Maryland and the task force I have with
    Governor Glendening. But there are certain areas of our
    country--Missouri has faced it too--where because of flood-
    prone, we have already literally and figuratively, financially,
    and through engineering, bailed out communities, only to have
    them re-flooded again.
        So FEMA came in, wants money to fund it, and we said, Well,
    cannot you get this from NASA? Then NOAA is going to also do
    mapping. And what we are saying is, Gee, we have got LANDSAT,
    we have got all this, are we creating data mortuaries or are we
    creating data opportunities? And how can there be cross-work,
    say NASA with FEMA, NASA with NOAA? Because those products,
    that mapping, you know the genius of the private sector, they
    will value-add it. They will be able to perhaps sell it. We
    have the Great Lakes model as an example.
        We are looking at how to get more bang from our buck
    through interagency cooperation, meet compelling human need,
    fund the basic programs, and get ready for the future. So we
    are interested in hearing from your testimony on how we can do
    it.
        So, with that, Mr. Chairman--Senator Burns is still holding
    the gavel, but I will yield the floor.
        Senator Bond. Senator Burns, would you like to use the
    gavel?
        Senator Burns. I wonder, we walked through that whole thing
    over there, Senator Mikulski. Do you need some wolves? I am
    trying to sell wolves this morning.
        Senator Mikulski. You have to know, Senator, I grew up in
    Baltimore, and there is a neighborhood called Fells Point. Now,
    the interesting thing about Baltimore is I represent more Nobel
    Prize winners than Teddy Kennedy. But I also have more bars in
    it than Boston. So I know all about wolves. [Laughter.]
        Senator Burns. Do you want to trade? We balance it out.
    [Laughter.]
        Senator Mikulski. Well, they are a little bit bigger than 3
    feet, anyway.

                       STATEMENT OF Senator CONRAD BURNS

        Senator Burns. Thank you, Mr. Chairman. And I was listening
    with quite a bit of interest to Senator Mikulski's statement.
        I want to review a few things as we work on this
    appropriation. Thank you, Drs. Lane, Colwell and Kelly, for
    coming this morning.
        I want to talk about a little program that has been around
    a long time, and that is EPSCoR. It is between $43 million and
    up to $63 million, I suppose, that is divided among 18 States.
    And if there is a success story about a program that has come
    of age, it is this one. Let me tell you some exciting things
    that happened in my State, because EPSCoR allowed smaller
    States to invest in their R&D and their infrastructure in which
    to perform R&D.
        And most of ours has been done in the area of dinosaurs,
    Senator Mikulski. Jack Horner, one of the leading researchers
    on dinosaurs and how they behaved and survived over 140 million
    years ago, is internationally known. And that is at Montana
    State University.
        But also EPSCoR has helped to attract several other
    neuroscience researchers, who have researchers, who have
    created a Center on Computational Biology, and recently won the
    Integrated Graduate Education Research and Training Award from
    the NSF. Several young faculty, initially supported by EPSCoR,
    have gone on to be recognized around the world and have started
    new careers through those awards.
        With EPSCoR funding, we have started an exciting program to
    examine life in the extreme thermal environments of Yellowstone
    Park. Not only can this research tell us about the origins of
    life, but also about how it may lead to new pharmaceuticals and
    new industrial chemicals. This is an especially exciting
    project.
        I encourage you to make a special trip to Montana just to
    review what they have done. From beginning to end, I think you
    will agree with me that it has been sort of one of those things
    that we have gone into not knowing really what was ahead of us
    and found out that there is quite a lot. We did not know what
    was in those boiling pots or those hot pools and how it may
    sustain life under very, very difficult conditions.
        In 1998, four students from Montana State University won
    the Goldwater Scholarships, America's premier undergraduate
    science award. Each was involved in MSU's undergraduate
    research programs supported by EPSCoR. So, if we are looking
    for a place where we get a lot of bang for the buck, it is this
    tiny, little program administered by NSF that has really done
    the job.
        We have believed in that program from the very first.
    Montana and other rural States have been included in the VBNS
    connections program, also provided by EPSCoR supplement. High-
    speed Internet connectivity is critical to States with
    dispersed populations, like Montana. With these connections, we
    can be full partners in the research community in the Nation
    and provide our students with full access to educational
    materials and opportunities.
        Laser Products, in Bozeman, Montana, now employs over 200
    people. And those industries have grown up around Bozeman
    because of the collaborations with MSU. These are contributing
    to economic prosperity in the community and also providing jobs
    for graduates. In fact, Bozeman is quickly becoming recognized
    as one of the Nation's emerging research regions.
        So I am very proud of what EPSCoR has done. And just like I
    say, it is a tiny, tiny, little part of what you do, but it has
    had huge impacts on States like Montana, Wyoming, the EPSCoR
    States, which before had never gotten any recognition for the
    work they have done in research and development. And so I am
    very proud of how that program has grown. We have kept tight
    control on it. It is not that expensive. But the impact on
    smaller States has really been something. So, I thank you for
    that.
        Mr. Chairman, that is the only statement I have. I welcome
    our guests today. And as Senator Mikulski was alluding to, we
    do have--over on the Commerce Committee, it was my privilege
    and honor to serve on Science and Technology and NASA, on the
    authorizing committee. So it has been really, really something
    to watch as we have taken these small products and have done
    great things. So I appreciate the opportunity of visiting with
    Dr. Lane. We have been friends a long time. And I do not think
    there is anybody in this country more dedicated to research and
    development and the well-being of our investment in those
    fields than the folks we have before us today.
        I thank you, Mr. Chairman.
        Senator Bond. Thank you, Senator Burns. I can tell you, it
    is a real pleasure for us to have someone with your expertise
    from the authorizing committee to be on this subcommittee with
    us. And I would certainly second your comments about Dr. Lane,
    Dr. Colwell and Dr. Kelly. And we look forward to hearing from
    them now.
        We would ask that you try to summarize your statements in
    10 minutes or less. You can take less if you wish. And we will
    make the full statements a part of the record.
        Dr. Lane.

                             statement of neal lane

        Dr. Lane. Thank you, Mr. Chairman, members of the
    committee. I am pleased to appear before you today. My written
    testimony describes the Office of Science and Technology
    Policy's, OSTP's, budget request for fiscal year 2000, and also
    provides some highlights of the national science and technology
    enterprise during 1998, and the administration's fiscal year
    2000 R&D budget request. And I would ask that it be included
    for the record.
        Senator Bond. Without objection, it will be.
        Dr. Lane. I also wish to thank the committee for its strong
    support of science and technology, and NSF, which I have
    particularly appreciated during the time I have been privileged
    to serve as Director.
        As you know, OSTP plays a vital role in leveraging the
    government's S&T investments for broad national goals. Support
    for such investments has traditionally been a matter of
    bipartisan agreement. And I believe it is imperative that we
    build common ground to support a shared vision, the commitment
    to keep America the world's leader in science and technology.
        OSTP has four main functions. We advise the President and
    other senior Administration officials about the impacts of
    science and technology on public policy and vice versa. We
    coordinate the work of the R&D agencies to ensure we get the
    biggest bang for the science and technology buck. We promote
    strategic partnerships among science and technology
    stakeholders--State and local government, industry, academia,
    and various international players. And we report on what we
    have learned through all these efforts. Last year, OSTP
    shepherded 11 multi-agency reports through the National Science
    and Technology Council, and seven reports and letter reports
    through the President's Committee of Advisors on Science and
    Technology.
        An example that provides a sense of the breadth of OSTP's
    influence is our work on the Administration's Initiative on
    Information Technology for the 21st century. And, Mr. Chairman,
    IT2 is a little confusing and we maybe overreached
    with that title, but the second ``t'' is the ``t'' in twenty-
    first.
        Senator Bond. What is the second ``i''? That is what
    bothers me.
        Dr. Lane. We do not have a second ``i.'' [Laughter.]
        Senator Bond. Okay.
        Dr. Lane. We just have one ``i.''
        Senator Bond. Okay. [Laughter.]
        Dr. Lane. The initiative, we believe, responds to a wake-up
    call from the congressionally chartered President's Information
    Technology Advisory Committee, known as PITAC. OSTP was
    instrumental in getting PITAC established. We also work closely
    with members of PITAC to make sure that its work was useful to
    the Federal agencies, while also challenging those agencies to
    think outside the box about their responsibilities and the
    possibilities for information technology research.
        Once we had the recommendations from PITAC, OSTP pulled
    together the Federal agencies to develop a response. And we
    ultimately concluded that information technology is so
    important that we are proposing a new Federal R&D investment of
    $366 million in fiscal year 2000, a 28-percent increase above
    and beyond our ongoing research programs.
        Out of this total, Mr. Chairman, $184 million--half of the
    initiative--comes through your subcommittee. To develop this
    initiative, we worked with the agencies to examine the existing
    information technology research programs--of which there are
    several--to determine just how we could leverage them for the
    best returns of this new investment, particularly responsive to
    this advisory committee's recommendations.
        We decided to make these new investments in three major
    areas. First, about two-thirds of the new funding--$228
    million--will support long-term, fundamental research, aimed at
    fundamental advances in computing and communications.
        The second element is $123 million to support advanced
    computing infrastructure--the machines and the software and the
    capability--as a tool to facilitate important scientific and
    engineering discoveries of national interest. The resulting
    supercomputer infrastructure will be orders of magnitude more
    powerful than that currently available to the civilian science
    community.
        Third, $15 million in new funding will greatly expand
    research into the social, economic and work force impacts of
    information technology, including the transformation of social
    institutions, the impact of legislation and regulation,
    electronic commerce, the barriers to information technology
    diffusion, and the effective use of technology in education.
    This element will emphasize finding ways to ensure that all
    Americans have the education they need to take advantage of the
    large numbers of high-wage jobs created in the new economy.
        One area that highlights the importance of these three
    areas is our ongoing work on the human genome. By providing
    fundamental advances in computing, the initiative will enable
    progression from sequencing of the human genome all the way to
    the design of new drugs. It will also enhance our ability to
    address the important social issues that are raised by these
    breakthrough discoveries, such as genetic privacy.
        IT is our largest R&D initiative for fiscal year 2000, but
    OSTP also played a critical role in developing coordinated
    interagency budgets and policies in the area of plant genome,
    food safety, emerging infectious disease, sustainable
    development, critical infrastructure protection, education
    research, and others.
        I ask you today, Mr. Chairman, for your continued support
    of OSTP's role in coordinating science and technology policy
    for the executive branch and for our Nation at large. OSTP's
    budget request of $5.2 million, and 40 FTE's, for fiscal year
    2000 represents an increase of budget authority of less than
    3.5 percent, and an increase of one person--one in the FTE
    level. These additional resources are essential to continue to
    provide the highest quality of work across our broad spectrum
    of responsibilities.
        Mr. Chairman and members of the committee, I hope this
    brief overview, combined with my written statement, has
    conveyed to you the extent of this Administration's commitment
    to advancing science and technology in the national interest
    and the importance of OSTP's role in that enterprise.
    Regardless of party affiliation, in the end, we can all agree
    that investments in science and technology are investments in
    the Nation's future.
        I look forward to achieving bipartisan support for a
    national science and technology strategy that will combine the
    resources of industry, academia and nonprofit organizations,
    and all levels of government to advance knowledge, to promote
    education, to strengthen institutions, and to develop human
    potential. I ask not only for your support for OSTP's fiscal
    year 2000 budget request, but I also want you to know how much
    I appreciate the longstanding bipartisan support of the
    committee for OSTP and for the science and technology research
    enterprise.

                               prepared statement

        I will be happy to answer your questions. Thank you very
    much.
        Senator Bond. Thank you, Dr. Lane.
        [The statement follows:]
                        Prepared Statement of Neal Lane
        Mr. Chairman, Members of the Committee, I am pleased to appear
    before you today to discuss the Office of Science and Technology
    Policy's (OSTP) budget request for fiscal year 2000.
        I very much welcome, and am encouraged by the current efforts in
    Congress in support of science and technology (S&T) funding. As you
    know, funding for S&T, like funding for education, is a high leverage
    investment in our continued quest for peace and prosperity. Support for
    such investments has traditionally been a matter of bipartisan
    agreement. It is imperative that we build common ground in support of a
    shared vision--a commitment to keep America the world's leader in S&T.
        As we approach the turn of the century, it seems appropriate to
    take stock of the Nation's S&T enterprise, and to look to the future--
    to the opportunities that lie ahead as well as the challenges that we
    face. The Information Age, driven by rapidly advancing S&T, is bringing
    changes to our society that are only beginning to unfold. Already, new
    communications technologies are transforming the way we work, where we
    work, and what we need to know to be successful in tomorrow's
    competitive environment. Six years ago, ``Internet'' was still a word
    known mostly to those in S&T. Today, this offspring of federal research
    activities is the backbone of a new industry and a window to a
    tremendous world of information for all segments of our society, from
    business executives to school children.
        The rapid economic growth of other nations means a future with
    greatly expanded markets for U.S. goods and services. Our ability to
    move our ideas, our goods, and ourselves swiftly to any place on the
    planet, with the help of new technologies, enhances our ability to
    share in the growth of global wealth. On the other hand, the increasing
    availability of these same capabilities throughout the world also means
    greater competition; it means increasing pressures on our shared
    environment, health, and natural resources; and it means more diverse
    dangers to our security from threats such as terrorism and the spread
    of nuclear and other materials of mass destruction.
             driving economic growth and improving quality of life
        Sustaining U.S. leadership in science and technology has been a
    cornerstone of President Clinton's economic and national security
    strategy. Investments in science and technology--both public and
    private--have driven economic growth and improvements in the quality of
    life in America for the last 200 years. They have generated new
    knowledge and new industries, created new jobs, ensured economic and
    national security, reduced pollution and increased energy efficiency,
    provided better and safer transportation, improved medical care, and
    increased living standards for the American people.
        Our economy has never been more driven by science and technology
    than it is today. Over the past three years, information technology
    (IT) alone has accounted for more than one-third of America's economic
    growth. More than 7.4 million American's work in IT today--and those
    jobs pay, on average, sixty percent higher than the average job. Alan
    Greenspan recently stated that rapid technological change has greatly
    contributed to eight years of record peacetime expansion, and is one of
    the forces producing what he called ``America's sparkling economic
    performance.''
        Investments in research and development are among the highest-
    payback investments a Nation can make. Over the past 50 years
    technological innovation has been responsible for as much as half of
    the nation's growth in productivity.\1\
    ---------------------------------------------------------------------------
        \1\ Supporting and Development to Promote Economic Growth: The
    Federal Government's Role The Council of Economic Advisers, October
    1995.
    ---------------------------------------------------------------------------
        We see the fruits of this innovation every day. Many of the
    products and services we have come to depend on for our way of life in
    America--lasers, computers, magnetic resonance imaging (MRI), teflon
    and other advanced materials and composites, communications satellites,
    jet aircraft, microwave ovens, solar-electric cells, modems,
    semiconductors, storm windows, human insulin, and others--are the
    product of U.S. science support and technology policies.
        These innovations also mean jobs and economic prosperity for
    America. They've built some of these key industries:
        Computers and Communications.--A creative partnership among the
    Federal agencies, industry, and academia led to what has become the
    Internet, the backbone of a global electronic communication system. The
    Internet has driven the evolution of a $590 billion domestic
    telecommunications and information technology industry, which supports
    millions of high-paying American jobs. In just the past 10 years,
    American employment in the computer and software industries has almost
    tripled. Market capitalization of the top five companies alone is over
    $600 billion.
        Biotechnology.--Discoveries in biology, food science, agriculture,
    genetics, and drugs upon which the private sector has been able to
    build and expand a world-class industry today support $13.4 billion in
    annual sales and more than 150,000 American jobs.
        Aerospace.--Aerospace leads all other industry sectors in net
    exports. The latest figures show the U.S. Aircraft industry shipped
    nearly $40 billion worth of commercial aircraft and employed more than
    half a million people.
        Environmental Technologies.--Almost unheard-of 10 years ago, more
    than 30,000 environmental technology and services businesses employ
    over 1.3 million Americans in high-growth, high-wage jobs. The
    environmental technology industry has annual sales over $186 billion, a
    number that is expected to grow to $214 billion by the year 2002.
        Energy Efficiency.--Technology advances, developed in part through
    public-private partnerships, have cut refrigerator energy consumption
    from 1900 kWh/year in 1974 to an average today of less than 650 kWh/
    year, reducing consumer electricity costs by $100/year per
    refrigerator. A partnership with the glass industry led to the
    development of the oxygen-fueled glass furnace, which in just 8 years
    has captured 30 percent of U.S. glass production and provides annual
    net energy savings of $11 million. Geothermal heat pumps (GHP) reduce
    energy consumption by 63-72 percent compared to electric resistance
    heaters/standard air conditioners. Some 400,000 GHPs are now in use in
    the U.S., with estimated annual savings of $120 million to $160
    million.
        Every one of these industries has been built on federal investments
    in R&D, and they are not isolated occurrences. From satellites, to
    software, to superconductivity the government has supported--and must
    continue to support--exploratory research, experimentation and
    innovation that would be difficult, if not impossible, for individual
    companies or even whole industries to afford.
    Recent Advances in Science and Technology
        Over the past year there have been numerous scientific and
    technological advances, reminding us of how much there is yet to know,
    and of the potential of S&T to further enrich and improve our lives. It
    is important to note that federal funding was a key to virtually all of
    the scientific breakthroughs of 1998, which included:
      --The accelerating universe.--Evidence of a rapidly expanding
            universe and the resurrection of Einstein's ``cosmological
            constant'', has transformed our view of the universe and posed
            fundamental new questions for physics.
      --Detailed workings of the cellular clock.--A number of discoveries
            revealed the remarkable universality of the clock workings:
            across the tree of life, from bacteria to humans, clocks use
            oscillating levels of proteins in feedback loops to keep time.
            Even more remarkable, fruit flies and mice--separated by 700
            million years of evolution--share the very same timekeeping
            proteins. By understanding the clock better, scientists can now
            begin to manipulate it, working on curing jet lag to
            brightening winter depression.
      --Analyzing and comparing whole genomes.--Researchers for the first
            time finished a complete sequence of a multicellular organism,
            as well as several feared microbes, bringing the total number
            of fully sequenced genomes to nearly two dozen. This year's
            newly completed microbrial genomes include those of some of
            humankind's worst enemies: the bugs for syphilis, tuberculosis,
            and typhus, as well as a Chlamydia, which causes venereal
            disease and blindness. The genomes reveal proteins unique to
            these pathogens, molecules that may be targets for drug or
            vaccine development.
      --A new look at space.--This year scientists provided the first image
            of a planet outside our solar system; evidence of ice on the
            moon; measurements of the largest explosion since the Big Bang;
            detailed study of Mars; and images of sun quakes and matter
            being consumed by black holes.
      --New insight into the nervous system.--A landmark discovery reveals
            for the first time physical characterization of the membrane
            protein responsible for the selective movement of potassium
            into and out of cells. This finding provides new insight into
            understanding the workings of the nervous system.
      --Evidence that neutrinos have mass.--Research showed that the
            subatomic particles known as neutrinos, long assumed to lack
            both charge and mass, do indeed have mass.
      --Quantum teleportation.--Physicists boldly went where no one has
            gone before, turning teleportation at the quantum level into
            lab reality by teleporting quantum information from the nucleus
            of a carbon atom to that of a neighboring hydrogen atom. This
            transmission of information between ions lies at the heart of
            quantum computing, which offers the prospect of lightning-fast,
            superparallel calculations.
      --Microchips make advances.--Researchers created a DNA-processing
            micromachine which may one day be able to sequence DNA.
            Researchers also developed a biochip that can screen a blood
            sample for cancer cells, bacteria, or other cell types and
            remove their DNA for analysis. Researchers are also using DNA
            chips themselves, where arrays of immobilized DNA snippets are
            used to search out small genetic variations in genes or to
            detect RNA messages from the genes turned on in cells. Such
            chips could one day screen for genetic disease.
      --Cancer prevention and treatment.--The war against cancer goes on,
            but physicians now have a few new weapons to fight with.
            Tamoxifen, an estrogen-like molecule, already in use as a
            breast cancer treatment, won approval for prevention in high-
            risk women, and researchers announced that the antibody
            Herceptin significantly slows the growth of metastatic breast
            cancer.
      --Infections and autoimmune disorders.--Scientists convincingly
            linked infections and autoimmune disorders, paving the way to
            better understanding and treatment of diseases such as diabetes
            and multiple sclerosis.
      --Hydrogen.--Scientists developed a device to turn water and sunlight
            into hydrogen. This simple new device holds great promise for
            producing a non-polluting fuel to run internal combustion
            engines. Fuel cells using hydrogen can be used to power
            vehicles, and provide heat and electricity for commercial and
            residential buildings.
    President Clinton's Fiscal Year 2000 R&D Budget
        The President and the Vice President remain unwavering in their
    support for science and technology as crucial investments in our
    future. They maintain that such investments enable our nation to
    compete aggressively in the global marketplace, protect our environment
    and manage our natural resources in a sustainable manner, safeguard our
    national security from emerging threats, and spur the technological
    innovation that has contributed so much to our economic prosperity and
    quality of life. They have brought the budget into balance. They have
    increased the investment in science and technology. We all, but
    especially our children and our grandchildren, will reap the rewards.
        President Clinton has submitted a balanced budget request to
    Congress for fiscal year 2000. Despite the tight constraint on
    discretionary spending, fiscal year 2000 is the seventh year in a row
    that the President has proposed increased investments in civilian
    research and development--to a total of $39.8 billion. Civilian R&D now
    constitutes 51 percent of the overall R&D budget of $78.2 billion.
        The fiscal year 2000 budget continues the important R&D trends
    established by this Administration. It boosts funding for basic
    research to $18.2 billion, an increase of 4.2 percent ($727 million)
    over fiscal year 1999. The budget also strengthens university-based
    research, which increases by $353 million, and reflects an effort to
    reestablish an optimum balance between health care research and other
    scientific disciplines.
        The 21st Century Research Fund continues to be the centerpiece of
    the President's R&D investment strategy. This year the Research Fund
    includes DOD basic and applied research programs, further evidence of
    the Administration's commitment to effective integration of the
    Nation's university-based research portfolio. The $38 billion Research
    Fund grows by 3 percent in fiscal year 2000 and provides for overall
    stability and for growth in the highest priority research programs.
        The proposed R&D investments will enable the S&T agencies to
    achieve the President's goals for science and technology: promote long-
    term economic growth that creates high-wage jobs; sustain a healthy,
    educated citizenry; harness information technology; improve
    environmental quality; enhance national security and global stability;
    and maintain world leadership in science, engineering, and mathematics.
    For example:
      --National Institutes of Health (NIH).--Keeping pace with the
            Administration's ambitious goal last year for progress in
            biomedical research, the budget includes a 2 percent ($320
            million) increase. These investments will allow continued
            progress on diabetes, brain disorders, cancer, genetic
            medicine, disease prevention strategies, and development of an
            AIDS vaccine.
      --National Science Foundation (NSF).--The budget provides $3.92
            billion (a 7 percent increase) for NSF's broad base of support
            to all fields of scientific study. The budget provides $146
            million for NSF to lead the Administration's Information
            Technology in the 21st Century (IT\2\) initiative and also
            increases funding for biocomplexity research on biological,
            physical, chemical, and social interactions in Earth's
            ecosystems.
      --Department of Energy (DOE).--The budget provides $2.84 billion (a 6
            percent increase) for basic science programs at DOE. The budget
            includes resources for basic research as well as continued
            support for construction and operation of large scientific user
            facilities, including the Spallation Neutron Source. DOE's
            participation in IT\2\ ($70M in fiscal year 2000) will help to
            accelerate scientific discovery and research.
      --Department of Defense (DOD).--The budget provides $1.1 billion in
            basic research, $3 billion in applied research, and $3.3
            billion in advanced technology development. Research on
            counter-terrorism and on improvements in the safety and
            security of the Nation's physical infrastructure and
            information and communications systems receives a targeted
            increase.
      --National Aeronautics and Space Administration (NASA).--The budget
            provides $2.48 billion for the International Space Station (an
            8 percent increase). NASA's budget also includes $2.2 billion
            for Space Science (a 4 percent increase over fiscal year 1999);
            and $1.46 billion for Earth Science (a 3 percent increase).
      --Department of Agriculture (USDA).--The budget provides a 3.5
            percent increase, $837 million, for the Agricultural Research
            Service. The Cooperative State Research, Education and
            Extension Service National Research Initiative--which provides
            competitive grants in areas of national concern such as food
            safety, the environment, plant and animal research, and human
            nutrition--receives a 68 percent increase to a total of $200
            million. Funding for the Forest Service increases 19 percent to
            $235 million in support of ecosystem and global change
            research.
      --Department of Commerce (DOC).--The budget includes $918 million in
            the 21st Century Research Fund at DOC. It provides $239 million
            (an 18 percent increase) for NIST's Advanced Technology Program
            to promote unique, rigorously competitive, cost-shared R&D
            partnerships. It also provides $283 million to NOAA for
            research to support decisionmaking on climate change, air
            quality, and ozone depletion.
      --Department of the Interior (DOI).--The budget provides $838 million
            (a 5 percent increase) to USGS for science that supports
            national resource and environmental decisionmaking. The budget
            also supports research and technical assistance on the
            scientific needs of land managers and local land use planners.
    Interagency Initiatives
        The budget increases investment in national priorities requiring
    multi-agency investments. For example:
      --High Performance Computing and Communications (HPCC) and the
            Information Technology Initiative (IT\2\).--The budget provides
            a total of $1.8 billion for these programs. IT2, which responds
            to the recommendations of the President's Information
            Technology Advisory Committee to increase funding for
            fundamental, long-term research, advanced applications, and
            research on the economic and social implications of information
            technology, is funded at $366 million (a 28 percent increase)
            in fiscal year 2000.
      --Climate Change Technology Initiative.--The budget provides a 34
            percent increase for this initiative, which includes $1.4
            billion in R&D on energy efficiency, renewable energy, carbon
            sequestration, and improvements in nuclear and fossil
            technologies. The initiative also provides $400 million in tax
            credits to stimulate adoption of energy efficiency
            technologies.
      --U.S. Global Change Research Program.--The budget provides $1.8
            billion (a 6 percent increase) to observe, understand, predict,
            and assess the state of the Earth and how it changes in
            response to natural and human-induced forces.
      --Partnership for a New Generation of Vehicles (PNGV).--The budget
            provides $264 million (a 10 percent increase) for this cost-
            shared, industry partnership. PNGV aims to develop affordable
            cars that achieve up to three times the fuel economy of
            comparable vehicles and meet all applicable emission and safety
            standards.
      --Education Research Initiative.--The budget provides $50 million
            ($25 million at NSF and $25 million at ED) to support large-
            scale, interdisciplinary research in three key areas: school
            readiness for learning reading and mathematics; K-3 learning in
            reading and mathematics; and education of PreK-12 teachers in
            mathematics, reading, and science.
    Private Sector Stimulus
        The budget provides $2.4 billion to extend the Research and
    Experimentation (R&E) tax credit until June 30, 2000. The R&E credit
    helps stimulate additional private sector investment in research and
    development which encourages technological advancement, leading to
    higher productivity, and helping to generate new American jobs.
                                the ostp mission
        In support of our Nation's science and technology priorities, OSTP
    has two primary responsibilities: advising the President on S&T; and
    providing leadership and coordination for our government's role in the
    national S&T enterprise.
        In the 1950's, in response to Soviet advances, highlighted by the
    launch of Sputnik, President Eisenhower saw the need for expert S&T
    counsel, and he invited James Killian, then president of MIT, to
    Washington to serve as the head of the first President's Science
    Advisory Committee, an OSTP predecessor. Since then our Nation's
    Presidents have drawn on the expertise of our office for S&T policy
    advice, and I see this as a contribution that will continue to grow in
    value as the challenges we face become increasingly complex.
        Within our agency, a small staff of professionals analyzes
    developments at the frontiers of scientific knowledge, and aids the
    President in shaping policy. OSTP also provides scientific and
    technical information and recommendations to the Vice President, the
    White House Offices, the Executive Branch Agencies, and to Congress.
        A second responsibility of OSTP is to provide leadership and
    coordination across the Administration. OSTP plays this role for a
    range of Administration priorities, including national security and
    global stability, environment, science, and technology. The National
    Science and Technology Council (NSTC) has been an invaluable partner
    with OSTP in developing interagency evaluations and forging consensus
    on many crucial S&T issues.
    OSTP Budget Request
        I ask today for your continued support of OSTP's role in
    coordinating S&T policy for the Executive Branch and for our Nation at
    large. OSTP's budget request of $5,201,000 for fiscal year 2000
    represents an increase in budget authority of less than 3.5 percent and
    an increase of one in the FTE level from 39 in fiscal year 1999 to 40
    in fiscal year 2000. This request will allow OSTP to fulfill its
    responsibilities in a White House that emphasizes the importance of
    science and technology in national and international affairs.
        After freezing our requests at the fiscal year 1996 enacted level
    for two consecutive years, this increase is essential to continue to
    provide quality support to the President and information to the
    Congress. Since personnel costs constitute the largest portion of
    OSTP's budget, our fiscal year 2000 budget request reflects our
    commitment to operate more efficiently and cost-effectively without
    compromising the essential element of a top caliber science and
    technology agency--high quality personnel.
    National Science and Technology Council
        To meet the Administration's priority S&T goals we must combine the
    efforts and the expertise of multiple agencies. OSTP personnel support
    the work of the NSTC, a Cabinet-level Council that sponsors interagency
    initiatives to advance key S&T objectives.
        Our distributed system of research funding also places a premium on
    coordination between complementary agency programs. The NSTC, now in
    its fifth year, is improving such coordination.
        NSTC membership includes Cabinet Secretaries, heads of science and
    technology agencies, and key White House officials with significant S&T
    responsibilities. In the process of generating specific budgetary and
    policy recommendations, NSTC routinely reaches beyond the federal
    government to seek input from a wide spectrum of stakeholders in the
    public and private sectors.
        An important objective of the NSTC is to guide individual agency
    budget priorities for R&D and to orient the S&T spending of each
    Federal mission agency toward achieving national goals. To meet this
    objective, the NSTC has established five goal-oriented committees, each
    of which is chaired jointly by a senior agency official and an OSTP
    Associate Director. These standing committees, along with ad hoc
    working groups within the NSTC, provide an effective forum to resolve
    cross-cutting issues such as the future role of the U.S. national
    laboratories, or providing a program guide to federally funded
    environment and natural resources (see Appendix A for a full list of
    NSTC generated reports from 1998.)
    The President's Committee of Advisors on Science and Technology
        As Assistant to the President for Science and Technology, the
    Director of OSTP co-chairs the President's Committee of Advisors on
    Science and Technology (PCAST) with John Young, former President and
    CEO of Hewlett-Packard Co. The PCAST, which consists of distinguished
    individuals from industry, education, and research institutions, and
    other non-governmental organizations, serves as the highest level
    private sector advisory group for the President and the NSTC. (see
    Appendix B for a full list of PCAST generated reports from 1998.)
    President Clinton established the President's Committee of Advisors on
    Science and Technology (PCAST) at the same time that he established the
    NSTC to advise the President on matters involving S&T and to assist the
    NSTC in securing private sector involvement in its activities.
        Mr. Chairman and Members of the Committee, I hope that this brief
    overview has conveyed to you the extent of this Administration's
    commitment to advancing S&T in the national interest. We are delighted
    that the fiscal discipline exercised over the past six years has put in
    reach the opportunity to place more emphasis on investments that can
    assure future economic progress, environmental protection, and other
    national priorities which depend so heavily on strong and sustained
    R&D.
        Regardless of party affiliation, in the end we can all agree that
    investments in S&T are investments in our Nation's future. I look
    forward to achieving bipartisan support for a national S&T strategy
    that will combine the resources of industry, academia, non-profit
    organizations, and all levels of government to advance knowledge,
    promote education, strengthen institutions, and develop human
    potential.
        I ask not only for your support for OSTP's fiscal year 2000 budget
    request, but also want you to know how much I appreciate the long-
    standing bipartisan support of the committee for OSTP and for the S&T
    research enterprise. I would be happy to answer any questions that you
    have.

                              Appendix A.--Reports

        National Plant Genome Initiative, January 1998
        Program Guide to Federally Funded Environment and Natural Resources
    R&D, February 1998
        Our Changing Planet: The Fiscal Year 1999 U.S. Global Change
    Research Program, An Investment in Science for the Nation's Future,
    March 1998
        National Science and Technology Council 1997 Annual Report, April
    1998
        A National Obligation/Planning for Health Preparedness for and
    Readjustment of the Military, Veterans, and Their Families after Future
    Deployments, August 1998
        Fiscal year 2000 Interagency Research and Development Priorities
    (Jones-Lew Memorandum), June 1998
        Networked Computing for the 21st Century/Supplement to the
    President's Fiscal Year 1999 Budget, August 1998
        Transportation Technology Plan, November 1998
        Air Quality Research Strategic Plan, November 1998
        Public/Private Partnerships: Implications for Innovation in
    Transportation, December 1998
        Endocrine Disruptors: Research Needs and Priorities, December 1998
        Reports and further information may be obtained by calling: 202-
    456-6100 (phone) or 202-456-6026 (fax).
        Reports are Also Available on the NSTC Home Page via Link from the
    OSTP Home Page at: http://www.whitehouse.gov/WH/EOP/OSTP/html/OSTP--
    Home.html

      Appendix B.--Activities of the President's Committee of Advisors on
                         Science and Technology (PCAST)

        In 1998 PCAST provided the following reports:
        Teaming With Life.--Investing in Science to Understand and Use
    America's Living Capital (June 1998). Over the last few decades, a new
    paradigm has emerged: Improving and protecting our environment is
    compatible with growing the nation's economy. As part of this paradigm,
    we have come to recognize the essential linkage between the economy and
    the environment. We now understand that the sustained bounty of our
    nation's lands and waters and of its native plant and animal
    communities is the natural capital on which our economy is founded. We
    also realize that a sound forward-looking economic strategy requires
    that we protect this natural capital, rather than damage it and then
    spend millions or billions of dollars attempting to recreate what
    nature has already given us. To protect our natural capital, our
    Nation's biodiversity and the ecosystems within which it thrives, we
    need to have an extensive and frequently updated environmental
    knowledge base. This knowledge base is required to evaluate alternative
    plans for managing biodiversity and ecosystems as we work to optimize
    the union between the environment and the economy. The report offers
    strategies as to how to amplify our knowledge that will allow us to
    accomplish these goals.
        PCAST issued the following letter reports:
        Letter Report on R&D Partnerships, released March 6, 1998, reviewed
    the effectiveness of Federal technology partnership programs based on
    three studies and noted areas for improving programmatic effectiveness
    and efficiency.
        Letter Report on Global Cooperation to Develop and Commercialize
    Energy Technologies to Meet the Global Challenge of Climate Change,
    released May 15, 1998. The report advised that the issues of climate
    change presents the United States and the world with one of the
    greatest challenges of the 21st century. The report recommended
    development of a plan to address the challenge of global impact of
    human activities through technology and development of a global
    collaborative framework in greenhouse-gas reductions.
        Letter Report on the Education Research Initiative, released June
    8, 1998. The report advised that the quantity, quality, and
    organization of education research in this country need renewed
    attention. The report recommended that the fiscal year 1999 spending
    constitute an initial investment in building the methodological human,
    and institutional resources that will move the United States to a $1.5
    billion annual program of peer reviewed, politically independent,
    reliable, and cumulative research in education that draws on a broad
    base of expertise.
        Letter Report on the fiscal year 2000 Budget, released November 4,
    1998. The report urges the President to strongly support a broad S&T
    portfolio in the fiscal year 2000 budget. PCAST advised the President
    to continue to focus Federal resources on strengthening the U.S.
    research capacity through an approach such as the 21st Century Research
    Fund and to broaden this concept to encompass the basic research
    programs of the DOD.

        Senator Bond. Dr. Colwell.
        Dr. Colwell. Mr. Chairman, Senator Mikulski and Senator
    Burns, I thank you for allowing me the opportunity to testify
    on the budget request for fiscal year 2000 for the National
    Science Foundation. This being my first appearance before this
    subcommittee, I also thank you for the very kind remarks.
        Before I begin my presentation, I would like to turn to Dr.
    Kelly for the National Science Board's views on the NSF budget
    and a little bit of information about the current state of
    science and engineering in the United States.
        Dr. Kelly.
        Senator Bond. Dr. Kelly, thank you.

                          statement of Eamon M. kelly

        Dr. Kelly. Thank you, Mr. Chairman.
        Mr. Chairman, Ranking Member Mikulski, Senator Burns, I
    appreciate the opportunity to testify before you, and request
    that my written statement be entered into the record.
        Senator Bond. Without objection.
        Dr. Kelly. First, let me thank the subcommittee for its
    strong and consistent support of the National Science
    Foundation. Your continuing commitment to NSF programs and
    activities is vital to our Nation's future. Guided by the
    creative and energetic stewardship of my colleague, NSF
    Director Rita Colwell, your investment in NSF's research and
    education portfolio has been and will continue to be handsomely
    rewarded.
        Second, on behalf of the National Science Board, I want to
    endorse the Foundation's request for $3.95 billion for fiscal
    year 2000. The investment represented in this budget extends
    across the frontiers of science, engineering and technology,
    and reflects the Administration's strong commitment to
    fundamental research. Moreover, it reflects my personal
    conviction that scientific research is the keystone of our
    economy. NSF's support for research has a multiplier effect. It
    is the foundation for other investments, governmental and
    nongovernmental alike, in research.
        It is worth noting that R&D funding patterns have changed
    substantially. Total national R&D funding has never been
    higher. It now amounts to more than $200 billion annually.
    However, long-term research investments, sponsored mainly by
    the Federal Government, have been steadily losing ground to
    short-term investments supported mainly by private industry.
    This decline is significant. Because, as the Council of
    Competitiveness points out in its recent report, ``Going
    Global,'' and I quote: Investment in discovery research creates
    the seed corn for future innovation. Government at all levels
    is the mainstay of the Nation's investment in science and
    engineering research. Unquote.
        The Council concluded that increased public investment in
    fundamental research and education is a vital need. Yet the
    long-term trends in national investment in research tell us we
    are underfunding fundamental research and, in the process,
    eating our seed corn.
        In 1997, the Federal Government provided 30 percent of all
    R&D funds in the U.S., down from 60 percent three decades ago.
    Other numbers tell a similar story. Of the $70 billion Federal
    investment in R&D, only $17 billion goes to fundamental
    research.
        Speaking as an economist, it is a fundamental economic
    error to underfund the basic research, either a total of $17
    billion or NSF's $4 billion, that underpins much of our $8.5
    trillion economy. Even the $17 billion level represents 2 one-
    thousandths of 1 percent of our total economic activity.
        Clearly, the creation of knowledge has become a driver of
    our economy that we almost take for granted. Commercial and
    medical breakthroughs in understanding and product development,
    from terascale computing systems to genomics, to laser surgery,
    are all rooted in the support of past NSF research investments.
        Today, four of the top 10 companies of the Fortune 500 are
    high-tech companies. None of these four was even in the Fortune
    500 a decade ago.
        Mr. Chairman, the payoffs flowing from our Nation's R&D
    system result from a balanced portfolio of research
    investments. Moreover, this system depends on the intertwining
    of research and education. So, while NSF investments spur the
    creation of new knowledge, they also help to educate the next
    generation of scientists and engineers.
        As we look beyond this budget year, the National Science
    Board is committed to the same wise investments and priority-
    setting in science and technology that this committee seeks. We
    thank you for your support of the Nation's investment in
    research and education, especially at the National Science
    Foundation. And we look forward to working with you, Mr.
    Chairman, and the entire subcommittee, to help sustain the U.S.
    world leadership in science and engineering in the next
    century.

                               prepared statement

        That completes my statement, Mr. Chairman, and I turn now
    back to Dr. Colwell.
        [The statement follows:]
                    Prepared Statement of Dr. Eamon M. Kelly
        Mr. Chairman, Ranking Member Mikulski, and members of the
    Subcommittee, I appreciate the opportunity to testify before you. I am
    Dr. Eamon Kelly, Chairman of the National Science Board and President
    Emeritus of Tulane University.
        Since the founding of NSF in 1950, the National Science Board has
    exercised two roles that of a national policy body, and that of a
    governing board for the National Science Foundation (NSF). The latter
    role is similar to that of a corporate board of directors, but as a
    Federal entity we operate within the framework of policy guidance
    established by the Congress and the Administration.
        The Board conducts an annual NSF long-range planning and budget
    review and approval to assure the health of the human, disciplinary,
    and infrastructure base for science and technology (S&T); to support
    new opportunities for the advancement of knowledge; and to make the
    process of priority-setting responsive to such opportunities.
        I am here today first to thank the Subcommittee for its strong
    support of NSF. Your continuing commitment to NSF programs and
    activities in research and education is vital to our Nation's future.
        Second, on behalf of the National Science Board, I want to express
    our strongest support for the Foundation's request for $3.95 billion
    for fiscal year 2000. The investment represented in this budget extends
    across the frontiers of science, engineering, and technology and is
    part of the 21st Century Research Fund. It reflects the
    Administration's strong commitment to fundamental research.
        Moreover, it reflects my personal conviction that research is the
    keystone of our economy. And NSF's support for research has a
    ``multiplier effect'' : it is the foundation for other investments
    agency and nongovernmental alike--in research.
        Three themes are priority-setters in the Foundation's budget
    proposal, which Director Colwell will elaborate:
      --NSF has been designated the lead agency for a six-agency initiative
            on Information Technology for the Twenty-First Century (or
            ``IT2'');
      --Biocomplexity in the Environment represents a set of coordinated
            activities in environmental science, engineering, and
            education; and
      --Educating for the Future: A 21st Century Workforce seeks to improve
            access to quality educational opportunities from elementary
            through higher education.
        As NSF's priorities suggest, science and engineering are becoming
    more international, multidisciplinary, and collaborative in character.
    These trends guide the National Science Board as well. As context for
    today's budget discussion, let me say a word about some recent NSB
    activities.
        The Board is in the midst of a six-month examination of research,
    education, and assessment on the environment. A public hearing was held
    in Portland in January, a symposium in Los Angeles in February, and a
    town hall meeting earlier this month at NSF headquarters in Arlington.
    This process is assisting the Board to provide policy-level guidance
    for the NSF's environment portfolio.
        The Board also recognizes the need for better understanding of the
    nature of the return on the entire Federal investment portfolio and for
    increased accountability for research investment choices by the
    agencies. The Government Performance and Results Act of 1993 requires
    that scientific investments, like all others, be subject to strategic
    planning and measurement of performance as a basis for resource
    allocation.
        As part of its national policy role, the Board is responsible by
    law for a biennial compilation of ``indicators of the state of science
    and engineering in the United States.'' Science and Engineering
    Indicators serves as the authoritative source of data on the health of
    the science and engineering research and education enterprise,
    presenting not only a domestic profile, but international comparisons
    as well.
        Science and Engineering Indicators is a valuable analytical tool
    for policy professionals in all sectors and the Board in particular. As
    the demand for accountability has grown, Indicators data have become
    increasingly useful for characterizing key trends in the scope,
    quality, and vitality of U.S. research and education.
        In the 1998 Indicators volume, the Board reported quantitative
    trends in U.S. science and engineering, concluding that ``The Nation's
    S&E enterprise is undergoing changes in structure and priorities as we
    prepare to enter the next century.'' This is all too clear when we look
    at the national picture, for example:
      --R&D funding patterns have changed substantially. The good news is
            that total national R&D funding has never been higher. It now
            amounts to more than $200 billion annually.
      --The not-so-good-news is that long-term R&D investments--sponsored
            mainly by the Federal government--have been steadily losing
            ground to short-term investments, sponsored mainly by private
            industry.
      --In 1997, the Federal government provided 30 percent of all R&D
            funds in the U.S. A decade ago, the Federal share was 46
            percent. Three decades ago, the federal share was 60 percent.
        This decline is significant because, as the Council on
    Competitiveness points out in its September 1998 report, Going Global:
    ``For the past 50 years, most, if not all, of the technological
    advances have been directly linked to improvements in fundamental
    understanding. Investment in discovery research creates the seed corn
    for future innovation. Government at all levels is the mainstay of the
    nation's investment in science and engineering research. . . .''
        The Council concluded that increased public investment in
    fundamental research and education is a vital need. Yet the trend is
    away from long-term research. It makes NSF investments in fundamental
    science and engineering more important than ever.
        Speaking as an economist, Mr. Chairman, it would be a fundamental
    economic error to underfund the fundamental research that underpins
    much of our $8.5 trillion economy.
        The payoffs flowing from our Nation's R&D system result from a
    balanced portfolio of research. At the same time, the U.S. S&T
    enterprise depends on the intertwining of research and education. NSF
    investments spur the creation of new knowledge across the disciplines
    of science and engineering, while helping to educate the next
    generation of scientists and engineers.
        This creation of knowledge--especially at institutions of higher
    learning across the U.S.--has become one of the primary drivers of our
    economy. Commercial and medical breakthroughs in understanding and
    product development--from terascale computing systems to genomics to
    laser surgery--are rooted in the support of past fundamental research
    investments.
        One only has to look at four of the top 10 companies of the Fortune
    500 are high-tech companies. None of these four was even in the Fortune
    500 a decade ago. Many grew from ideas nurtured by American
    universities. As Fed Chairman Alan Greenspan recently noted: ``In a
    global environment in which prospects for economic growth now depend
    importantly on a country's capacity to develop and apply new
    technologies, the research facilities of our universities are envied
    throughout the world * * *. The payoffs in terms of the flow of
    expertise, new products, and start-up companies, have been
    impressive.''
        Future economic prosperity, gains in our standard of living and
    overall well-being are increasingly dependent on innovations that
    emerge, in often unpredictable ways, from a bedrock of Federal
    investments in science and technology.
        One other area of recent NSB activity demonstrates both payoffs and
    continuing needs. The Board stated in its 1997 report on The Federal
    Role in Science and Engineering Graduate and Postdoctoral Education,
    that ``The education of graduate and post-doctoral students in a
    discovery-rich university research environment is at the heart of the
    post-World War II compact between the Federal government and
    universities.'' In the last fifty years, stresses on higher education
    institutions have increased and should be addressed in a comprehensive
    manner.
        As the Board continues to examine these stresses, a major concern
    is the preparation of an increasingly diverse student body for the
    workforce of a global economy. That concern originates with the quality
    of education at the K-12 level.
        The Board has considered the disturbing implications of the Third
    International Mathematics and Science Study, or TIMSS, which showed an
    alarming decline from 4th to 8th to 12th grade among U.S. students
    relative to their international peers.
        Earlier this month, the Board released a report, ``Preparing Our
    Children,'' that will be of interest to this committee. I ask
    permission to submit a copy of the report for the record. The report
    calls on scientists and engineers to assist teachers and schools in
    preparing students for higher learning and the 21st century workplace.
        For a mobile student population like ours, local schools are de
    facto a national resource. It is therefore a national imperative to
    improve, through local strategies, student achievement in mathematics
    and science. I would add that some of the most encouraging signs of
    educational improvement can be found in the cities supported by NSF's
    Urban Systemic Initiatives program, notably Detroit, El Paso, and
    Memphis.
        In closing, Mr. Chairman, I want to assure you that the National
    Science Board is committed to same wise investments and priority-
    setting in science and technology that this committee oversees. We
    thank you for your support of the Nation's investment in research and
    education, especially at the National Science Foundation. But we
    clearly see unmet needs.
        Today's research opportunities are simply breathtaking. The amount
    and breadth of funding needed to exploit those opportunities motivates
    the National Science Board's conviction to make the case not just for
    the NSF budget, but for the knowledge and products that will be
    returned to the Nation on this investment.
        It is my personal pleasure to collaborate with NSF Director Rita
    Colwell in explaining to all our citizens the value of these long-term
    investments in research, education, and the future. Thank you.
                     biographical sketch of eamon m. kelly
        Eamon Michael Kelly was born in New York City and attended Columbia
    University from 1960 to 1965, where he earned the master and Ph.D.
    degrees in economics. Following graduation from Columbia, he joined the
    Penn State faculty at University Park, Pennsylvania.
        In 1968, Kelly was appointed to U.S. government service by the
    President, serving as Director of Policy Formulation with the Economic
    Development Administration of the U.S. Department of Commerce. He was
    later named Special Assistant to the Administrator of the Small
    Business Administration, where he participated in planning and
    initiating the federal government's first minority economic development
    program. Kelly joined the Ford Foundation in 1969 and served as
    Officer-in-Charge for the Office of Social Development, the
    Foundation's largest domestic and civil rights division.
        In 1977, Kelly served as a special consultant to the U.S. House of
    Representatives where he participated in drafting legislation that
    provided a $1.7 billion guarantee to prevent the insolvency of New York
    City. Later that year he was appointed Special Assistant to the
    Secretary of the U.S. Department of Labor. In that position, he
    successfully directed a government-wide investigation of the Teamster's
    $1.4 billion Central States Pension Fund and led negotiations resulting
    in the Fund being transferred to private management. After leaving the
    Labor Department, Kelly returned, at the request of the Secretary of
    Labor, to direct efforts that led to the end of a nationwide coal
    strike.
        In 1981, he was chosen to serve as the 13th president of Tulane
    University. In July 1998, Kelly retired as president of the university.
    Currently, Kelly, whose area of specialized interest is international
    urban and rural development, holds the rank of professor in the
    departments of Economics, Latin American Studies, and International
    Health and Development at Tulane. He is also a founding member of the
    Payson Center for International Development and Technology Transfer.
        Kelly is active on the boards of many professional, philanthropic,
    civic, and corporate organizations. In 1995, he was appointed by
    President Clinton to serve on the National Science Board (NSB), the
    governing body of the National Science Foundation, which sponsors
    scientific and engineering research, develops and sponsors educational
    programs, and helps guide national policy. In 1998, Kelly was elected
    chairman of the NSB.

        Senator Bond. Thank you, Dr. Kelly.
        We now turn back to Dr. Colwell, and start the clock anew.

                           statement of rita colwell

        Dr. Colwell. Thank you. Mr. Chairman, I do have a statement
    which I will summarize very briefly. With your permission, I
    ask that my full statement be part of the record.
        Senator Bond. Without objection, it will be.
        Dr. Colwell. Thank you.
        Mr. Chairman, Dr. Kelly has touched on some very important
    trends in fundamental R&D in recent National Science Board
    reports. Over the past 25 or so years, Federal research
    investments have steadily increased in nearly all fields. And
    that is good news. However, the overall mix of Federal
    investments in science and engineering has changed
    significantly and very dramatically, primarily through gains in
    the biomedical fields, at the expense of physical sciences and
    engineering. And the very sharp nature of the shift in funding
    toward the biomedical fields has taken a few people by
    surprise.
        Now, I would be the first to tell you about the very
    exciting things that are happening in the biomedical field.
    Some of that funding has gone to my own research. But I do know
    that society really cannot live by biomedical bread alone. This
    trend, in fact, concerns many in the medical sciences. NIH
    Director Harold Varmus discussed it in a speech last year. Dr.
    Varmus--and I think to his credit--addressed this directly, and
    talked about the dependence of biology and medicine on other
    fields of science.
        So, this brings us to the fiscal year 2000 request for NSF
    and the need for increased investment in research and
    education. As you know, the NSF is the only agency whose
    mission covers research in all fields of science and
    engineering, as well as education at all levels--essentially
    from cradle to grave. We support the fundamental work that
    benefits the mission agencies, like NIH, right down the line.
    And so for this reason, it is important that NSF continue to
    support the investments that reach all fields, all disciplines.
    And that is the governing philosophy of our fiscal year 2000
    request.
        For this request, NSF is closing in on the $4 billion
    milestone. The fiscal year 2000 request comes to $3.95 billion,
    which represents about a 5.8-percent increase over the current
    level. And I think this is an outstanding request, given the
    constraints that you have already stressed, imposed by the
    discretionary spending caps. And the headliner in the budget is
    the new initiative in information technology. And the
    rationale, I think, is quite clear. As Internet growth has gone
    through the roof, IT has become the essential fuel for the
    Nation's economic engine.
        And the numbers speak for themselves. The latest estimates
    show that IT has generated about a third of the recent growth
    in the U.S. economy. It now accounts for about 7.4 million
    jobs, and it pays wages that are about 60 percent higher than
    the private sector average.
        And I think the challenge is to sustain this record of
    success. And so this has led to the government-wide initiative,
    the Information Technology for the 21st century, the
    IT2. And across the government, as Dr. Lane has
    pointed out, IT2 will total about $366 million
    across six agencies.
        Now, 60 percent of this will go to support university-based
    research. And I think that is the real win-win for our country.
    The academic research investment serves double duty. It armors
    and enables students with advanced IT skills. And Senator
    Mikulski has addressed the work force issue, which is critical.
        This is more than just a national initiative. It is a
    national imperative. It is a classic example of a long-term
    investment in fundamental research that works for the common
    good--in fact, for the global good.
        This same sense of imperative comes through in a second
    initiative presented in the request for NSF. And this one is in
    the area of biocomplexity. Biocomplexity is a multi-
    disciplinary approach to understanding our world's environment.
    For generations, scientists have studied parts of our
    environmental system--individual species, individual habitats--
    in isolation. Now it is time for a better understanding of how
    those parts function together as a whole, as Senator Mikulski
    has called for. One reason it is time to tackle this task is
    that we now have the ability, the technologies, to grasp the
    complexity of our environment.
        And, finally science and math education remain a priority
    in this budget, as it must. Last year, we got the not very good
    news about how our schools compared to other nations. By 12th
    grade, our students are near the bottom. We can and we must do
    better. The request sustains our current base of innovative
    activities and plants a few new seeds as well.

                               prepared statement

        Well, that covers the basics of the budget request. I would
    like to close by saying that, once again, over the past 25
    years, we have seen a major realignment of the Federal research
    portfolio. And this makes it an ideal time to look ahead and to
    align our investment priorities with the needs and
    opportunities of tomorrow's information economy. I look forward
    to working with all of you to meet those needs and to
    strengthen our Nation's investment in the future.
        Thank you.
        [The statement follows:]

                       Prepared Statement of Rita Colwell

        Mr. Chairman, Senator Mikulski, members of the Subcommittee, thank
    you for allowing me the opportunity to testify on the budget request
    for fiscal year 2000 for the National Science Foundation.
        Before I turn to details of the NSF budget request, I'd like to say
    a few words about how NSF fits into the overall R&D environment of our
    country.
        My good friend and colleague Dr. Eamon Kelly--Chairman of the
    National Science Board--has touched on some important trends in
    fundamental R&D in recent NSB reports. Let me mention one other long-
    term research trend that is causing concern among many in the science
    community.
        NSF's Division of Science Resources Studies has taken a close look
    at the mix of Federal research funding across different fields of
    science and engineering.
        First, some good news. Over the past 25-plus years, federal
    research investment research has increased significantly in most
    fields. Overall, federal research investments have grown about six-fold
    in current dollars since 1970.
        However, the mix of investments has changed significantly and
    dramatically--primarily through gains in biomedical fields and declines
    in the shares for physical sciences and engineering.
      --In 1970, the life sciences accounted for 29 percent of Federal
            research spending. By 1997, their share had risen to 43
            percent. Put another way, the share increased by half.
      --Engineering, by contrast, saw its share decline by 12 percentage
            points over the same period, falling from 31 percent to 19
            percent of the Federal research portfolio.
      --The share going to the physical sciences dropped by more than 5
            points--from 19 percent to 14 percent of the total portfolio.
        The combination effect is just as significant. Engineering and the
    physical sciences--taken together--accounted for 50 percent of federal
    research spending in 1970.
        That's down to 33 percent today--a drop from half of the total to
    just one third.
        The sharp nature of the shift in funding toward the biomedical
    fields has taken more than a few people by surprise.
        I'd be the first to tell you about the great things that are
    happening in biomedical fields. Some of that funding has gone to my own
    research. But, I also know that society cannot live by biomedical bread
    alone.
        This trend in fact concerns many in the medical sciences. NIH
    Director Harold Varmus discussed it in a speech last year. Dr. Varmus,
    much to his credit, took the bull by the horns and talked about the
    dependence of biology and medicine on other fields of science. In his
    words: ``Most of the revolutionary changes that have occurred in
    biology and medicine are rooted in new methods. Those, in turn, are
    usually rooted in fundamental discoveries in many different fields.''
        He then went on to cite laser surgery, CAT scans, fiber optic
    viewing, ECHO cardiography, and fetal sonograms as examples of these
    revolutionary advances.
        This brings us to the fiscal year 2000 request for NSF, and the
    need for increased investment in research and education. NSF is the
    fulcrum for all of science and engineering.
        NSF is the only agency whose mission covers research in all fields
    of science and engineering, as well as education at all levels--cradle
    to grave. We support the fundamental work that benefits the mission
    agencies right down the line.
        For this reason, it is important that NSF continue to support
    investments that reach all fields and disciplines, which is the
    governing philosophy of our fiscal year 2000 request.
        Let me turn now to the budget. NSF is fast closing in on a $4
    billion milestone.
        The fiscal year 2000 request comes to $3.95 billion, which
    represents a 5.8 percent increase over the current level. This is an
    outstanding request given the constraints imposed by the discretionary
    spending caps.
        The Administration agreed with us when we said loudly and clearly
    that research investments deserve the highest priority. The positive
    response we got is reflected in an 8 percent increase for research
    project support.
        The headliner in this budget is the new initiative in information
    technology. The rationale is clear.
        As Internet growth has gone through the roof, IT has become the
    essential fuel for the nation's economic engine.
        The numbers speak for themselves. The latest estimates show that IT
    has generated one-third of the recent growth in the U.S. economy. It
    now accounts for 7.4 million jobs * * * and it pays wages that are 60
    percent higher than the private sector average. The challenge now is to
    sustain this record of success.
        You may be familiar with the recent report by the President's
    Information Technology Advisory Committee--PITAC for short. PITAC
    concluded that federal support for long-term research on information
    technology has been ``dangerously inadequate.'' In its words ``support
    in most critical areas has been flat or declining for nearly a decade,
    while the importance of IT to our economy has increased dramatically.''
        This has led to the government-wide initiative: Information
    Technology for the 21st Century--IT\2\ as it's called.
    Across the government, IT\2\ will total $366 million across
    six agencies.
        60 percent of this will go to support university-based research.
    That's the real win-win for America. The academic research investment
    serves double duty, as it armors and enables students with advanced IT
    skills.
        NSF is the lead agency for IT\2\. This was recommended
    last fall by PITAC, and we are glad to accept this responsibility and
    challenge.
        We'll be putting $146 million into our part of IT\2\,
    which will cover three sets of activities.
      --First is fundamental IT research--at $100 million. This will focus
            on a key assessment from PITAC's report.
        For all of our ability to push the high-end in computing, no one
    really understands how all the pieces work together. The need right now
    is to improve both reliability and performance. We can achieve this by
    understanding how systems interact and gaining new knowledge of the
    working whole.
      --The request also includes $36 million for a terascale computing
            system. This will serve computer scientists and the entire
            science and engineering community.
      --Finally, we'll take advantage of the fact that NSF's portfolio
            includes both the information sciences and the social,
            behavioral, and economic sciences. There is $10 million for
            research on the societal, ethical, and workforce impacts of
            emerging technologies.
        When people ask me, why NSF and the United States should invest in
    information technologies--and why now--I say it is an absolute must.
        It's not a national initiative, it's a national imperative. It's a
    classic example of a long-term investment in fundamental research that
    works for the common good, in fact, for the global good.
        IT\2\ is an investment that will strengthen the entire
    research and education enterprise. It will deliver tools and
    capabilities that will benefit every field, every discipline, and every
    level of education.
        When we bring faster computers to weather forecasting, we save
    lives, we protect buildings and crops, and more--by getting better
    advance warning of El Nino's, tornadoes, hurricanes, and other severe
    events. My own research on climate and infectious diseases (El Nino and
    cholera) has made this dramatically clear to me.
        The possibilities are limitless. We tackle the toughest challenges
    in science and engineering, and we put high octane fuel in this great
    engine of job creation and growth.
        This same sense of imperative comes through in a second initiative
    presented in the request. This one is in the area we call
    biocomplexity.
        Biocomplexity is a multidisciplinary approach to understanding our
    world's environment. For generations, scientists have studied parts of
    our environmental system--individual species and habitats--in
    isolation. Now it is time for a better understanding of how those parts
    function together as a whole.
        This will not be easy. Taken separately, these parts are very
    complex. Biocomplexity is about looking at phenomena, whether they be
    weather or proteins or human society, at many scales. Such a viewpoint
    will let us identify the principles and patterns that operate at
    multiple levels of organization in the earth's systems, and across time
    and space.
        Because of our planet's biocomplexity, organisms and entire
    ecosystems in one region can be influenced dramatically by physical and
    chemical changes occurring thousands of miles away. For example,
    wildfires in the western U.S. affect fisheries half a world away.
    Mercury from very hot wildfires can be blown aloft by high level winds
    and fall into rivers and lakes far away. Fish consume food contaminated
    by the mercury, presenting a human health hazard.
        This is just one aspect of biocomplexity. There are many more.
    Around the globe, scientists in many disciplines collect and analyze
    environmental data on the stability of the polar ice caps, the
    temperatures of tropical oceans, and the health of species, forests,
    lakes and rivers in the United States.
        Biocomplexity is about combining these efforts in a comprehensive
    way. It is an ambitious concept, but one that could have enormous
    payoffs in the years ahead.
        One payoff would be better environmental decision-making on the
    part of governments, industries and individuals. ``Ecological
    forecasting''--as some call it--could have far-reaching benefits for
    agriculture and other industries dependent on changes in the
    environment.
        Another payoff could be a better handling of the difficult problem
    of non-native or invasive species.
        One reason it's time to tackle this task is that we now have the
    ability, the technologies, to grasp the complexity of our environment.
        From computational algorithms to mathematical models, from remote
    sensing to new kinds of sensors, and of course to genome sequencing and
    the molecular basis of metabolism and heredity * * * the technologies
    have arrived, as have the opportunities in research.
        Finally, science and math education remains a priority in this
    budget, as it must. Last year we got the not-so-good-news about how our
    schools compare to other nations.
        By 12th grade, our students are near the bottom. We can and must do
    better. The request sustains our current base of innovative
    activities--and plants a few new seeds as well.
        One of those promising seeds is the new Graduate Teaching Fellows
    program. The program may seem small at only $7.5 million, but it is an
    important beginning with a potential impact well beyond the dollars. It
    will broaden graduate education, and boost the science, engineering,
    and technology content in K through 12 classrooms.
        I'll just mention a few other highlights before closing.
        The Plant Genome Research Program will continue to increase. Its
    funding will increase by $5 million to a total of $55 million.
        This builds on an existing research base of $20 million--bringing
    the total investment to $75 million. This will provide the scientific
    underpinning in the future to improve nutritional content of our food
    crops, both in quality and yields.
        A new start in the budget is the Network for Earthquake Engineering
    Simulation. We are providing $8 million in fiscal year 2000 toward a
    total investment of $82 million over the next five years. This is
    modeled after the highly successful nanofabrication network NSF began
    several years ago. This will lead to a national, fully-interconnected
    network of major earthquake research facilities.
        Finally, we will be continuing investments in a number of major
    infrastructure projects. One is the modernization of the South Pole
    Station, which remains on schedule and on budget, thanks in large part
    to the forward funding provided by the subcommittee in past years.
        That covers the basics of the budget. Let me conclude by adding
    that by its very timing, a budget for the first year of a new
    millennium takes on added significance.
        That applies doubly so to NSF. The year 2000 marks the 50th
    Anniversary of the National Science Foundation.
        Given the increase we have received in this very tight budget
    environment, it is clear that this is a ``golden anniversary''
    investment. This is also an appropriate time to step back and think
    about the long-term importance of investments in science and
    engineering.
        Unfortunately, our fast-paced world makes it hard for us to focus
    beyond today's problems and concerns. It's a challenge to make a case
    for investment in our children's future.
        Thankfully, the VA/HUD subcommittee has taken a more long-term
    view, even though the payoffs from some basic research may come ten or
    twenty years from now.
        You have consistently supported NSF's investments over the years in
    a bipartisan manner. For this, let me thank you again. I look forward
    to working with all of you to strengthen our nation's investment in the
    future as we approach the next millennium.
        Thank you.

                           overall funding priorities

        Senator Bond. Thank you very much, Dr. Colwell. I
    congratulate you on your ability to receive such strong support
    from the White House in your first budget request. But we need
    to talk a little reality and cold water here. We could be
    facing a very tight budget. And we really do not know just what
    the constraints will be.
        In the worst-case scenario, assuming we are not able to
    provide any funding increase for NSF overall, what would you
    recommend in funding priorities? And then, what would you have
    to forego?
        Dr. Colwell. We would make every effort to pursue the
    Information Technology Initiative and Biocomplexity and
    Educating for the Future. These are priorities. They are
    critical. And what we would try to do is invest as best we
    could.
        I think the biggest challenge that I face as the Director
    of NSF is to sustain and maintain our strength and leadership
    in the basic disciplines, while at the same time reaching out
    for the opportunities, the strategic opportunities.

                   priority of information technology funding

        Senator Bond. Where would you cut if you pursued
    IT2?
        Dr. Colwell. Fortunately, the roots of IT2 are
    embedded in the past initiatives--High-Performance Computing,
    the Second Generation Internet and the KDI--which have all been
    brought together to encompass the next evolutionary step. Being
    a biologist, I can see how this evolved quite nicely.
        Senator Bond. So you could take that, you could shift the
    focus from those into your new IT2?
        Dr. Colwell. We would make every effort to keep Information
    Technology going.

                        plans for information technology

        Senator Bond. Where does the Information Technology fit in
    with the KDI and the other things? Is that a logical extension?
    Is it going in a different direction? That is the thing I
    really have trouble understanding.
        Dr. Colwell. It is clearly a logical extension. Several
    years ago, the investment was made in High-Performance
    Computing to get the supercomputing together. Then partnerships
    were developed to bring computing to every part of the system.
    That is critical. And what the IT Initiative will allow us to
    do is to expand that further.
        In fact, nominee Deputy Director Joe Berdogna and I have a
    commitment to go the last mile, to make sure that every part of
    the country is connected to the computing infrastructure and
    that science and engineering is brought to every part of the
    country.
        The Internet has done that. The Next Generation Internet
    will allow even speedier communication and connection.
        So all of this has built on each other. The KDI recognized,
    from the proposals coming in from the field, from the
    constituents, that there was a need to bring computing into
    biology, into chemistry, into behavioral and social and
    economic sciences. So that has been an evolutionary step. And
    now with our focus on information technology, we will be able
    to maintain our leadership and bring all of this from the past
    into a coherent whole.
        Senator Bond. Dr. Lane, we do note some major shifts in the
    President's fiscal year 2000 budget and their research and
    development priorities, a shift toward more civilian R&D
    funding, and a much greater emphasis on information technology,
    which seems to be a departure from some of the past focus on
    health sciences. What is the rationale for the changes? And as
    the President's Science Advisor, what do you foresee in the
    near future in terms of Federal R&D policy, what direction is
    it going to go?

                                  funding nih

        Dr. Lane. Mr. Chairman, with regard to the funding that the
    President is requesting for biomedical research--NIH in
    particular--the request that the President has sent over for
    fiscal year 2000 is consistent with the plan that he presented
    last year for the outyears.
        As you know, Mr. Chairman, I think the President requested
    just below the order of 8 percent for NIH for fiscal year 1999,
    but the Congress appropriated roughly twice that amount. And so
    the 2-percent request that the President sent over for NIH this
    time around puts the funding actually slightly above what the
    President had originally planned. So it in no way suggests that
    biomedical research is not a high priority. It remains a very
    high priority for the administration.

                             information technology

        The Information Technology Initiative, as Dr. Colwell has
    indicated, is really a grassroots need that has been developing
    over a number of years. It crystallized, I think, in the
    recommendations of the President's Advisory Committee, that
    represents experts from universities and industry, who came
    together and said, Look, you do have to set priorities. Given
    that information technology is critically important to the
    economy of the Nation and to people's lives in so many
    different ways, having tripled the jobs available--we are
    talking about a $600 billion piece of the overall economy--the
    Nation must remain at the cutting edge in information
    technology. And now, how do we do that?
        Well, you do that by making an investment early on in the
    research that is going to guarantee you stay there 10-15 years
    down the road. And what the committee said was that the current
    programs are very important, and they do not question the
    wisdom of the past, it is just that we are not investing
    sufficient dollars in the fundamental, long-range questions--
    software, for example.
        And so we need to add money to the Nation's R&D investment
    in information technology, and we need to do it in specific
    areas. The committee laid those areas out and the initiative is
    responsive to those committee recommendations.
        Senator Bond. Well, I would like to ask you and Dr.
    Colwell--I remain puzzled about what distinguishes this from
    the HPCC initiative and the NGI initiative. Last year you were
    telling us KDI was the greatest thing since sliced bread and
    canned beer. And we thought this was the wave of the future.
    And it seems that KDI has kind of dropped out of the scene. Is
    this IT2 just the new flavor of the day? Are you
    just continuing along with the same thing and just gave it a
    new name? And has KDI disappeared and NGI? Are they all
    encompassed in this new IT2?
        Dr. Lane. Mr. Chairman, the High-Performance Computing and
    Communication Initiative, of course, is a mature initiative. It
    was a very wise choice at the time, and it continues, as one
    can see in the budget. The purpose of that initiative was to
    make available the computing infrastructure to tackle very
    important problems in science and engineering. It has been
    very, very successful.
        The NGI was to get the networking infrastructure out across
    the country that is needed for R&D and that ultimately gets
    picked up by the private sector and contributes to the economy.
    The explosion we have seen in e-commerce derives from the
    investment the Federal Government has made in networking all
    the way along--most recently in NGI, which was authorized in
    1998.
        So those two programs remain very important. What the
    President's Advisory Committee said is now you need to look 20
    years down the road. Now you need to be sure that you are
    investing enough money in fundamental questions about software
    that are not being addressed right now. Right now we are
    talking about 150 million people or machines on the Internet
    all around the world. But what if you have 10 billion devices
    connected to the Internet, how do you deal with that?
        We do not know the answer to that question. That is a very
    fundamental research question. But the numbers are, in fact,
    realistic. Because what we see down the road is all kinds of
    sensors--not just people interacting with one another, but
    sensors--on systems, on airplanes, in transportation systems,
    interacting through the Internet. We have to know how to handle
    those. That is a very basic research question. And the
    committee said: You need to do more to answer that question.
        Senator Bond. Dr. Colwell, anything you want to add?

             funding breakdown within the IT2 initiative

        Dr. Colwell. Yes. I would like to add to that. The way the
    NSF will be spending the money is $100 million will be in basic
    research in new computer languages, new ways of linking, let us
    say, 1,000 processors for higher-speed computing, databases.
    Senator Mikulski mentioned large databases. We need to
    interpolate those databases so that the information from
    atmospheric physics and atmospheric chemistry, along with
    ecological databases and also demographic databases--to bring
    the social aspect of it together--can help us to understand how
    the complexity of our planet really works. This will come from
    the new investment in software research that is very important.
        Ten million dollars will go to understanding the human/
    computer interface. The fact is, when we walk into our homes
    now, we probably have minicomputers, tiny computers, doing a
    variety of things. Eventually these will be connected, so that
    we may be able to ``talk to our coffeepot'' and ask it to turn
    on. These are the kinds of things that are coming in the
    future.
        And then, $36 million would be for the system, to expand
    high computing capability, so that every part of the country--
    every part of the country--is tapped into this very-high-
    capacity computing. It is really a look into the future and
    very, very important.
        Senator Bond. Well, Dr. Colwell, that is all very
    interesting, but please spare me from talking to my coffeepot.
    [Laughter.]
        There are a lot of exciting things that I would like to do,
    but that is not one of them.
        Dr. Colwell. Okay. Thank you.
        Senator Bond. Senator Mikulski.

                                  funding R&D

        Senator Mikulski. Thank you, Mr. Chairman.
        Dr. Lane, I want to ask a few questions about scientific
    funding and then go to both the new initiatives and yet NSF's
    core program. When I came to the Senate and this committee, the
    way science, and particularly R&D, was funded was 65 percent
    went into defense and about 35 percent went into civilian. That
    was a decade-plus ago. What now is the proportion between the
    DOD R&D and then what goes to civilian? And has that increased
    substantially?
        Dr. Lane. Senator Mikulski, I think for the first time the
    balance has shifted, that it is now 51 percent civilian R&D and
    49 percent defense R&D. I believe that is correct.
        Senator Mikulski. And a substantial amount of that--or,
    according to Dr. Colwell's testimony--there has been an
    increase in the biomedical; is that correct?
        Dr. Lane. That is correct, Senator.

             distribution of funding across scientific disciplines

        Senator Mikulski. Though NIH still is--well, let us see,
    when we started out, it was $8 billion; it is approximately
    double now, over a decade, at $15 billion. NASA has stayed
    steady state at $13 billion. NSF has moved ahead just with what
    we have tried to do with modest incrementals, et cetera. So
    could you tell us where most of the money is going and how that
    works out?
        And, Dr. Colwell, did you want to elaborate on that, and
    where we are falling behind and what we need to keep in mind?
        Dr. Colwell. Yes. What I think is a concern is the
    reduction in engineering and the physical sciences. We know,
    for example, that the advances in laser surgery for cataracts
    comes from basic research--chemistry, computer sciences,
    physics. We know that imaging--CAT scans and so forth--all
    traces back to basic research in physics and chemistry.
        Now, what is happening of course is that physics and
    biology are converging, so that there is a great deal of
    physics to be contributed to.
        Senator Mikulski. Well, it is not converging in the
    Congress--what I am trying to get at--as we looked at the
    funding of these programs and these old categories. So, would
    you say that that would give you--and when I say ``you,'' I
    mean jointly----
        Dr. Colwell. Yes, Senator. I think that we do need a
    balance in the physical/biological/behavioral sciences. This is
    a concern.

                   maintaining U.S. leadership in the future

        Senator Mikulski. Well, this is an issue that is really--
    not to go into the details at this subcommittee--but it comes
    to--well, let me ask this question--you see, I believe, first,
    that the initiative to raise biomedical research, of which I
    have been one of the movers of that, is indeed a worthwhile
    endeavor. However, a lot of this is congressionally driven. And
    all of Congress knows what NIH does. Am I correct in that? But
    all of Congress does not know, nor necessarily support, what
    the other scientific agencies do.
        For example, over at Commerce, no matter how able Secretary
    Daley is or his predecessors, even in the other party, nobody
    kind of gets NOAA. They certainly do not get NIST. And we can
    just look over there.
        And in our own Congress, you have the Commerce
    Subcommittee, you have Labor, HHS, with all that they are
    dealing with, you have us. So, I believe that what we need and
    what the Congress needs is really not only a State of the Union
    Address, with bells and whistles and ruffles and flourishes,
    but really for the science community within the Federal
    Government, the leadership, really I think to present on a
    bipartisan basis and a bicameral basis where we need to go and
    where there are glide paths down which give one pause. Because
    it is in the practical engineering we solve--practical
    engineering helps us clean up those brownfields, helps us clean
    up those Superfund sites, waste water treatment and clean
    water.
        We cannot have an EPA without engineering. Otherwise we are
    just like a regulatory agency with no tools. So that I think is
    something really to be considered for the administration. And I
    note that, with your crosscutting initiative here and the
    private sector councils, was really what we had worked to
    establish under President Bush and your predecessor. So this is
    something we have been working on for some time and I know
    talking about this.
        But I think this country needs a millennium agenda. And I
    think we need a millennium agenda that both parties support,
    that all presidential candidates can embrace with fiscal
    prudence and so on. And I think there needs to be some type of
    presentations. Because I have got colleagues that are now
    scrambling to learn high tech.
        Anyway, I could elaborate on this, but it is a source of
    great concern to me. And the synergistic and cumulative effect
    of that I think is also inspirational to our American people
    and to our young people who need to get into it. Because all of
    a sudden I think geek is becoming fashionable and geek is
    becoming profitable.
        Dr. Colwell. Senator, I could not agree with you more.
        Senator Mikulski. Geeks are in. [Laughter.]
        Dr. Colwell. I really agree, because we are working at NSF
    to put together a list of what we call ``unmet opportunities''.
    There are things that we are not able to do because we are not
    able to explore in the directions that will maintain a highly
    competitive economy. In fact, a report from the Competitiveness
    Council was just published in Science Magazine this week that
    showed the United States has now dropped from first place in
    innovation, and Finland is ranked at the top, using a variety
    of measures, including international patents and that sort of
    thing.
        So it is a great concern that we really maintain leadership
    and that we have a balanced portfolio and that we move in these
    directions.

        availability of information on science in the federal government

        Senator Mikulski. Let me ask this, because my own time is
    going and I have other questions that are a little bit more
    targeted. Is there a one-stop-shop book or booklet or something
    that says what every scientific agency does in the Federal
    Government?
        Dr. Lane. Senator, there is a biannual report that OSTP
    puts out. And that report does in fact offer, in my view, a
    pretty good description of what each agency does, what the
    administration's priorities are, what the national program is,
    and then the role of each agency. But I think we should have a
    look at that and see whether it, in fact, satisfies the
    requirements that you lay out.
        Let me also say that the President's Committee of Advisors
    on Science and Technology, PCAST, is right now in fact working
    on putting together particularly good examples to illustrate
    the impact of the Federal investment in science and technology
    on people's lives in order to get the story out and help
    everyone understand the points that you just articulated so
    clearly.
        Investment in biomedical research is important. We do care
    about that.
        Senator Mikulski. Absolutely. And I am for it. And we do
    not fund FDA. FDA is very skimpy. And, therefore, we are
    running into problems. And I am not so sure it is the
    regulatory environment.
        Dr. Lane. My own view is that all of the agencies need an
    appropriate investment in R&D, including basic studies. But
    every agency cannot do all of the research that is necessary.
    So the interagency coordination that you talked about earlier
    is critically important. And that is done through the
    President's National Science and Technology Council. I think
    that does follow on to the FCCSET process that was begun under
    President Bush.
        Senator Mikulski. Well, my time is up. I will come back to
    my more specific questions.
        Senator Bond. Thank you, Senator Mikulski.
        Senator Burns.

     funding for the experimental program to stimulate competitive research

        Senator Burns. I have got just three areas. Thank you, Mr.
    Chairman.
        I was sitting there listening, and said, Okay, we have got
    some redundancy that we should root out to save some dollars
    maybe and to maybe increase dollars in some areas. And then you
    come back and say, Well, maybe that redundancy is okay, that
    every agency should be doing some things. I happen to think
    that we have got a little too much redundancy. I can see it. I
    can see it in FAA and NASA, some of those areas on R&D and
    engineering, but, nonetheless, we will deal with them later.

                                     epscor

        I have a couple of concerns, Dr. Colwell. You did not ask
    for any more money in EPSCoR in your initial request. And I
    think we should. High-performance computing and high-speed
    networking are vital to rural areas. We have taken several
    steps to help our States, but connections remain costly. And I
    think we should be looking into that and maybe relieving some
    costs there, to where our rural areas can participate,
    especially in high-speed computing.
        I know you are trying to include more researchers from the
    EPSCoR States on advisory and peer review committees, and I
    would suggest that we continue making some progress in that
    way.
        And, Dr. Lane, I look forward to working with you on the
    Next Generation Internet. We think that is very important.
        Those are areas where I have concerns in your request,
    which I think we can address. And I look forward to working
    with you on this appropriation. And I just commend you, and
    keep up your good work.
        Dr. Colwell. Thank you, Senator. I would like it to be a
    hallmark of my time at NSF that we brought science and
    engineering and technology to every part of the country. And we
    are looking at ways of moving to the next stage for EPSCoR. And
    we think that one direction might be strong partnerships with
    the States to leverage investments.
        Senator Burns. Those funds are meshed by State funds.
        Dr. Colwell. Yes.
        Senator Burns. And I think what I am concerned with is a
    little, when we get into allocating dollars out to institutions
    and this thing, I do not like the idea of the haves and the
    have-nots. And, of course, EPSCoR was designed to sort of
    spread that out across the country. Because I do not think all
    the brainpower in America is found between here and Boston. End
    of story.
        I have got another appointment. [Laughter.]
        Dr. Colwell. Thank you, Senator.
        Senator Burns. And I thank you. Those are the areas of my
    concern, and I look forward to working with you on that.
        Dr. Colwell. Yes, sir. It will be a pleasure.

                       geographic distribution of funding

        Senator Bond. I share your concerns, Senator Burns. And I
    was going to follow up and ask, I would like Dr. Colwell and
    Dr. Kelly, as well as Dr. Lane, to address the question
    specifically. There is no more money in the budget, do you
    share the concern that Senator Burns and I have? Not that we
    are against the corridor between here and Boston. Would you
    address that question? And what specific steps can you take?
    What is happening?

                               funding for epscor

        Dr. Colwell. Well, actually, we are doing quite a lot. It
    does not appear in the line that says EPSCoR, but we are making
    every effort--for example, through the science and engineering
    centers--to link minority institutions. We are making a very
    strong effort in the IT Initiative to ensure that funding will
    also include other than the top 100 or the top 50 universities.
        In fact, the trend--I did an analysis before I came here--
    and the trend is that more institutions are involved in
    research funding.
        Senator Bond. And that will happen in IT2?
        Dr. Colwell. Yes. We are making a very strong effort.

               distribution of support for plant genome research

        Senator Bond. And on Biocomplexity, will there be that
    opportunity as well?
        Dr. Colwell. Yes, indeed. As a matter of fact, I do think
    the plant genome has been an ideal demonstration of how we can
    use a large sum of money. We have 400 institutions involved.
    And we have been building on the strength of an institution--
    the University of Missouri. Many people do not know it, but
    historically the really exciting work in understanding genes
    was done by Louis Stadler and eventually also his son, David
    Stadler, working in Missouri. Through corn genetics, tomato
    genetics--agricultural research--they developed an
    understanding of just what a gene is and how transposons move
    genetic information around in the chromosome.
        So we are building on that historical strength, including
    partnerships among many universities. This is the way to go--
    partnerships within the community and also partnerships among
    the agencies.

              distribution of r&d funding across the united states

        Senator Bond. Dr. Kelly, would you like to comment on the
    question of the smaller institutions, the area that Senator
    Burns raised?
        Dr. Kelly. This has been discussed at the Board level
    fairly extensively. And I think the Board is committed to an
    effective distribution of our science and research funds across
    the United States. From my earlier comments, you know there is
    a strong belief that not only does science, engineering and
    technology have a tremendous impact on the quality of life, but
    it is key to economic development.
        So, in terms of the economic development capacity of all of
    the different States, we see that science and engineering is a
    driver there. And therefore, the effective distribution of
    those funds is critical. And we support what the Director has
    just said in terms of the distribution of our intellectual
    firepower across the country.
        However, part of the question you have with all of the
    various initiatives going on is the question of resource
    allocation. And right now we have dropped behind Germany, Japan
    and France in terms of the percentage of our R&D that is going
    into research--not just basic research, but research totally.
    As that develops--and, as you mentioned, information
    technology--that is going to become very important both in
    terms of international as well as domestic competitiveness.
        You know, Moore's Law that information technology
    productivity would double every 18 months started in 1980.
    Everybody thought it would last for 10 years. We are now
    projecting that Moore's Law will be maintained for another 15
    years. So, the Information Technology Initiative is critical to
    our international competitiveness. And our proportion of
    resources going into research and development is declining. It
    is critical internationally and it is critical domestically.
    And it is critical for all of the States in the United States.

                             plant genome research

        Senator Bond. Dr. Colwell, to follow up on the plant genome
    research, as I indicated, we appreciate the support for it. You
    have had an opportunity to look at it. Where do you see the
    research going? And can you give us any thoughts from your own
    professional background as to the benefits or to the potential
    breakthroughs you see coming if you can move forward and
    progress on this initiative?
        Dr. Colwell. I think it is an extraordinary initiative--
    very, very important. And if it had not already been started,
    it is one that I would have started, because I think it is one
    of the top priorities for the country, especially for
    agriculture. I see some directions that we should be going in
    understanding the genomes of the pathogens that infest and
    affect wheat and corn and soybeans and also the genomes of the
    insects.
        Because if we are going to devise a workable, sustainable,
    sensible method for improving agriculture, it is necessary to
    understand how these interact and how genes move amongst them.
    Thus, we need to progress in understanding the genetic basis of
    our productivity in agriculture.

                     benefits and dangers of biotechnology

        Senator Bond. As I discussed with Dr. Colwell, I have a
    great example of the pathogens, a great testing laboratory in
    what I thought was going to be a chestnut orchard. But let me
    ask a broader question that is of concern to us. And I would
    welcome the comments of all of you.
        We are seeing, even in the Midwest, growing concern about
    attacks on biotechnology generally. There are organized groups.
    There are very well-publicized individuals who, in my
    unprofessional opinion, are modern-day representatives of the
    Flat Earth Society, who think that any genetic engineering or
    biotechnology advances are bad. We know that in all of these
    things, whenever you are making progress, there have to be
    parameters.
        And I also note, I believe the National Academy of Sciences
    has made this a sufficiently high priority to fund their own
    study on it. Because we have major newspapers, unfortunately,
    who are flogging the dangers without understanding the
    benefits.
        Can you comment on the benefits versus the dangers, the
    best way of responding? How do we develop an accurate and
    adequate scientific response to the attacks that, frankly, have
    become widespread in Europe and are raising their heads
    throughout the United States, as well? And I would like to have
    the comments of all of you on that.
        Dr. Colwell. This is a manifestation of the serious
    problems we have in science and math education. It is critical
    that we have public education, as well. And NSF will be focused
    on this.
        In fact, one of the programs that we are launching--and it
    is a very exciting one--involves graduate students in
    elementary, middle and high schools. We have a program that
    just started which was going to be a pilot program, but the
    response was so positive we have gone ahead and gotten it
    started. And as part of our budget, it is only a modest
    amount--$7.5 million.
        The approach is to have a school system and the university,
    together as partners, propose an educational initiative,
    whereby graduates students receive a stipend and their tuition
    and fees are covered, but they will do their teaching in the
    elementary, middle and high schools under the pedagogical
    oversight of the expert teacher. In this way, it will bring
    content and excitement into the classroom, along with the
    mature experience of a teacher.
        So these kinds of things are really very, very important in
    educating the public.
        Now, with respect to biotechnology, I have been involved in
    that for a long time and I will try not to be too long-winded
    in this answer.
        Senator Bond. It is extremely important, I think, to all of
    us.
        Dr. Colwell. I chaired the BSAC, the Biotechnology Science
    Advisory Committee for EPA for several years. And I have been
    on the NIH Policy Board for Biotechnology and also FDA.
        I realized when I was on the FDA Food Committee, and the
    FLAVR-SAVR tomato was brought up for discussion, that it was
    very obvious that here a very tiny change that allowed just a
    deletion in the DNA, that allowed slow ripening naturally, was
    somehow viewed as being dangerous, when, in fact, the current
    method was to classically select tomatoes, for example, that
    would remain hard--sort of like golf balls, if you will--bring
    them into the supermarket and then spray them with chemicals to
    fast-ripen. And it seemed to me that there was a disconnect
    here in understanding that, in one instance, you were working
    with natural processes, and regulating them, and in the other
    you were more or less artificially treating the product.
        So we have an educational problem that is absolutely
    critical and one that we have to address.
        Senator Bond. Dr. Lane.

                                 biotechnology

        Dr. Lane. If I may add a comment, Mr. Chairman. I certainly
    agree with Dr. Colwell's points here: it is fundamentally an
    educational issue. We also have similar issues in the area of
    human health and what we would do at the genetic level there.
        But you made the point about the international side of
    this. There are many countries--many of them in Europe--that
    take a very strong view about biotechnology, and where the
    public attitude I think is, in fact, far less supportive of
    genetically engineered foods than has been the case in this
    country.
        As you know, there is this biodiversity treaty that we have
    not yet put in place. And under that treaty is the Biosafety
    Protocol. And this last year, since we are not at the table to
    formally be a part of those discussions, we barely missed some
    serious problems that would have major implications for trade
    in the area of food because of restrictions that would be
    placed on our exports to other parts of the world of
    genetically engineered foods. This is a serious matter
    domestically, but also very serious in terms of international
    trade.
        And I think it is very important in the future to try to
    ensure that the United States is at the table at those kinds of
    discussions. Because this is going to be of growing importance
    to our country. As you say, Mr. Chairman, it is a very
    important issue. It is both education, but it is also, in terms
    of international relations, a challenge to us.
        Senator Bond. Dr. Kelly?

                      need for public education in science

        Dr. Kelly. I would agree with everything that has been
    said, especially the emphasis on education. We really have not
    done as good a job as we could in terms of science and
    education in this country, starting with public education. We
    have seen some preliminary but very encouraging public
    education results, in terms of the statewide systemic
    initiatives and the urban systemic initiatives at NSF, in terms
    of the science and math education of public school children.
    But it is too early really to do full-scale evaluations of
    that. But it has been encouraging.
        We also have the education of the--and the National Science
    Board has taken on as a specific task--public education in
    general. The Nation has really a very, very limited
    understanding of the impact of science on its quality of life
    as well as its economy.
        As Dr. Lane said, from an international standpoint, it also
    has become a singular world. And we have developed an
    international task force to see how we can address the problems
    that Dr. Lane has described in terms of the international
    ramifications of science.
        Finally, there are, especially in the life sciences,
    serious ethical questions that we have been discussing in terms
    of gene therapy. But that really is more in the life science
    than it is in the agricultural and biocomplexity areas. But
    these are issues that the Board is addressing. But the central
    one from our vantage point really is the public education
    issue.
        Senator Bond. Senator Mikulski, if you do not mind, I want
    to just ask a follow-up, and then I will allow you to conduct
    your questions.
        Senator Mikulski. Sure, why do not you go ahead. I think
    this is a very interesting conversation.

                  educating the public on biotechnology issues

        Senator Bond. I am very much worried. We talk about public
    education and getting the information into schools. That is
    vitally important, and I am concerned about the education. But
    we have a major public perception problem that is being, in
    many instances, spawned on the network news at night. And
    somebody has got to be there to give a sound scientific
    response. And I do not know the responses. But we need somebody
    who is speaking up and saying, This is a legitimate concern;
    that is not a legitimate concern. This is a real danger; that
    is not a danger.
        What is the right institution to do that? Where do we send
    these naysayers when they come--they come after us and they
    say, We do not believe you because you are elected politicians.
    That is probably not a bad assumption. But to whom do we refer
    them? What is the right locale to get this information, to get
    a sound scientific answer?
        Dr. Lane?
        Dr. Lane. Well, I think you mentioned the National Academy
    of Sciences on this. The Academy has come forward in many
    questions of this kind that are quite controversial in order to
    put the credibility of the scientists behind those answers.
        But I actually think this is an area where credibility on
    the part of the public is going to come by hearing a consistent
    story from all sides that they trust, including government. So
    I think we have to speak out on this kind of scientific
    subject, but I also think the nongovernment side, which has
    much to lose if we continue to go down this road of
    misinformation, also has to speak up. And I think that is an
    area where we can do this in partnership.
        Senator Bond. The NSF, is this something that you can
    provide us a script and step out in front of the cameras and
    lay out an appropriate scientific description of the benefits,
    the potential dangers and the necessary controls?
        Dr. Colwell. This is actually part of our educational
    effort. For example, we are providing funding to the American
    Society for Microbiology for a four-part series on
    microorganisms, to understand the fundamental basis of
    microbiology and the genetics of microorganisms, and how that
    has provided for the extraordinary explosion and revolution in
    the biosciences. Oregon Public Broadcasting has been the key
    television station that has been involved.
        It is these kinds of presentations that are public service
    kinds of activities that are a very, very important part of the
    educational process to get that story, that message, in its
    full scientific veracity and authenticity, to the public.
        Senator Bond. Thank you very much, Dr. Colwell.
        I will submit the rest of my questions for the record.
        I now turn the questioning over, and the gavel, to Senator
    Mikulski. I am going to have to leave for a meeting with the
    Attorney General here shortly. But I will allow you to run the
    meeting.
        Senator Mikulski. Well, you know you have constitutional
    protections. [Laughter.]
        And I will be there for you.
        Senator Bond. I really appreciate that.

                    managing public fears related to science

        Senator Mikulski [presiding]. Thank you, Mr. Chairman.
        I think the chairman--this is just by way of a comment, but
    then I am going to get to my questions--we raised this with
    FEMA. There were other issues that we have raised in hearings
    on terrorism, and also a recent one on bacteria-resistant
    disease that Dr. Frist had. And here is the point that I am
    saying. Very often we have a bigger problem in managing the
    fear than we do in managing the problem.
        And, Dr. Colwell, you remember when we had the terrible
    outbreak of pfisteria in our Maryland rivers, for which there
    was great pause and concern. And the media kept showing the
    same three dead fish that looked like they had been mutilated
    by an X file creature. And it was serious. And it was real. And
    we then had almost a rapid plummeting of the Maryland seafood
    industry and Maryland tourism, for which we then did not know.
        Now, your Federal elected officials said we need scientific
    inquiry. And the day we announced that it was going to be done
    through responsible agencies, and CDC was going to come to see
    about public health consequences, where I said, you know, where
    there is a killer, you need a detective, and who is better than
    the medical sleuths. But just once the community heard that CDC
    was going to come, things calmed.
        Now, the point I think that Senator Bond is making in all
    of this is there needs to be I think a realistic approach.
    There will be problems in the United States of America, some
    because of other countries, some because of other groups, some
    just because of accidents, some whatever. But we need to have,
    I think, a relationship that the administration needs to lead
    with the media, that on a volunteer basis, they do not
    exacerbate the fear.
        That does not mean you do not report the news. That does
    not mean that you do not provide the public education and
    information. But just now that we have gone through a pretty
    rigorous hearing on Y2K, we are not only concerned about the
    functioning of the United States of America and the world, but
    we are worried about exacerbating the fear even now.
        So, we are not going to go into it in this committee, but I
    think this is all part of an initiative. And I know my own time
    will go, but there has to be some voluntary code of conduct
    among the media, where they report the news, but they do not
    become participants in exacerbating the panic.
        Dr. Colwell. I agree with you. And part of the problem is
    the ignorance of the distribution of the organism. That is, the
    lack of information. We do not have--or we are just beginning
    to get--a fundamental understanding of the molecular
    composition of pfisteria. That is, what it is.
        Senator Mikulski. They did not need a science lesson,
    though, Doctor. They did not need to know the molecular
    composition. What they needed to know was do not panic when you
    drank a glass of water in Bethesda.
        Dr. Colwell. Yes, I understand that. But, you see, we were
    not able to actually detect where it was. And we will be able
    to do that in the future--close the gap. But I understand your
    point and I agree with you. There needs to be a mechanism for
    bringing this information to allay the fears.
        Senator Mikulski. No. I think that there has to be a White
    House summit on really a way that where there are issues that
    occur at a national level that could produce panic, that there
    is a voluntary--and I stress the word ``voluntary''--code of
    conduct, where news and information is given to the American
    people, but not also in a way that exacerbates hoarding, panic,
    evacuation. That is what I am talking about.
        Dr. Colwell. I agree. I agree with you. Indeed, it is a
    very, very powerful point.

                              food safety council

        Dr. Lane. Senator, let me also mention that the President
    has put in place a Food Safety Council, which I am pleased to
    co-chair with Secretary Glickman and Secretary Shalala. Of
    course, the focus is on ensuring that our Nation's food, which
    is the safest in the world, continues to be, and is even safer,
    and to recommend the steps to be taken to make it safer. But
    this issue that you raise relates to food safety----
        Senator Mikulski. It is broader than a particular segment.
    It could be food. Then it could be the water. It could be an
    accidental chemical spill--an accidental chemical spill, not
    even a terrorist attack of a weapon of mass destruction.
        Dr. Lane. I will raise the issue at the Council.

                        preparing tomorrow's work force

        Senator Mikulski. Let me come back to what my own questions
    are, because we are moving beyond this committee. And, of
    course, it points out that in the Senate we do not have a
    science committee. We have a series of committees that work on
    it.
        Now, I want to talk about the President's initiatives and
    programs, but, first, I really want to talk about education.
    And what I so like about science and technology is that it has
    none of the traditional barriers. It does not matter if you are
    black or white. It does not matter if you are blind or cannot
    see. It does not matter if you are male or female. That,
    essentially, in the information technology world, there should
    be none of the old, often prejudicial, barriers that stop
    people from participating in the work force. It really should
    not matter anymore.
        And this, to me, is one of the greatest opportunities that
    this coming century will be able to provide. And, again, I will
    reiterate that I am deeply concerned, though, that we are
    already beginning to segregate out. And it is usually on the
    basis of social class, and then race and ethnicity. So, the
    ``same olds, same olds'' are occurring for circumstances that
    are not necessarily the old bigotry barricades, but other
    barricades.
        Now, my question is, one, generally for our country, what
    are the cross-cutting--you have cross-cutting on research--but
    what are the cross-cutting initiatives on literally I will call
    it work force readiness, not only at the elementary school,
    but, even more specifically also, if you could talk about the
    community college, which is often a gateway to higher
    education, particularly for new populations where no one has
    been to college? I have a great passion for the community
    college, and I think they might be overlooked or undervalued in
    this.
        Could I just hear those thoughts, and then where they might
    fit into this appropriation?
        Dr. Colwell. Absolutely. As you know, the H-1B visa funds
    are targeted for scholarships. And we have allocated more than
    70 percent to the 2-year community colleges and 4-year
    colleges, because that is where the work force issue really is
    highlighted. And in every one of our science and engineering
    technology centers, we have a linkage with the minority
    institutions and other than the research I institutions.
        Within every directorate there is an educational component
    in the major research funding that is given. That does not
    appear as part of the education budget, but it is there. It
    permeates all of the directorates. It is critical. And I am
    very pleased to say that the Assistant Directors for each of
    the seven directorates understand this. And so the focus on
    work force is a major one. In fact, $10 million for the IT
    Initiative is focused on the interface and work force issues.
        As you say, the IT Initiative is critical in many, many
    ways because----
        Senator Mikulski. Let me rephrase this, because we will
    come back to the IT Initiative.
        Dr. Colwell. Okay.
        Senator Mikulski. I know that we have the Urban Initiative.
        Dr. Colwell. Yes.
        Senator Mikulski. We have had other initiatives. We have
    initiatives, et cetera. My question is, just as you have this
    really very exciting multi-agency approach on IT2,
    is there a parallel one in education?
        Dr. Colwell. There are partnerships developing. As you
    know, the Department of Education----
        Senator Mikulski. They are developing, but there is not one
    like existed here?

                         education research initiative

        Dr. Lane. Well, there is, Senator, in the fiscal year 2000
    budget, the Educational Research Initiative, between NSF and
    the Department of Education. This is the second year of the
    initiative and a request to double the funding. The initiatives
    purpose is to address issues of whether our kids are ready for
    school and, in particular, what can technologies do to ensure
    there are not the barriers that are in place right now, to help
    kids learn to read and help kids learn mathematics. So that is
    one example of an interagency education initiative.

                              educational research

        Senator Mikulski. Well, do you feel that that has really
    got an ``umph'' to it--I mean, that it has energy, commitment
    and vitality? Or is it a lot of people meeting, processing and
    they will tell me that the process is the journey?
        Dr. Colwell. No, I think it is genuine. And let me say that
    one of the emphases that we will be placing in education will
    be on learning. I think we have spent a lot of time and money
    on teaching, but I think we need to do research on how children
    learn. And one of the partnerships we are developing is with
    NIH, where research has been done, and the Institute for Child
    Development. The NSF and NIH have a brain research program
    going. That kind of information can be brought to bear.

                  graduate teaching fellows in k-12 education

        Senator Mikulski. Well, I think that all sounds very good
    in terms of the basic research. But probably one of the most
    interesting things I heard in all of this, this morning was the
    fact that graduate students and undergraduate students were
    going into the classroom. Because particularly at the
    elementary school, where their emphasis has been on basic
    reading, which we really need our teachers to be able to do,
    but they do not have degrees necessarily in biology or some of
    these new, advanced programs. How does that happen? Does
    somebody pay for them to do that?
        Dr. Colwell. Well, normally graduate students--who have
    teaching fellowships--would spend 20 hours a week as a lab
    instructor in the undergraduate classroom. But it seemed to us
    that this is an extraordinary capability that could be brought
    into the elementary, middle and high schools. So that 20 hours
    a week that would be spent in the undergraduate laboratory
    teaching can now be spent working with children in the
    elementary, middle and high schools. But the partnership is
    critical between the university and the----
        Senator Mikulski. So it is like a teaching fellow program?
        Dr. Colwell. Yes, Senator.
        Senator Mikulski. Do they go into middle schools?
        Dr. Colwell. Yes, Senator.
        Senator Mikulski. Do the middle schools have a priority?
        Dr. Colwell. We have not set priorities. We have gotten a
    large number of responses, and we will see how that sorts out.
    But if it turns out that it needs to be----
        Senator Mikulski. Well, Dr. Colwell, let me just say this,
    again, just to move along. I do not want to be prescriptive in
    terms of programs, but I would say this. All of the research
    indicates--all of the data we have, from the CDC and NIH, NIMH,
    and child development, et cetera, says this, that it is in the
    middle--that by the third grade, if you cannot read, you leave.
    And particularly the little boys already start to do their
    truancy and so on, and little girls start to kind of mentally
    drop out, but they hang in there.
        Where little girls definitely start to drop out, if not
    intellectually, is in the middle school. That is where they
    decide they do not want to learn math. Or that is why they
    really begin an intellectual withdrawal, if not a truancy
    problem. Boys have a different variance of that, but, again, if
    they make it to the sixth grade, that is determinative of
    whether they go on to high school and what a lot of their focus
    is, also, in high school, where a high school related to
    vocational training would still need science and math.
        So, again, I would really like you to explore the
    deployment where you are most needed, where children are making
    their most decisions. Children make decisions along the way,
    and a lot depends on what is happening in the classroom,
    because unfortunately the classroom is becoming their new home.
        Dr. Colwell. I accept your suggestion, and I am delighted--
    --

                     innovations for middle school learning

        Senator Mikulski. And there is a great body of knowledge on
    that.
        Now, I am going to go to one other point, which goes to
    your informal learning budget, and I will come back in terms of
    its adequacy. The Centers for Disease Control--and, again, the
    Drug Czar and Justice says--that children are most--you know,
    our old channel 11, ``It's 11 o'clock, do you know where your
    children are?''--most people know where their children are at
    11:00; they do not know where they are from 3:00 to 8:00, or
    where they are gives them pause. It is the structured after-
    school activities. It is in the structured after-school
    activities where some of the biggest gains can be made.
        Because to go to another great American, General Colin
    Powell said, in order for children to learn, they have to be
    involved with a caring adult, either in the home, the classroom
    or in some other activity. I visited a PAL program, some of
    these programs, in Baltimore. These structured after-school
    activities are where kids are learning computers. They are
    doing their homework. And they love it, because they are
    working on little projects and things like that.
        And, again, if we are talking about deployment of defined
    resources, I think you need to go where you are most needed,
    not where the teaching fellows of the university thinks they
    should go. I think there should be guiding principles. And I
    would really encourage, then, conversations with not only the
    Department of Education, that has a great body of knowledge on
    this, but also CDC, Justice and so on. Because I think what we
    are talking about here is not only work force readiness, but it
    could be one of the sources of enormous prevention to either
    dropouts or not engaging in the basics that will take them to
    these new fields.
        And they might not go on to be a Ph.D. at the University of
    Maryland, but we want them to be a lab tech at the University
    of Maryland. Or even if you are going into fire technology, I
    mean the construction industry, you know, we need lab techs, we
    need a multilevel work force. But all will be based on science,
    technology and a grasp of information technology.
        So this is what I really urge you--really urge you--to
    really take a look at so that we maximize some of these new
    innovations and that we also then take a look at what our
    initiatives have produced--like the Urban Initiative and so on.
        Dr. Colwell. Believe me, Senator, I am resonant to what you
    are saying. In fact, that is part of the focus on learning.
    Because it is where and how you can have the most impact on
    children and their capacity to learn and to enable them to
    become productive citizens. Your suggestions are very well
    taken.
        Senator Mikulski. See, there is already a body of knowledge
    of when young people make decisions.
        Dr. Colwell. Yes.
        Senator Mikulski. And we can go on into that in another
    detail.

                        importance of community college

        Dr. Lane. Madam Chair, let me also comment about the
    importance of community colleges. I think that is a very
    important observation. And the program that NSF and the
    Department of Education work together on with the community
    colleges has done an extraordinary amount I think to pull
    together those colleges, with the universities on the one hand
    and high schools on the other hand, to try to remove those
    holes that the kids fall in at that critical stage. It is a
    different critical stage, but it is also very important to
    allowing people to get the education that give them the jobs
    that they deserve and that they need.

                       addressing future education needs

        Senator Mikulski. I could go on about this, but they are
    questions that I would like to discuss with you privately
    because of the time of the hearing and so on. It is just a
    really straightforward one.
        Just as our response to Sputnik and so on, which was a
    national emergency and a threat to the security of the United
    States, we passed something called the National Defense Act,
    which was really the building block of getting teachers ready
    to go into the classroom and people ready for the future. It
    served the Nation well.
        And my question now is, on the brink of the new millennium,
    do we need a new version of that, like a Universal Digital
    Education Act? I am not saying what it should be. I would like
    to have your thoughts on it, to see about this. But, again,
    everything is going into piecemeal. But let us do that later.
        Dr. Colwell. Yes, I would love to do that.

                      adequacy of funding for nsf programs

        Senator Mikulski. I would like to now just return to the
    President's initiative, which I find enormously exciting. And
    let me say this. As everyone knows, my whole strategic
    initiative idea--but this is what I was talking about--this is
    exactly what I was talking about--organizing around national
    goals and everybody being best at what they are most needed for
    and best at what they do. And this is exactly the conceptual
    framework. It was not industrial policy and winners and losers
    and everybody learning--it was not an occupational research
    program.
        Now, let me, though, go before to the new initiative, this
    question. In the President's budget, do you feel that the
    existing programs are adequately funded, or are there some that
    are more spartan that you would like that we have to really
    ensure that are the core NSF funding in the directorates, as
    well as very important programs like EPSCoR, and also the
    academic research and facilities? I cannot go anywhere in
    Maryland to any higher education facility without being hustled
    for a building, a laboratory or laboratory equipment.
        Dr. Colwell. I understand very, very well.
        Senator Mikulski. Yes. I mean, really.
        Dr. Colwell. Yes. We are very busy putting together, our
    2001 budget, as we discuss here the 2000 budget. And the unmet
    opportunities that we have got to address in order to remain
    competitive, to have a vibrant work force, to have a very
    strong, successful educational system, are the kinds of things
    that we are considering.
        And I would say that we have tried very, very hard in this
    budget to maintain balance. For example, I think the IT
    Initiative is critical for the social and behavioral sciences,
    because the databases that can now be mined through the IT
    Initiative are extraordinary. We are addressing some of this in
    the fiscal year 2000 budget because of the crossover into all
    the disciplines that the IT Initiative provides.
        Even though it appears as a budget item in the computer and
    information science and engineering science budget,
    IT2 really is an initiative within NSF that has been
    developed by discussions with all of the AD's, including
    participation--strong participation--by the math and physical
    sciences AD and the education AD. So that permeates throughout
    the agency. It is a very important cross-disciplinary
    initiative.
        I should also say that it is a very powerful interagency
    initiative, because indeed, as the designated lead agency, we
    have been working with the other agencies.
        Senator Mikulski. I am going to come back to that. But I
    asked you, do you have enough money to keep the other programs
    going at the level that they should?
        Dr. Colwell. Well, spartan, but yes.
        Senator Mikulski. You are scrapping, but yes. But where are
    you scrapping?
        Dr. Colwell. I think that, as we said earlier----
        Senator Mikulski. Because, I tell you, the scientists and
    your wonderful people who work at the Science Foundation and
    how this is also out in America--it is not an institute of
    science, it is a Foundation of Science--the only way you can
    attract and maintain people is ``show me the money.''
        Dr. Colwell. Right.
        Senator Mikulski. And if they think we go from one glitz
    and one glory to another----
        Dr. Colwell. I am concerned about the disproportionality in
    engineering, in the physical sciences--physics, math,
    chemistry, engineering. I am concerned about that.
        Senator Mikulski. The ones that were outlined in your
    testimony?
        Dr. Colwell. Yes, Senator.

                     increasing nsf award size and duration

        Dr. Kelly. Senator, from a national perspective and policy
    standpoint, it relates to what I was talking about before, in
    terms of the general, overall funding for research in the
    country. And people do not like to talk about it because it is
    not attractive, it is not sexy. But the fact of the matter is,
    with the underfunding, the amount of the average NSF grant and
    the duration of the average NSF grant is much too low to create
    the kind of stability that will make for good science and for
    improving the science in the field. We also do not have
    appropriate equipment and facilities budgets for the
    institutions.
        But those are--it is just a basic question right across the
    entire science, where, in the basis sciences, you do have that
    kind of underfunding and short-duration, low-amount grant,
    where most of our faculty spend most of their time developing
    proposals.
        Dr. Colwell. The average principal investigator-driven
    grant at NIH is about $250,000. The average investigator-driven
    grant at NSF is about $83,000.

                             overall science budget

        Dr. Lane. Madam Chairman, may I add a comment about the
    overall science budget?
        I think that if you look at the President's fiscal year
    2000 budget, he really submitted a very aggressive research
    budget, given the constraints on the fiscal year 2000 budget.
    He submitted a balanced budget. In fact, we have this wonderful
    situation of a surplus. The President has made clear that
    surplus is off the table until we deal with social security and
    medicare and other important issues. But it was a very good
    budget for science and technology. He would like to do more.
        I think one way to think about the Federal investment in
    science and technology is to what extent are we failing to
    utilize the extraordinary talents and capabilities of the
    people who are out there, the young people who are going to be
    the next generation, but also the existing scientists--
    scientific and engineering researchers in the country?
        My sense is we are significantly underutilizing this
    extraordinary resource. We are, in some sense squandering some
    of our earlier years' investment in higher education, because
    we have so many talented scientists who cannot get their
    funding from NSF and cannot get their funding from NIH just
    because the competition is so incredibly stiff. The grant
    sizes, we hear from all directions, are too small on the
    average. And there are many kinds of programs that simply do
    not exist at all. And the initiatives are there to try to help
    address those kinds of things.
        So these initiatives are very important or the President
    would not be bringing them over here. But there is only so much
    money. And so something has to give.

                            valuing higher education

        Senator Mikulski. Well, that is exactly right, and this is
    in no way to throw water on the initiative. I happen to think
    the initiative is crucial. I like the fact that it is
    interdisciplinary and the fact that you have NIH, NASA, the
    Department of Energy, NOAA, and the Department of Defense
    involved. It is like uniquely American. You have Defense and
    NOAA, NIH working. This is really extraordinary. And each
    working, hopefully, on maintaining the national security
    interests of the United States.
        So I am for it. But I do also worry about the basic
    sciences that essentially were outlined in your testimony. And
    I think it gives us pause about how we do the new initiatives,
    and yet are able to sustain the others at a level.
        And I think we, again, with candor, when one thinks that a
    recent graduate from a land grant college in software
    engineering could make $67,000 a year and no sweat, and being
    recruited with a subsidized lease for a BMW and all the other
    little Gucci things that--you know, Starbucks for life,
    vouchers, all of those kinds of things, and then you think of
    someone graduating, again, from the University of Maryland, or
    Hopkins, or the University of Missouri, and then that they are
    going to have to go through more debt to go for a master's and
    a doctorate, and then once they get it, forage for funds to
    pursue research. And if they are young, they have to stand in
    line because--just like at NIH, there are senior people who
    tend to be able to also garner that.
        So it is the young, the innovative, exactly what you said,
    Dr. Colwell, the innovation index. And so I worry about that.
    And I worry about how to recruit them and encourage them to go
    on for their advanced education and to do the type of research.
    And, at the same time, while they are working and feeling like
    a temp at many of our colleges--and many of our young people
    feel like temps at college--they are making $38,000 a year, or
    something like that, and say ``Why?'' And I am not talking
    about where they would leave and go to law school and
    intellectual property or something; they leave and go into
    other science fields.

                       information technology initiative

        Dr. Lane. Madam Chair, I think one thing that makes me feel
    particularly good about the Information Technology Initiative,
    even if it is in a tight budget, is that it indeed is going to
    impact virtually every area of scientist and engineering
    research and education. I cannot think of an initiative that is
    as far reaching in terms of the broad spectrum of scientific
    and research activities, but also in getting at some of these
    very important social work force issues.
        There is no rule that says somehow our young people cannot
    have better jobs, more fulfilling jobs, happier and healthier
    lives than their parents did. That is what we all want to see.
    I think these kinds of technologies, if properly used and
    consistent with our societal values, are precisely the kind of
    things that are going to make people's lives better. So I feel
    very good about it and believe that it is going to provide
    precisely that incentive to get the best minds focused on such
    critically important national issues.
        Senator Mikulski. I believe lives will be better. But, at
    the same time, if we are talking about learning at a community
    college, someone has got to be in that classroom. The question
    is, who is that somebody going to be? And maybe they do not
    worry about research, but how are they going to get into that
    classroom. And I think these are really big issues,
    particularly the education of the master's degree person, who
    often does find their way into the assistant and associate
    professor at community colleges or geographic areas that are
    sparsely populated that have a difficult time in recruiting.
        So we have got to think about this and how we are going to
    encourage people to go on for their graduate degrees. Yes, the
    private sector is alluring, and I think it is wonderful, but
    there could not have been a NASDAQ without infotech. I mean we
    could go to Wall Street. We could go to the New York Stock
    Exchange. And what do we see at the New York Stock Exchange?
    Everybody at a computer.
        Look at what the New York Stock Exchange did a few weeks
    ago. They had their own Y2K drills. It was phenomenal, with
    Wall Street really working several Saturdays in a row,
    everybody at their computers, making sure that the financial
    services will be fit for duty at the turn of the century.
        But all of that exists because of information technology,
    not only science and savings lives and MRI's. At the same time,
    we need people who are willing to go into scientific research
    and stay there. And we cannot undervalue them or underfund
    them. And the competition now is so great, I think that is one
    of your biggest challenges. That is one of your biggest
    challenges for minorities going on to higher education. Am I
    correct?
        Dr. Colwell. You are absolutely correct.
        Senator Mikulski. I mean just the level of recruitment is
    phenomenal for the bachelor's degree. And I think it is great
    that, if you are the first in your family and you have got an
    engineering degree, you go back into that neighborhood and you
    can show that education does lead to prosperity, I think it is
    fantastic. But then I worry also about them going into science,
    advanced degrees in science research.

             education of foreign individuals in the united states

        Dr. Lane. Madam Chair, there is no more important issue for
    our country, I think. This discussion also underscores our very
    real dependence on foreign people coming to this country for
    their education and to stay. And thank God they did. Otherwise
    we would not be a leader in science and technology, I believe,
    at this time in our history.
        But many of those young people are not going to come to the
    United States for their education in the future. The whole
    world is developing its educational system and its own niche in
    science and technology. We have got to find a way to ensure
    that all of our citizens from all communities, all cities, all
    family backgrounds are able to participate in this
    extraordinary career in science and technology. We have got to
    find a way to do that. And our administration is committed to
    making those efforts.
        Senator Mikulski. I want to thank you for this hearing. As
    you can see, there is no end to the interest and certainly no
    end to the interest that Senator Bond has. You might note that
    there were not many colleagues here, but the President, as we
    spoke, was holding a 60-member briefing on the Kosovo
    situation. Many of our members--in fact, most of our members--
    were participating in that, on both sides of the aisle. And so
    do not view the attendance as an interest index. It was really
    because of the pressing emergency with the Kosovo situation.
        I will conclude this hearing by saying that I think that
    there needs to be an education of the Congress itself about
    what the Federal agencies do, and then their synergistic and
    cumulative effect with one another.

                         Additional committee questions

        We want to thank you. We want to thank you for the ideas.
    We look forward to what happens on the budget debate, if we can
    operationalize these good intentions. And we look forward to
    working with you.
        [The following questions were not asked at the hearing, but
    were submitted to the Agencies for response subsequent to the
    hearing:]

                       EXECUTIVE OFFICE OF THE PRESIDENT

                    Office of Science and Technology Policy

                      Questions Submitted by Senator Bond

                                  pitac report
        Question. I understand that the IT2 initiative was
    developed in response to the President's Information Technology
    Advisory Committee (PITAC) report to the President. In addition to the
    panel's concerns about managing the initiative, the report also states
    that new modes of research support and new implementation strategies
    will be required. PITAC also recommended that the Federal government
    ``must not subsidize activities left to the private sector.''
        Is the private sector investing in long-term, high-risk information
    technology research?
        Answer. The IT sector has more than doubled its annual R&D
    investment over the past 10 years. But this private investment is
    largely focused on the near-term development needs of a intensely
    competitive marketplace--only 5 percent to 10 percent of industry's R&D
    expenditures go toward non-product research, and a substantial share of
    that investment is for applied, not fundamental, R&D. Industry
    recognizes that their investment is insufficient to cover many critical
    long-term research needs. In addition, the market rarely provides
    industry with incentives to make substantial investments in basic
    scientific and engineering knowledge, whether derived through
    application of advanced computing tools, as proposed by IT2
    , or through other means of scientific discovery. In both cases, the
    compelling national interest to ensure adequate R&D investments
    justifies a continued and strengthened Federal role.
        Question. Do you expect the private sector to be involved in the
    IT2 initiative?
        Answer. We anticipate that industry will compete to supply the
    high-end computing and communications infrastructure that will be
    procured under the advanced computing component of the initiative. This
    would not be possible without industry contributions (in-kind or cost
    share) to the research effort to build and operate the new
    infrastructure. Also, industry has a strong track record of partnering
    with government and academic researchers in order to speed the
    development of fundamental breakthroughs into commercial applications.
    A rather dramatic example of this is the collaboration between the Next
    Generation Internet's (NGI) research partners at universities, who are
    engaged in basic networking research, and the manufacturers of advanced
    network equipment, who contributed $500 million in equipment for use in
    NGI partner testbeds. Clearly beneficial to both researchers and their
    industry partners, such collaboration also accelerates bringing the
    benefits of basic research to the economy.
        Experience strongly indicates that these two kinds of industrial
    participation--vendors and industry partners--will carry over into
    IT2 activities.
        Question. How will NSF and OSTP determine which activities should
    be funded by the public and which ones should be best left to the
    private sector?
        Answer. The research agenda outlined for the IT2
    initiative corresponds to the priority fundamental research areas--and
    specific research topics within those areas--identified by the
    President's Information Technology Advisory Committee (PITAC) as
    requiring increased and sustained Federal support. The IT2
    is a multi-agency effort. Although NSF and OSTP have leadership roles
    in coordinating the initiative, each participating agency will
    determine which research it will fund. Agency expertise and agency
    mission will be important determining factors in selecting research
    that contributes to the goals of the initiative.
                           it2 management
        Question. I would now like to discuss how the IT2
    initiative will be managed. NSF has been designated as the lead agency
    for this major initiative and I understand that OSTP will play a
    significant role in the oversight of its implementation. With five
    other agencies involved, managing this initiative will be a major
    challenge to NSF. Both the NSF Inspector General and the President's
    Information Technology Advisory Committee (PITAC) have raised this as a
    serious management challenge and recommended that NSF needed to ensure
    that adequate resources would be devoted to programmatic oversight. I
    also recall from last year's hearing that Dr. Lane expressed his
    concern about the Foundation being asked to take on larger challenges.
        As Director of OSTP and Science Advisor to the President, do you
    still have the same concerns you expressed last year about NSF's
    capacity for taking on larger initiatives?
        Answer. NSF has a sound track record of leadership in major multi-
    agency programs that support information technology R&D. It has
    maintained a leadership role within the High Performance Computing and
    Communications (HPCC) program since its inception in 1991. NSF also
    consistently has been one of the top funders of information technology
    research and infrastructure development supported through that program.
    Because the IT2 initiative builds on past and ongoing R&D
    activities in the HPCC program, we currently are merging coordination
    of IT2 and HPCC into an integrated management structure in
    which NSF will continue to have a leadership role. I am confident that
    NSF will continue to ably exercise its leadership in the integrated
    programs.
        Question. Is the issue related to NSF's management resources been
    an area of discussion for the Administration? How is the Administration
    addressing this matter?
        Answer. Although the NSF enjoys a leadership role in the planning
    and implementation of the IT2, the initiative is a multi-
    agency effort. Therefore management of the initiative is being assured
    through mechanisms that draw on multi-agency resources and provide
    coordination across all participating agencies.
        The IT2 initiative will be coordinated through the NSTC
    as part of an integrated program that incorporates related ongoing
    Federal information technology R&D programs. A Senior Principals Group
    has been established to provide policy guidance and leadership. I chair
    that senior management team, whose members currently include the NSF
    Director, NASA Administrator, Under Secretary of Energy, Under
    Secretary of Commerce for Oceans and Atmosphere, NIH Director, Under
    Secretary of Defense for Acquisition and Technology, and senior OMB and
    NEC officials. Once the IT2 and HPCC program have been
    merged, the Senior Principals Group may be expanded to include
    appropriate senior policy officials from other participating agencies.
        An operational Working Group chaired by the NSF Assistant Director
    for Computer and Information Science and Engineering will coordinate
    research and infrastructure planning while promoting full and open
    competition policies. The Working Group includes members with ties to
    related ongoing multi-agency research programs. I have tasked the
    National Coordination Office (NCO) for Computing, Information and
    Communications R&D, which assures coordination of the HPCC programs, to
    support the Working Group during and after the transition to integrated
    coordination of IT2 with the ongoing programs.
                                 indirect costs
        Question. I want to raise some concerns about the amount of scarce
    federal R&D dollars that are not going directly to researchers--namely,
    indirect costs or overhead. I am concerned that the federal government
    pays a significant amount of money for indirect costs at universities
    and other research institutions. I am also troubled by the numerous
    examples of inappropriate or questionable charges for indirect costs
    that have been uncovered in recent years. This reinforces my fear that
    the federal government is not able to do as much oversight when costs
    are being defined as indirect rather than direct. And despite numerous
    attempts to contain indirect costs, a lot of funds are still being
    spent on non-research purposes.
        Last year's NSF authorization act mandated an OSTP study and report
    to Congress on indirect costs. Can you please tell us about the
    progress of the study and your preliminary findings?
        Lastly, what recommendations do you have regarding the payment of
    indirect costs?
        Answer. Much attention has been focused in recent years on the
    indirect costs paid to universities for the conduct of research. These
    costs are a real and necessary part of the total costs of research, but
    it is in the interest of both the universities and the Federal
    government to ensure that these costs are not excessive.
        OSTP is on schedule to deliver the indirect cost study to Congress
    as required by last year's NSF authorization bill. Our preliminary
    findings show that since 1991, universities have reduced indirect cost
    rates significantly. I look forward to forwarding the completed report
    to you later this year.
                             policy issues at ostp
        Question. I have read articles that indicate a growing interest in
    the field of nanotechnology. I also understand that the administration
    is reviewing this area and may recommend a major strategic initiative
    on nanotechnology similar to the information technology initiative.
        Do you view nanotechnology as an emerging field of interest for the
    federal government? Are you indeed planning a major nanotechnology
    initiative for fiscal year 2000? If so, what funding amount are you
    projecting to propose in the budget and does this mean that the
    information technology initiative will not be a major emphasis next
    year?
        Answer. Nanotechnology is a very exciting new realm of scientific
    discovery that has the potential to impact chemical processes,
    electronics, biology, information technology and advanced materials. I
    stated in my April 1, 1998 testimony to Congress that `` * * * if I
    were asked for an area of science and engineering that will most likely
    produce breakthroughs of tomorrow, I would point to nanoscale science
    and engineering often called simply ``nanotechnology * * * ''
    Nanotechnology has the potential to be a very big economic engine for
    the 21st century. As such, the Administration has been coordinating an
    effort with key federal activities to assess where the federal
    government is currently investing in nanotechnology and where it might
    make sense to expand funding to put the United States in a competitive
    position to exploit discoveries that could emerge from nanotechnology
    research.
        Question. Besides nanotechnology, what do you see as the primary
    issues facing OSTP over the next few years and what are the major
    science policy issues, as well as R&D funding priorities, that face the
    Nation over the next few years?
        Answer. I have attached, for your information, a copy of a joint
    memo from OMB and OSTP prepared for the fiscal year 2000 budget process
    that highlights the Administration's goals for science and technology,
    the principles that guide our investment decisions, and specific
    funding priorities. A similar memorandum is being prepared for fiscal
    year 2001, which I will be happy to share with the Committee when it is
    complete.
                                 infrastructure
        Question. Are there any particular federal programs or activities
    that are available to help research institutions with research
    infrastructure needs such as laboratory equipment, growth chambers,
    greenhouse space, modernization of existing laboratories and other
    necessities?
        Answer. There are a few programs that are available, but they tend
    to be directed at research sponsored by particular agencies. For
    example, the NSF has a program for acquisition, renewal, and
    development of shared laboratory equipment, but its selection criteria
    requires the associated research be of the sort sponsored by NSF. NIH
    has a joint program with NSF for similar purposes, but to be eligible,
    investigators must be funded by both agencies. There is funding
    available for modernization of laboratories from NIH, but only for NIH
    sponsored activities. In general, most agencies provide some money for
    laboratory equipment for their sponsored researchers.
        Question. Do you believe there is a substantial unmet need for
    infrastructure purposes? Do you have any cost estimates on these unmet
    needs?
        Answer. Yes, there is a widespread need for such funds, both as
    regards research equipment and conventional infrastructure
    (refurbishments of buildings, roofs, sewers, etc.) across many
    agencies. There is no good estimate on research equipment needs, but
    the estimate on conventional infrastructure needs have been estimated
    in various reports to be higher than $10B when looked at across all
    agencies. The 1998 NSF ``Science and Engineering Indicators'' estimates
    $7B for unmet conventional infrastructure needs at universities and
    colleges and another $1.4B in research equipment at those institutions.
        Question. Do you have any suggestions on how we can meet these
    unmet needs?
        Answer. The NSF report cited above and two reports from the
    National Research Council and the GAO have stated that as budgets have
    gotten tighter infrastructure fixes have been postponed so that
    operations could continue. Thus an obvious solution to modernize
    research equipment is increased funding. The solution to conventional
    infrastructure needs could also be met in that way, but there may be
    other solutions. In this latter case there may be a broader array of
    funding scenarios such as third party financing, GSA or private
    parties. We should add that one component of the indirect costs
    assessed on federal grants to research institutions addresses ongoing
    costs for maintenance and refurbishment of the infrastructure. In
    general, however, these charges do not provide the capital needed for
    major infrastructure development and renewal.
                         development of it2
        Question. While the goals of the initiative seem worthy, I am
    concerned that this idea may have been driven by the White House and
    not something that was developed in response to the demands of the
    scientific community.
        Can you describe how this proposal was generated and to what extent
    the scientific community was involved in its development?
        Answer. The PITAC was established in February 1997, pursuant to
    Congressional authorization in the HPC Act of 1991. Over the past year,
    the PITAC has undertaken an evaluation of Federal research programs to
    support development of advanced information technology.
        In a letter to the President in early June 1998, the PITAC urged
    that public investments in computer, communication, and other
    information technology research be significantly expanded to ensure an
    ever-increasing standard of living and quality of life for our people.
    Their findings were subsequently detailed in an Interim Report to the
    President, released in August 1998.
        The President asked me to prepare a detailed plan that addressed
    the PITAC findings. Following the release of the PITAC interim report,
    I held a meeting of the principals from our key R&D agencies. I
    requested that they help me craft an initiative which not only
    strengthens our investment fundamental research, as recommended by the
    PITAC, but which also provides the strongest possible computational
    support for advancing applications in science and engineering. We
    convened an interagency working group to develop the initiative.
        Throughout the fall, as the initiative took shape, we looked to the
    research community for guidance. This included soliciting feedback on
    the PITAC interim report and the appropriate Federal role to address
    its findings, through: briefings to the Congress; briefings to major
    scientific advisory boards (e.g., the National Science Board and the
    President's Committee of Advisors for Science and Technology); speeches
    and presentations to major national and international scientific
    associations (e.g., AAAS and NAS conferences, the Town Hall meeting at
    ``SC98,'' an annual international supercomputing conference, meeting of
    the G-8 science ministers); and consultations with major computer
    industry leaders.
        We also drew upon the results of a widely attended July 30-31
    workshop, co-sponsored by DOE and NSF at the National Academy of
    Science, on the potential for a high-performance computing initiative
    to address large-scale scientific problems. DOE and NSF had already
    begun working with the scientific community to propose a program in
    this area, and those ideas were incorporated into the overall planning
    for an initiative.
        Finally, we asked the PITAC to convene working panels to flesh out
    more detailed research agendas within the priority areas that they had
    identified.
                                     ______

                      Questions Submitted by Senator Burns

        Question. In helping put together the fiscal year 2000 request for
    the Next Generation Internet (NGI), how were decisions made as to which
    federal department or agency would have which responsibilities and how
    were responsibilities divided among the agencies?
        Answer. NGI agency roles and activities are set forth in the NGI
    Implementation Plan issued in July 1997. These basic roles and
    activities remain unchanged in fiscal year 2000, although there have
    been some adjustments to milestones due to Congressional funding
    decisions for the fiscal year 1998 and fiscal year 1999.
        Question. In putting together the fiscal year 2000 request for the
    NGI, was any consideration given to which parts of the proposal would
    be especially useful or applicable to rural/EPSCoR states and if so
    what are the results?
        Answer. NGI is a research and development program to provide the
    technologies and applications required as foundations for the next
    generations of the Internet. Institutions with fundable research
    proposals must not be disadvantaged in competing for NGI awards merely
    because of their location. In fiscal year 2000, some NGI funds will
    continue to be used to help rural/EPSCoR institutions connect to the
    NSF's high speed network, the vBNS, which is part of the NGI testbed.
    NSF already has expanded the High Performance Connections program to
    cover all 50 states and has made 33 grants in 18 EPSCoR states.
        Question. What portions of the fiscal year 2000 NGI program would
    be most helpful to rural states? Which parts of the NGI budget do you
    believe the rural states would be most competitive in?
        Answer. Eventually, NGI research on wireless, hybrid, and satellite
    technologies may reduce the cost and improve the services available to
    all users including those in geographically remote areas. In the
    meantime, associated funding to expand the reach of the NSF's High
    Performance Connections program in rural states will greatly enhance
    opportunities for rural/EPSCoR institutions with fundable proposals to
    compete for NGI awards.
        Institutions that will be most competitive for NGI awards will be
    those where research is emphasized and where there are fundable
    proposals in advanced networking research or applications. These
    qualifications are not necessarily linked with the geographic location
    of the institution.
        In the annual review of the NGI which was submitted to Congress on
    April 28, the President's Information Technology Advisory Committee
    (PITAC) noted that the NGI program is not an infrastructure program,
    and therefore cannot directly address reach to rural, inner-city,
    minority, or small institutions. The PITAC has recommended that
    Congress consider additional funding for a program where the NGI
    research institutions act as aggregators and mentors for these
    institutions. Since this is an infrastructure issue, and not research,
    it is not covered by the NGI or the proposed Information Technology for
    the Twenty-First Century (IT2) initiative.
                                     ______

                          NATIONAL SCIENCE FOUNDATION

                      Questions Submitted by Senator Bond

                          commitment to it2
        Question. The Administration's information technology initiative
    was proposed in response to the President's Information Technology
    Advisory Committee's (PITAC) recent report and recommendations. PITAC
    specifically recommends additional funding for information technology
    of $4.743 billion over the fiscal year 2000--2004 period and over $2
    billion annually thereafter.
        Is the Administration budgeting the PITAC-recommended amounts? If
    not, what exactly is the Administration budgeting for this program in
    the outyears?
        Answer. The PITAC Report recommended a multi year funding plan. NSF
    believes that this is necessary to expeditiously realize the PITAC
    goals, recognizing that more than one year is needed to provide and
    maintain both the needed fundamental research and high-end computing
    capabilities in the outyears. Future year requests are dependent on the
    fiscal constraints that are in place at the time, and program plans by
    the participating agencies will be adjusted to meet their appropriated
    budgets.
        Question. If the requested funding amounts are not provided for
    IT2, will NSF use existing resources within its Computer and
    Information Science and Engineering account or other accounts such as
    the Integrative Activities account?
        Answer. The planned IT2 program is integrated with and
    expands upon ongoing research, adds new emphases, and changes the
    balance of ongoing activities. NSF plans to address the IT2
    initiative's priorities as closely as funding levels permit, even if it
    means reducing attention in some currently supported areas.
                         development of it2
        Question. While the goals of the initiative seem worthy, I am
    concerned that this idea may have been driven by the White House and
    not something that was developed in response to demands of the
    scientific community.
        Can you describe how this proposal was generated and to what extent
    the scientific community was involved in its development?
        Answer. The science and engineering research community was actively
    involved in identifying needs and recommending research priorities for
    the IT2 initiative. Prior to and early in the fiscal year
    2000 budget development process, NSF funded studies to identify
    research opportunities and challenges, and how best to take advantage
    of the rapidly developing computational capabilities in high-end
    computing in cutting edge research. A series of workshops were held in
    which members of the external scientific and engineering community
    identified many important problem areas requiring attention and
    important scientific problems whose computational needs are not met by
    computational capabilities currently available to the general science
    and engineering research community. At roughly the same time, the
    Department of Energy (DOE) was developing a plan to implement high end
    computing for their mission related applications. In addition, a joint
    NSF/DOE workshop was held at the end of July 1998 to study these latter
    issues.
        A significant outcome of all of these efforts was the
    identification of major research opportunities and needs in computer
    science and engineering. The President's Information Technology
    Advisory Committee (PITAC), working independently, drew many of the
    same conclusions. Specifically, these parallel activities noted that
    there was a pressing need for considerable expansion of federal
    investments in basic research, information and computing
    infrastructure, and the development of human resources if the nation's
    leadership in this field is to be maintained. Consequently, several
    agencies joined together to develop a broad fiscal year 2000 response
    to the PITAC recommendations. Further planning for the IT2
    initiative has taken place through an intensive interactive process
    involving, among others, the President's Science Advisor and the
    National Science and Technology Council.
                                  pitac report
        Question. I understand that the IT2 initiative was
    developed in response to the President's Information Technology
    Advisory Committee (PITAC) report to the President. In addition to the
    panel's concerns about managing the initiative, the report also states
    that new modes of research support and new implementation strategies
    will be required. PITAC also recommended that the Federal government
    ``must not subsidize activities left to the private sector.''
        Is the private sector investing in long-term, high-risk information
    technology research? Why or why not? Do you expect the private sector
    to be involved in the IT2 initiative (e.g., cost-sharing)?
        Answer. In general, the private sector does not invest heavily in
    long-term fundamental research in information technology because of
    short term market pressure, the need to develop new products, the
    highly competitive nature of the industry, the high risks associated
    with long-term basic research, and an inability to exclusively capture
    the results of basic research. As a result, the federal government has
    been the principal source of funds for basic research in information
    technology. There is considerable evidence that this governmental
    investment in fundamental research on communications and computing
    technologies has led to U.S. domination in the information technology
    industry sector, and to the creation of multi-billion dollar
    industries.
        NSF has a long-standing practice of partnering with industry in a
    variety of ways, including significant cost-sharing involving either
    direct funding or in-kind contributions. This practice will continue in
    IT2 activities. Joint efforts may include participation in
    research centers and projects, prototyping and real world testing of
    advanced computers, training for industrial researchers in new high-end
    technologies, research sabbaticals, and training of graduate and post-
    doctoral students.
        Question. How will NSF determine which activities should be funded
    by the public and which ones should be best left to the private sector?
        Answer. NSF is the only Federal agency mandated to promote the
    health and vitality of research and education in science and
    engineering across all fields and disciplines. NSF emphasizes the
    initiation and support of basic scientific research and research
    fundamental to the engineering process. Past experience indicates that
    the majority of this research will be carried out at the nation's
    colleges and universities.
        The determination of research priorities in information technology,
    as well as the other areas supported by the Foundation, will be based
    heavily upon advice received from experts in the relevant external
    academic, industrial and governmental research communities. One of the
    hallmarks of NSF is its merit review system. The Foundation relies on a
    system of merit review by independent experts to judge the quality and
    impact of research being considered for support. Community input on
    overall priorities is also received through a variety of mechanisms,
    such as informal discussions, workshops, special studies and
    Directorate Advisory Committees.
        Research planning for IT2 will be coordinated through a
    National Science and Technology Council interagency process in order to
    minimize overlap and duplication of effort among all the federal
    agencies involved. In addition, where appropriate, industrial
    scientists and engineers will take part in the review and evaluation of
    proposals not only to help assess scientific merit but also to help
    preclude the funding of proprietary research.
                           evaluating it2
        Question. The goals of the IT2 initiative seem laudable,
    yet broad in some respects.
        How will we be able to assess whether the program, if funded, has
    achieved its objectives? Would an audit and evaluation of the
    IT2 initiative be undertaken by the executive branch or an
    external source?
        Answer. Active monitoring and progress assessment are important
    elements of IT2, both on the individual project and broad
    initiative scales. PITAC recommends that an annual review of the
    research programs be carried out to insure that the investment
    portfolio is properly balanced, comprehensive and well-coordinated.
    Such a review would be carried out under the NSTC, with high-level
    external advice provided by PITAC. In addition, progress under
    IT2 would be part of Government Performance Results Act
    (GPRA) reporting procedures. Impact evaluation over a longer time frame
    would be carried out through a commissioned independent study, similar
    to the National Research Council evaluation of the HPCC initiative--the
    1995 ``Brooks-Sutherland Report''.
                           it2--management
        Question. NSF has been designated as the lead agency for this major
    initiative and I understand that OSTP will play a significant role in
    the oversight of its implementation. With five other agencies involved,
    managing this initiative will be a major challenge to NSF. Both the NSF
    Inspector General and the President's Information Technology Advisory
    Committee (PITAC) have raised this as a serious management challenge
    and recommended that NSF needed to ensure that adequate resources would
    be devoted to programmatic oversight. I also recall from last year's
    hearing that Dr. Lane expressed his concern about the Foundation being
    asked to take on larger challenges.
        First, please explain how NSF as the lead agency will manage this
    initiative from an interagency perspective. For example, will NSF
    direct NASA's activities? How will NSF work with the other agencies to
    coordinate, set priorities, and implement the program?
        Answer. NSF has been designated as the ``lead'' agency for this
    initiative in keeping with the President's Information Technology
    Advisory Committee (PITAC) finding that basic research in information
    technology is critical to maintaining U.S. leadership in information
    technology. Each agency will be responsible for establishing the
    priorities required to carry out its mission. NSF's role is to
    coordinate individual agency efforts so that they complement each other
    to meet the overarching goals of the IT2 program. In
    addition, NSF is also responsible for maintaining the basic research
    emphasis in IT2.
        Management of the IT2 initiative is coordinated through
    the National Science and Technology Council (NSTC). A Senior Principals
    Group has been established that includes the NSF Director, NASA
    Administrator, Under Secretary of Energy, Under Secretary of Commerce
    for Oceans and Atmosphere, NIH Director, Under Secretary of Defense for
    Acquisition and Technology, and senior OMB and NEC officials. This
    group assists in establishing overall priorities and ensuring balance
    in the national information technology portfolio. An operational
    working group, which meets weekly and is chaired by the NSF Assistant
    Director for Computer and Information Science and Engineering (CISE),
    coordinates research and infrastructure planning while promoting full
    and open competition policies. Subsidiary working groups organized
    around appropriate focus areas of IT2 research and
    development will coordinate research activities, propose new
    initiatives, and address programmatic objectives related to their
    research focus areas.
        Question. Second, does NSF have the staff resources and management
    structure to manage this effort in addition to its current workload?
    Have you discussed these management issues with the IG and will you ask
    the IG's office to provide advice?
        Answer. At present, the Foundation does not have believe that it
    has sufficient staff resources to manage the increased level of
    activity resulting from the IT2 initiative. Additional staff
    will be needed, with the number depending on the funding level and the
    proportions of the particular activities that are implemented, e.g.,
    the type and number of research projects supported and the
    implementation of the terascale computing system.
        We believe that, given the proper resources, NSF has the experience
    to successfully meet the management challenges listed by the Inspector
    General in the case of the IT2 initiative. NSF is presently
    developing the internal management structure for the IT2
    initiative that draws upon prior Foundation experience in the selection
    and management of research carried out by individuals, teams, and
    centers, and interagency efforts in the High Performance Computing and
    Communications (HPCC) and the Next Generation Internet (NGI) programs.
    The Inspector General participates in policy discussions among senior
    management in which many of these issues are considered. NSF's
    demonstrated ability to establish quality merit-reviewed research
    programs in coordination with other federal agencies, such as the NSF/
    EPA partnership, will help ensure quality management of this effort. We
    have also gained considerable experience from partnering with agencies
    such as the Defense Advanced Research Projects Agency (DARPA), the
    National Library of Medicine, NASA and the Library of Congress in the
    Foundation's expanding digital libraries program. Other examples of
    NSF's ability to establish a productive management structure include
    our management of networking research, building NSFNET, and focusing on
    new research challenges after the Internet was established.
                              performance measures
        Question. This subcommittee has been concerned about the
    Foundation's failure to provide a budget justification that meets the
    requirements of the Government Performance and Results Act. We believe
    that it is important for all NSF initiatives and programs to be
    identified with specific funding as well as quantifiable goals and
    milestones. The goal statements for much of the fiscal year 2000
    performance plan--especially in the areas of research investments and
    training--appear to be as general and nonquantitative as last year.
        How does NSF propose to comply with our concerns?
        Answer. NSF has expressed its performance goals for results as
    descriptive standards under the Government Performance and Results Act
    (GPRA) option for use of the ``alternative format''. NSF's use of the
    alternative format, approved by the Office of Management and Budget,
    allows the agency to express its performance goals for results in
    descriptive terms, rather than in quantifiable and measurable form. The
    descriptive standards in NSF's Plan include definitions for
    ``successful'' or ``minimally effective'' performance outcomes. This is
    permissible under Section 1115.b.1.A of the Results Act. NSF's level of
    success in achieving these results-oriented goals will be determined
    through external assessment processes. This approach allows for a
    responsible and comprehensive assessment of the continuous flow of
    results from NSF-supported activities. These results will be
    highlighted in NSF's annual GPRA performance reports. Since both the
    substance and the timing of outcomes from NSF-supported activities are
    unpredictable, performance standards for the results of NSF's
    investments in research and education cannot be adequately expressed in
    quantified, annual performance goals. Further, the discrete alignment
    of program funds with specific performance goals is difficult to
    attain, because NSF investments generally work toward more than one of
    the performance goals simultaneously. Also, because research results
    are unpredictable in a given year, it is not possible to tie resources
    in a given year to outcomes obtained in the same year. Nevertheless, as
    we gain experience from application of the GPRA process, we will
    continue to seek techniques to more closely tie resources to the
    categories of investment presented in our performance plan.
                           math and science education
        Question. This month the National Science Board released a report
    on math and science education. I understand that this report and its
    recommendations are in response to the so-called ``TIMSS'' report that
    basically said our middle and high school students are not doing well
    in math and science education compared to their international
    counterparts.
        How is NSF responding to the Board's report and recommendations?
    Are there any related IT2 activities that will benefit
    science and math education at grades K-12?
        Answer. The National Science Board (NSB) report underscores NSF's
    commitment to providing national leadership in K-12 science and
    mathematics education. Over the last decade, NSF has pursued a
    comprehensive strategy for developing standards-based curricula,
    instructional strategies, and assessments. To promote their
    implementation, NSF has created innovative strategies for reforming
    entire education systems (i.e., state, urban, rural, district levels).
    The NSB report also highlights the critical role of partnerships. Most
    of our programming requires meaningful collaborative working
    relationships with major stakeholders that bring the broad ownership
    critical to success. Current NSF priorities include: education
    research, teacher education, systemic reform, efforts promoting
    diversity in science and engineering, and applications of learning
    technology.
        The NSB report focuses on two components of NSF's K-12 program
    portfolio critical to improving student performance--curriculum
    development and teacher education. NSF has supported the development of
    exemplary, comprehensive instructional materials that promote inquiry-
    based learning, are rigorous in content and age appropriate, and
    improve the education of all students. All curriculum materials embody
    the essential principles of the National Council on Teachers of
    Mathematics (NCTM) standards and the National Academy of Science (NAS)
    science standards. All supported materials now include embedded
    assessments to guide classroom instruction, and go through extensive
    pilot and field-testing. Standards-based, large-scale assessments are
    in demand by states and districts. We are focusing increased attention
    on development and implementation of these assessments since they are
    critical in strengthening science and mathematics education, as well as
    determining the effectiveness of NSF programming.
        A growing body of evidence documents that teachers more
    knowledgeable in content and effective in teaching practice improve
    student performance. Our teacher education programs--preservice and
    inservice--strengthen both content and pedagogy. We are developing new
    components within our teacher education programs, examining needs at
    different career stages--especially at the start of a teaching career
    when so many talented individuals are lost to the classroom--and
    strengthening the infrastructure necessary to train new generations of
    effective science and mathematics educators and administrators. We walk
    a fine line in this arena, balancing long-term and short-term needs.
        As part of the IT2 initiative, NSF will support research
    aimed at investigating pipeline issues that affect the participation of
    underrepresented populations (e.g., women, minorities) in these fields.
    In addition, NSF does support related activities in K-12 mathematics
    and technology education, including the National Science, Mathematics,
    Engineering, and Technology Education Digital Library (NSDL). Further,
    within the Computer and Information Science and Engineering (CISE)
    Directorate, a new initiative, Teaching Experiences for CISE Students,
    introduces graduate and upper-level undergraduates into K-12 learning
    environments.
        The Senate VA-HUD Appropriations Committee has asked NSF to develop
    a strategic plan that can help address the deficiencies in U.S. student
    performance identified by TIMSS. We will share this plan with the
    Committee.
                                 indirect costs
        Question. I want to raise some concerns about the number of scarce
    federal R&D dollars that are not going directly to researchers--namely,
    indirect costs or overhead. I am concerned that the federal government
    pays a significant amount of money for indirect costs at universities
    and other research institutions. I am also troubled by the numerous
    examples of inappropriate or questionable charges for indirect costs
    that have been uncovered in recent years. This reinforces my fear that
    the federal government is not able to do as much oversight when costs
    are being defined as indirect rather than direct. And despite numerous
    attempts to contain indirect costs, a lot of funds are still being
    spent on non-research related purposes.
        Dr. Colwell, how much and what percentage of NSF dollars are going
    towards indirect costs? Please provide this data for the last 10 fiscal
    years. What sort of things are we paying for under the indirect cost
    heading? Lastly, what recommendations do you have regarding the payment
    of indirect costs?
        Answer. The amount and percentage of NSF dollars which funded
    indirect costs for the last 10 fiscal years are shown in the table
    below:

    ------------------------------------------------------------------------
                                              Indirect $ (in    Percent of
                   Fiscal year                   millions)         total
    ------------------------------------------------------------------------
    1998....................................            $639            19.7
    1997....................................            $668            21.2
    1996....................................            $578            18.9
    1995....................................            $527            16.9
    1994....................................            $481            17.0
    1993....................................            $456            17.6
    1992....................................            $457            18.8
    1991....................................            $414            17.9
    1990....................................            $366            18.8
    1989....................................            $342            19.1
    ------------------------------------------------------------------------

        Indirect costs, as defined in OMB Circular A-21 for colleges and
    universities, include the following cost categories: (1) facility costs
    such as depreciation and use allowances, interest on debt associated
    with certain buildings, equipment and capital improvements, operation
    and maintenance expenses, and library expenses; and (2) administrative
    costs such as general administration and general expenses, departmental
    administration, sponsored projects administration, and student
    administration and services. The percentage of indirect cost dollars to
    total dollars funded by NSF is significantly below the average indirect
    cost rate negotiated on a government wide basis (which is close to 50
    percent of modified total direct costs).
        NSF considers indirect costs legitimate costs of doing business.
    All research projects benefit from the expenses categorized as indirect
    costs. For example, research is conducted in buildings and laboratories
    that generate costs which should be shared by all users and
    beneficiaries of the facility. Indirect costs simply allocate these
    shared expenses to the appropriate research projects or users. In
    addition, some of the indirect costs incurred by research institutions
    are the direct result of their compliance with Federal mandates, e.g.
    environmental requirements.
        The area of indirect costs, particularly those of colleges and
    universities, which are negotiated by the Department of Health and
    Human Services and the Office of Naval Research, has been studied and
    reviewed over the last decade by numerous groups. These studies have
    resulted in several major revisions to the cost principles, some of
    which NSF believes may have gone too far in limiting reimbursement of
    indirect costs. For example, OMB Circular A-21 currently places a 26
    percent cap on administrative costs for educational institutions; this
    area may need to be reevaluated as to its fairness relative to other
    research performers, such as non-profit organizations, and the effect
    it has had on the federal/university research partnership. Another
    example is the reclassification of certain personnel costs in A-21 as
    ``Organized Research,'' which, by effectively lowering the
    institution's indirect cost rate, may have created disincentives for
    institutions to contribute effort to Federally supported research. This
    issue was noted in the recent report in response to the Presidential
    Review Directive on the Government-University Partnership. Except for
    those issues, NSF believes the cost principles are reasonable and
    suggests they be allowed to remain stable and constant for the
    foreseeable future.
                              merit review process
        Question. Last December, the NSF Inspector General submitted a
    report to the Congress outlining the 10 most serious management
    challenges facing the Foundation. one of those challenges relates to
    the merit review process, which this subcommittee has also been
    concerned about. We have asked for an outside group to evaluate the
    impact of the new merit review criteria that NSF adopted at the start
    of this fiscal year.
        What do you see as the most serious challenges facing the merit
    review system? How do you intend to broaden the representation of the
    panelists selected to review proposals?
        Answer. Merit review is critical to the way NSF conducts business.
    NSF believes the merit review system is essential for maintaining high
    standards of excellence and accountability in the proposal decision
    process.
        From NSF's perspective, the most serious challenges facing the
    merit review system are: (1) engaging the scientific community in the
    use of the new electronic system for submitting reviews, to ensure
    quality and consistent reviewer input; (2) reducing the burden on the
    reviewing community; and (3) reducing the complexity of a process which
    has become quite complicated due to potential conflicts of interest, as
    partnering and/or collaborations increase. Both NSF staff and the
    scientific community are receiving training in the use of the new
    electronic system.
        NSF's policy on the selection of peer reviewers stresses the
    importance of wide representation--including characteristics such as
    geography, type of institution, and underrepresented groups. NSF's
    advisory system involves approximately 50,000 scientists and engineers
    a year, about 20 percent of whom have not previously served as a
    reviewer at NSF. NSF is constantly looking for and identifying new
    reviewers in the merit review process. Broadening the reviewer base is
    accomplished by having NSF staff identify potential new reviewers. This
    is best done by NSF staff meeting the potential reviewers at their
    institutions or at scientific meetings, and also by asking for
    recommendations from existing reviewers.
                        biocomplexity in the environment
        Question. Biocomplexity in the Environment has been described as a
    priority in the NSF budget request. In the past couple years, NSF
    emphasized a similar theme called ``Life and Earth's Environment.'' The
    increased level and emphasis on Biocomplexity in the Environment also
    appears to be in contrast to the National Science Board's position of
    not establishing a National Institute for the Environment in NSF.
        First, does the Biocomplexity priority mean that you will be
    revisiting the establishment of a National Institute for the
    Environment?
        Answer. NSF is very much aware of the importance of a sound
    environment to the United States and to the world. NSF's initiative on
    Biocomplexity in the Environment seeks to enhance our understanding of
    the complex dynamics of environmental systems. It will facilitate
    interdisciplinary research that spans temporal and spatial scales,
    considers multiple levels of biological organization, crosses
    conceptual boundaries, uses and fosters the development of new
    technologies, and links research to societal application.
        With respect to a National Institute for the Environment (NIE),
    NSF's report to Congress outlined our belief that the most appropriate
    way to implement the goals of the proposed NIE is through an
    interagency partnership coordinated by the National Science and
    Technology Council with significant NSF involvement in associated
    fundamental research and education activities. We continue to believe
    that this approach is the best way to advance the overall environmental
    research agenda and that the creation of a stand-alone NIE is not an
    effective means of achieving the proposed intellectual goals of an
    environmental institute.
        Question. Second, are the activities under Life and Earth's
    Environment (LEE) now included in Biocomplexity in the Environment
    (BE)? To what extent is LEE different from BE? Please explain.
        Answer. NSF activities formerly included in Life and Earth's
    Environment (LEE) are now included in Biocomplexity in the Environment
    (BE). However, BE goes beyond LEE, including the new biocomplexity
    initiative which emphasizes integrative and interdisciplinary work in
    environmental areas that capitalizes on the extraordinary advances in
    related technologies including genome sequencing, new computational
    algorithms and mathematical methods, sensors and monitoring devices,
    and remote sensing. The scope of Biocomplexity in the Environment
    includes both focused initiatives and core research programs aimed at
    fostering research on the complex interdependencies among the elements
    of specific environmental systems and the interactions of different
    types of systems. It reflects the evolution of NSF thinking about how
    NSF-supported research on the environment can best take advantage of
    opportunities provided by advances throughout science and engineering
    and, at the same time, be most valuable to the developing program of
    federal activities related to the environment.
                           graduate education support
        Question. The fiscal year 2000 budget request provides an increase
    for science and math education at the pre-college level, but a decrease
    at the undergraduate and graduate level. While I applaud the increased
    funding request for the pre-college level, it seems especially strange
    to reduce the graduate education budget when Congress just went through
    a major rewrite in the immigration area and increased the number of
    visas for foreign high tech workers due to a shortage in American
    trained workers.
        What is the rationale for reducing support for graduate education?
        Answer. Programs which benefit graduate education cut across the
    spectrum of activities within the Education and Human Resources (EHR)
    account. In fiscal year 2000, these programs are supported out of two
    Subactivities within EHR: (1) Graduate Education funds individual
    fellowships and research traineeships; and (2) Undergraduate Education
    funds the NSF Graduate Teaching Fellows in K-12 Education (GK-12),
    which involves both undergraduate and graduate education, and the
    National Science Mathematics, Engineering and Technology Education
    Digital Library (NSDL) initiatives. Summing all of these efforts,
    overall support for graduate level education actually increases by $3.5
    million.
        Question. What is NSF going to do differently to address the needs
    of U.S. students at the K-12 level?
        Answer. NSF continues to maintain a comprehensive portfolio of
    programs that address the needs of K-12 education, including systemic
    reform, instructional materials development, teacher education, and
    informal science education. New K-12 efforts include: (1) the NSF
    Graduate Teaching Fellows in K-12 Education, initiated as a prototype
    in fiscal year 1999, that supports graduate and advanced undergraduate
    SMET majors as content resources for teachers, and (2) the National
    Science, Mathematics, Engineering, and Technology Education Digital
    Library (NSDL) that will be a national resource for increasing the
    quality, quantity, and comprehensiveness of internet-based K-16 SMET
    education.
        Several efforts explicitly address growing needs of the high-
    technology workplace. The Advanced Technological Education (ATE)
    program will continue to strengthen the science and mathematics
    preparation of the high technology workplace through large-scale Center
    efforts and special projects targeted at the secondary grades and
    community college levels. A number of these efforts link academic and
    industrial partners and, in fact, focus on information and
    communication technologies. In addition, NSF--with support from the H1-
    B Nonimmigrant Petitioner Fees collected under Title IV of the American
    Competitiveness and Workforce Improvement Act of 1998 (Public Law 105-
    277)--will provide scholarships to low-income individuals pursuing
    degrees in computer science, engineering, and mathematics; establish
    academic enrichment opportunities for K-12 students; and support
    systemic reform activities, especially for projects that seek to link
    K-12 reform with technical workforce development.
        Question. Does NSF plan to collaborate with the Department of
    Education?
        Answer. NSF and Department of Education (DoED) staff interact in
    programmatic areas of complementary interest. The agencies are
    currently collaborating on the Interagency Education Research
    Initiative (IERI) that focuses on the use of information and computer
    technologies to promote improvements in the teaching and learning of
    mathematics, science, and reading. In addition, NSF is developing and
    field testing materials to train undergraduates who will receive DoED
    Work-Study support for tutoring students in middle-school mathematics.
    Among other recent collaborative efforts are projects to promote parent
    engagement in standards-based education, as well as jointly sponsored
    survey and analysis efforts under the Third International Mathematics
    and Science Study (TIMSS). DoED has also been supportive of the
    leveraging of its Eisenhower, Title I and Title II funds by NSF
    systemic reform and teacher education projects.
                               antarctic program
        Question. In fiscal year 1998, NSF initiated the modernization of
    the South Pole Station with an appropriation of $70 million. The fiscal
    year 2000 request of $5.4 million continues this work and we expect to
    spend $127.9 million over the fiscal year 1998-2001 period. NSF is also
    requesting $12 million to complete upgrades for its fleet of polar
    support aircraft.
        First, how is the modernization of the South Pole Station going?
    What major challenges do you expect to face this year and expect to
    continue to face as the modernization progresses? I would especially be
    interested in the status of the major logistics support contract.
        Answer. South Pole Station Modernization (SPSM) is currently on
    schedule and within budget. The acceleration of funding ($70 million in
    fiscal year 1998 and $39 million in fiscal year 1999) has made it
    possible to move up procurement of materials and construction of the
    Dark Sector Lab, a 3000 square foot building which will support
    astrophysics research. The accelerated funding will make it possible to
    combine previously separate procurements for major components--
    structural steel, wall panels, and other construction materials--into
    several large purchases instead of a greater number of smaller
    purchases. In addition to providing for consistency of materials for
    the station, simplifying long-term maintenance, this approach will
    likely result in saving procurement labor costs and inflation. Also,
    perhaps most importantly, the acceleration helps guard against possible
    procurement-associated delays in the future, and thus against schedule-
    driven cost increases.
        Future challenges include the extreme weather conditions under
    which the project will be completed; the short period (100 days per
    year) for exterior construction; and the possible transition to a new
    support contractor. Uncertainties in the weather are mitigated by
    transporting as much material as possible during favorable weather. The
    shortened construction season is offset by scheduling exterior work
    during the austral summer (November through January) and subsequent
    interior work during the austral winter.
        The major risk associated with the possible transition to a new
    contractor during South Pole Station Modernization is increased labor
    costs due to lost time as a result of a new contractor's lack of
    familiarity with the project or the unique requirements and conditions
    of working in Antarctica. This risk is mitigated by the following:
      --Continuity.--The design and review responsibilities are vested in
            separate architectural and design contractors. These
            responsibilities will not be affected by any contractor
            transition.
      --Procurements.--NSF is currently discussing with Antarctic Support
            Associates (ASA), the current contractor, a procurement option
            that would substantially accelerate (by two years) the
            procurements associated with SPSM. If this is determined to be
            feasible, a majority of the procurements will have been
            completed by the end of the possible transition between the old
            and new contractor.
      --Contractor selection.--The selection of a new contractor will be
            based on technical expertise and cost pricing to ensure that
            the contractor selected has the experience necessary to
            complete the project and that the cost will be reasonable.
      --Phase-in period.--The phase-in period provides 6-months for the old
            and new contractors to work together, on-site, in order to
            bring about a smooth transition. Several key NSF staff
            participated in the most recent contractor transition and will
            bring valuable experience to the next transition, if needed.
      --Retention of experienced labor pool.--It has been NSF's experience
            that when contractors change, a significant portion of
            personnel, from mid-management to skilled labor, is retained by
            the new contractor.
      --Planning and oversight.--All documentation, including designs,
            planning and project management software, and other project
            documents, belongs to NSF and would be available to a new
            contractor. NSF has been conducting quarterly SPSM project
            audits during which ASA and NSF staff discuss engineering
            activity schedules, procurement and construction plans and
            schedules, cost accounting for the project, and other
            administrative matters. This ensures that NSF staff are as
            knowledgeable as ASA staff on the status of the project.
      --On-site management.--During recent Antarctic summer seasons, NSF
            has placed several of its experienced managers at McMurdo
            Station and the South Pole to provide oversight and management,
            both for logistics and operations, and for facilities
            management. These managers have an average of nearly 20 years
            of Antarctic and construction management experience and are
            thoroughly familiar with the project.
        A Request for Proposals (RFP) for recompetition of the Antarctic
    support contract was issued on September 14, 1998, and proposals
    submitted in response to the RFP are currently being evaluated. A
    contract will be awarded in October 1999.
        Question. Second, with the Air National Guard in control this year,
    how are they doing?
        Answer. The New York Air National Guard (NYANG) met all mission
    requirements this season and exceeded expectations with respect to
    delivery of materials for South Pole Station Modernization. NSF
    continues to work with NYANG on the management relationships among the
    various parties involved in providing support to the U.S. Antarctic
    Program. These relationships are important for the smooth operation of
    the program. NSF is also working closely with NYANG on developing
    procedures and training for remote field operations.
                                  ``fastlane''
        Question. The IG has expressed concerns about NSF's implementation
    of its electronic processing proposal and award information system
    called FastLane.
        How is the implementation of FastLane progressing and what
    challenges do you face? To what extent are grantees having difficulties
    in implementing the new system?
        Answer. The implementation of FastLane is progressing on schedule.
    As of February 1999, there are over 1,500 registered institutions.
    These institutions account for over 90 percent of the proposal and
    award activity at NSF. In fiscal year 1998 NSF received over 5,000
    proposals, 21,000 proposal reviews, and 3,400 post-award administrative
    requests and notifications via FastLane, and FastLane was used to
    disburse 94 percent of NSF's research budget. As of December 1998, over
    85 percent of NSF's grantees used FastLane to submit their Federal Cash
    Transaction Reports (which represents 95 percent of the dollar value of
    all active NSF awards).
        We do, however, face a number of challenges as we continue to
    implement FastLane:
      --Electronic signatures.--NSF is receiving many business transactions
            electronically, but there are documents that for legal reasons
            require a signature on paper. The resolution to this issue must
            be an inexpensive, rapid-response, widely available system. NSF
            is working as a participant with the Federal Commons project on
            pilot projects to satisfy this requirement.
      --Printing of proposals in color.--The electronic submission of
            proposals (many of which contain color images) does not
            immediately eliminate the need for paper copies. Printing in
            color is both slow and expensive. To address this issue and be
            consistent with our long-term vision of eliminating the
            printing of proposals, NSF is exploring a variety of possible
            resolutions to this problem such as conducting a pilot with our
            reviewers in which we would only provide proposals to them
            electronically.
        We think the research community is rapidly accepting the use of
    FastLane. Based on feedback we have received from our grantees, we
    believe that the primary difficulties our grantees have in implementing
    FastLane are:
      --Concern about Federal research funding agencies developing their
            own systems.--As a member of the Federal Demonstration
            Partnership (FDP), NSF works with other Federal research
            funding agencies and member grantee organizations on a variety
            of issues. A common concern is that each agency will develop
            its own independent ``FastLane-like'' system, thus forcing the
            grantees to learn a variety of systems. In response to this
            concern, NSF is participating in the development of the
            ``Federal Commons'', an internet-based electronic ``commons''
            providing access to grant availability, status, award and other
            key grant administration functions that will be accessible to
            the entire federal grants community, including federal
            agencies, state and local governments, universities and other
            grant recipients and stakeholders. The Federal Commons is now
            in its early stages of planning, design, and development.
      --Internet response time.--Depending on how a grantee is connected to
            the Internet (firewall architecture, Internet service provider,
            equipment speed, etc.), grantees may experience slow response
            times when using FastLane. Generally the response time is
            excellent in the morning, and then begins to deteriorate as
            activity increases. In the late afternoon (about 6:00 PM
            Eastern time), response time begins to improve again. Although
            the grantee's Internet connection is largely responsible for
            the response time that he/she experiences, NSF has made every
            effort to build a solid FastLane architecture to avoid
            contributing to the problem and we continue to look for ways to
            provide even better, faster access.
                                  travel funds
        Question. The NSF Inspector General has expressed concerns about
    the lack of sufficient support for oversight by NSF program staff. One
    of the cited causes for this problem is the lack of sufficient travel
    resources. In your fiscal year 2000 request, $1.2 million is being cut
    from your travel account yet you are requesting authority to use
    research and education funds for ``award related travel.''
        Are these changes designed to respond to the IG's concerns? How
    much total funds to you expect to allocate for travel? Please give us a
    breakdown in terms of how much you propose to spend out of your
    salaries and expenses ``general operating'' expenses and how much would
    come out of your other program accounts.
        In regard to the $1.2 million travel funds cut from your general
    operating expense category, are these funds being reallocated? If so,
    for what purposes?
        Answer. The request to fund oversight and outreach travel in the
    research and education program accounts is designed to respond to the
    IG's concerns. Inspector General reports continue to cite the lack of
    travel funds for oversight of NSF awards as a major management
    challenge. If the request is approved, all award-related travel will be
    funded in the program accounts. Staff travel for training and
    participation in conferences will continue to be funded in the Salaries
    and Expenses (S&E) Account.
        The increase of $1 million in award-related travel is requested to
    maintain a reliable merit review process and to provide additional
    oversight to implement GPRA goals and new program initiatives.
        Reallocated funds of $1.2 million in the S&E account will be used
    to support planned investments in information infrastructure. The
    Foundation continues to make major investments in new technology to
    support improved business operations and to keep pace with an
    increasingly complex workload.

                                TRAVEL BY ACCOUNT
                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                               Fiscal year
                                                           -----------------
                                                              1999     2000
    ------------------------------------------------------------------------
    Salaries and Expenses.................................      4.0      2.8
    Research and Related Activities.......................      5.5      7.1
    Education & Human Resources...........................      2.4      3.0
    Major Research Equipment..............................      0.1      0.1
                                                           -----------------
          Total...........................................     12.0     13.0
    ------------------------------------------------------------------------

                                outreach efforts
        Question. I understand the NSF conducts regional outreach or grant
    seminars periodically. I think it is critical, especially for smaller
    institutions, to receive some sort of technical assistance training so
    that they are able to develop competitive research proposals of their
    own.
        Do you have any outreach efforts planned for fiscal year 1999?
    Please describe these plans. Beyond those outreach efforts, what other
    steps is NSF taking to better inform and involve faculty and students
    about your programs?
        Answer. NSF conducts a number of outreach efforts to assist all
    parts of the research and education communities. For example, NSF
    Regional Grant Conferences provide ``outreach'' information on
    proposal/grant requirements; the merit review process; policies and
    issues such as conflict of interest, cost sharing, etc.; NSF electronic
    initiatives such as the NSF FastLane System; as well as NSF's purpose,
    programs, budget trends and emphases. For the past several years, NSF
    has conducted two regional grants conferences annually, in conjunction
    with host universities. Attendees are principal investigators and
    research/sponsored project administrators, primarily from educational
    institutions. NSF regional conferences have been well received and the
    demand for such events continues.
        In fiscal year 1999 NSF conducted two Regional Grants Conferences.
    In October 1998 a conference was hosted by the University of Kansas in
    Lawrence, Kansas. This was the first NSF Regional Grants Conference
    held in an Experimental Program to Stimulate Competitive Research
    (EPSCoR) designated State. Given the success of this conference, NSF
    plans to routinely incorporate visits to EPSCoR States in these
    outreach events. In March 1999 a second conference was held in Los
    Angeles, co-hosted by the University of Southern California, the
    California Institute of Technology, University of California, Los
    Angeles, and University of California, Santa Barbara. In fiscal year
    2000, NSF plans to hold conferences at the Colorado School of Mines in
    October and at Louisiana State University in March.
        NSF has also been actively engaged in other outreach activities.
    For example, in October 1999, NSF will host an all day training event
    at the Society for the Advancement of Chicanos and Native Americans in
    Science. We have also hosted ``NSF Days'' in connection with the last
    five annual meetings of the National Council of University Research
    Administrators (NCURA) which has a membership of approximately 800
    institutions.
        NSF also has an active information dissemination program to provide
    the latest information about funding opportunities, deadline dates,
    program contact information and award information. NSF relies on
    electronic dissemination as the principal method of distributing
    information about the agency. NSF's web site (http://www.nsf.gov) is
    accessed by about 9,000 visitors each weekday. Web-based systems such
    as the ``Online Document System'' and the ``NSF E-Bulletin'' let our
    community know about funding opportunities.
        In addition, NSF has developed the ``Custom News Service,'' a free
    subscription service that alerts subscribers to information of
    interest. Introduced in early 1997, the e-mail and web-based system
    allows subscribers to sign up for specific types of information (for
    example, news about new programs). This popular service has nearly
    17,000 subscribers and has helped enormously with our outreach efforts.
        NSF also conducts an expanded outreach initiative for EPSCoR
    states. In the last two years, more than 230 trips to EPSCoR states
    have been made by administrative and program officers from all around
    the Foundation. Generally, NSF program staff describe their program's
    requirements and make themselves available to researchers for advice
    and guidance. These visits are made in addition to the regular site
    visits for existing projects. The EPSCoR program also awarded a grant
    to the American Association for the Advancement of Science (AAAS) to
    assist EPSCoR institutions and researchers planning to submit proposals
    for the high performance computing and networking connections program
    at NSF. Working closely with NSF and EPSCoR state Project Directors,
    AAAS also conducts regional conferences where technical assistance is
    provided to individual researchers.
                        earthquake engineering research
        Question. The fiscal year 2000 request includes $7.7 million to
    start a new earthquake research activity called Network for Earthquake
    Engineering Simulation (NEES). NSF is estimating that the total cost
    will be $81.9 million over a five-year period.
        Will NSF bear the entire cost of creating and operating NEES or
    will cost-sharing from other entities be involved? If other sources of
    funds will be leveraged, please provide an estimate of the funding
    amounts and sources that you expect to receive these funds from.
        Answer. NSF does not plan to require cost sharing by awardees
    during the creation of NEES. No support is anticipated from other
    agencies for NEES development and implementation. However,
    approximately 50 percent of operating costs will be supported by user
    fees.
        Question. Please detail how these funds will be used for purposes
    such as new construction of facilities, equipment purchases, and
    infrastructure.
        Answer. NSF plans to spend fiscal year 2000 funds on:
      --Developing the network that will link and integrate the various
            NEES facilities.--The network will provide the capability to
            remotely operate and view experiments, to collaborate on
            research, to store and analyze data, and to perform
            simulations. Further planning has indicated that it would be
            most efficient to implement the network first to ensure a
            uniform platform for all facilities.
      --Selected Facilities.--Fiscal year 2000 funds may be used to support
            facilities that can be brought on-line most quickly. This may
            include facilities requiring only minor upgrades and mobile or
            field facilities. Making support available for these facilities
            early in the project life allows NEES to provide benefits
            throughout the construction period.
        Question. What sort of entities do you expect to operate and
    maintain NEES?
        Answer. In fiscal year 2000-2004 while facilities are being
    constructed, each component of NEES will be operated by individual host
    institutions, which are expected to primarily be academic institutions.
    After this period, the entire network will be operated and maintained
    by a consortium of host institutions and users that has been selected
    through a competitive process.
        Question. Who will have access to NEES?
        Answer. Proposals to conduct experimental research at the NEES
    facilities will be accepted from all sectors of the earthquake
    engineering community. These proposals will be competitively evaluated
    by peer-review. It is expected that NEES will be accessed primarily by
    academic researchers. However, the results of NEES experiments will be
    available to a wide range of users. NSF expects the network to promote
    the development of research tools such as integrated databases and
    user-generated software and to be a major resource for government
    agencies--including the National Earthquake Hazards Reduction Program
    (NEHRP) agencies, the professional engineering community, hazard
    response managers, K-12 educators, and the general public.
                                 infrastructure
        Question. Are there any particular programs or activities at NSF
    that are available to help research institutions with research
    infrastructure needs such as laboratory equipment, growth chambers,
    greenhouse space, modernization of existing laboratories, and other
    necessities?
        Do you believe that there is a substantial unmet need for
    infrastructure purposes? Do you have any cost estimates on these unmet
    needs?
        Answer. NSF supports a variety of programs that help research
    institutions with the type of instrumentation needs you have described.
    For over a decade, NSF has annually invested approaching 10 percent of
    its research funds in instrument development and acquisition. In fiscal
    year 1998, this investment totaled nearly $200 million.
        In addition to supporting instrumentation on individual research
    and education grants, the Foundation supports instrumentation through
    more than 15 targeted programs. In fiscal year 1999, for instance,
    funds for instrumentation will be provided through programs including:
      --Major Research Instrumentation (MRI). This program, supported at a
            level of $50 million, is a large-scale instrumentation effort
            designed to improve the condition of scientific and engineering
            equipment for research and research training in our Nation's
            academic institutions. The MRI program allocates funds in the
            range of $100,000 to $2,000,000 for instrumentation that is not
            readily available from other NSF programs.
      --Advanced Technological Education (ATE) program, initiated in 1995,
            which provides instructional equipment to technician education
            programs, principally in two-year colleges.
      --HBCU Program, which was initiated in 1998 and supports
            instructional equipment within the context of curriculum and
            faculty development activities.
      --Course, Curriculum and Laboratory Improvement program, which builds
            on the former Instrumentation and Laboratory Improvement
            program and provides support for instructional instrumentation.
        It is clear that there is a substantial unmet need for
    infrastructure purposes. In 1992, an NSF survey asked the heads of 300
    science departments and facilities in U.S. research colleges and
    universities for their single highest priority need for
    instrumentation. The requested items cost a total of more than $1.2
    billion. This need for instruments extends far beyond these research-
    intensive institutions into the teaching-intensive four-year colleges,
    community colleges, and K-12 school systems.
        Despite efforts to address the issue, the pace of technological
    change implies a continuing need for revitalization of laboratories and
    instrumentation. A recent NSF workshop, Information Technology: Its
    Impact on Undergraduate Education in Science, Mathematics, Engineering,
    and Technology (NSF 98-82), found that both faculty and students will
    require high-speed connectivity to access educational innovations and
    broader information essential to a modern education, and gives an
    indication of the cost challenges posed by establishing and maintaining
    an information technology infrastructure for education.
                                     ______

                      Questions Submitted by Senator Burns

        Question. As you know, Montana is an EPSCoR state and EPSCoR has
    been very important to developing our state's research infrastructure
    and capabilities. I was disappointed that you did not recommend any
    increase in the budget for the EPSCoR program. Does this mean that
    developing a nationwide science R&D capability is not a high priority
    for NSF?
        Answer. The commitment to developing science and engineering
    capabilities in all regions and states is a high priority for NSF, and
    NSF's budget request for EPSCoR for fiscal year 2000 reflects that
    priority. In addition to the $48.4 million that is requested for the
    EPSCoR program itself, the program will leverage $15 million from
    research programs across the Foundation to support meritorious
    projects. The co-funding effort between EPSCoR and NSF research
    programs enables EPSCoR researchers to participate more fully in NSF
    research activities. In the last two years, NSF has increased the level
    of co-funding from NSF research programs from approximately $10 million
    to $15 million.
        Question. High performance computing and high-speed networking are
    vital to rural areas such as Montana. NSF has taken a number of steps
    to help our states but connections remain costly and we need to insure
    that our institutions are included in applications use of this
    infrastructure. What is NSF doing to address these issues?
        Answer. Many academic institutions have questions regarding how and
    when to integrate advanced networking resources, including how to
    develop financial and technical plans to integrate these new
    technologies into their ongoing research and education activities. As a
    result, the Foundation has put into place additional support, outreach,
    and planning capabilities for such institutions. A special project
    funded by NSF will help institutions obtain technical information,
    planning assistance, and communications/networking analysis needed for
    integrating advanced networking functions into their operations.
        More specifically, NSF is considering a series of planning
    workshops designed to enable:
      --campus Chief Information Officers, researchers, and partners to
            provide advice on the nature of programs and requirements
            following the period of the vBNS cooperative agreement;
      --institutions and regions to evaluate their readiness for advanced
            networking, and to plan and provide input regarding their
            related requirements; and
      --the Partnerships in Advanced Computational Infrastructure and the
            leading edge supercomputing sites to evaluate and make
            recommendations regarding future networking resource needs, and
            means for enhancing education, outreach and training activities
            and broadening the spectrum of institutions involved.
        NSF is also in the early stages of exploring how best to more
    deeply involve these institutions in collaborative research in
    universal libraries.
        In addition to bringing computing and high speed networking
    connections to the EPSCoR states, NSF has undertaken two actions that
    will allow EPSCoR researchers to understand the potential uses of this
    infrastructure and to compete more effectively for awards that
    capitalize on earlier investments. First, the American Association for
    the Advancement of Science (AAAS) is assisting EPSCoR institutions and
    researchers who plan to submit proposals that will utilize the
    networking infrastructure. Working closely with NSF and EPSCoR state
    Project Directors, AAAS is conducting regional conferences that will
    provide technical assistance to individual researchers. In addition,
    NSF has expanded outreach efforts to EPSCoR states. In the last two
    years, program officers from NSF research directorates have made more
    than 230 trips to EPSCoR states to describe research opportunities and
    explain NSF policies and procedures that govern proposal submission.
        Question. I know that NSF has been trying to include more
    researchers from EPSCoR States on advisory and peer review committees.
    What progress are you making?
        Answer. Participation in NSF review and advisory panels provides
    familiarity with NSF programs, characteristics of successful proposals,
    and contacts across the national research community. In fiscal year
    1996, the EPSCoR program distributed its first list of over 1,900
    highly qualified EPSCoR scientists and engineers to NSF research
    programs with the objective of increasing their involvement in these
    important activities. By the end of fiscal year 1998, the most recent
    year for which NSF has complete data, a total of 385 EPSCoR scientists
    and engineers had been used by NSF programs as reviewers and panelists.
    This number is approximately 16 percent above the fiscal year 1996
    benchmark.
                                     ______

                      Questions Submitted by Senator Craig

        Question. As you know, Idaho participates in the Experimental
    Program to Stimulate Competitive Research (EPSCoR). This program has
    been very helpful to the state in developing its research capacity. We
    are making progress, but we need to make more. How can we expand EPSCoR
    in order to become competitive for some of the larger research and
    center grants at NSF?
        Answer. NSF is undertaking a number of efforts to improve the
    competitiveness of EPSCoR states. In fiscal year 1998, NSF expanded
    outreach activities in EPSCoR states, increasing opportunities for NSF
    program staff to meet on-site with institutions, researchers, and
    administrators. These outreach visits provide information on funding
    opportunities across NSF research programs. EPSCoR states report that
    meeting directly with NSF staff provides important insights into the
    requirements for submitting proposals to NSF. Several EPSCoR states
    share Idaho's interest in the large-scale research and center grant
    programs and have asked relevant NSF staff to attend state EPSCoR
    meetings, make presentations, and/or meet with selected researchers. We
    strongly encourage those research faculty interested in becoming
    competitive for such awards to contact cognizant NSF program officers
    to request outreach activities; EPSCoR staff can assist in making
    appropriate contacts. To date, more than 230 program staff have
    participated in the EPSCoR outreach effort, including six outreach
    visits to Idaho.
        Question. What steps can NSF take to insure that EPSCoR states such
    as Idaho participate fully in new NSF research initiatives?
        Answer. In addition to numerous NSF outreach efforts, the American
    Association for the Advancement of Science (AAAS) has received an NSF
    award to assist EPSCoR states in increasing participation in new
    program initiatives at both NSF and other federal agencies. For
    example, AAAS conducted a workshop in Coeur d'Alene for individuals
    interested in applying to Small Business and Innovation Research (SBIR)
    programs administered out of a number of federal research and
    development (R&D) agencies. Following this workshop, AAAS provided
    technical assistance to Idaho small businesses to aid in preparation of
    their proposals. Currently, AAAS is planning a similar effort that will
    assist Idaho researchers in gaining an increased understanding of
    emerging opportunities in environmental science research.
        Question. Telecommunications and networking are very important to
    the University of Idaho and other institutions in our state. The
    University has received a BNS award from NSF, which will allow it to
    connect to the high speed network. How can we ensure that our
    institutions will now participate in the research and applications for
    the high speed networks?
        Answer. Many academic institutions have questions regarding how and
    when to integrate advanced networking resources. These institutions
    need to develop financial and technical plans to integrate these new
    technologies into their ongoing research and education activities. As a
    result, the Foundation has put into place additional support, outreach,
    and planning capabilities for such institutions. A project funded by
    NSF will help institutions to obtain technical information, planning
    assistance, and communications/networking analysis needed for
    integrating advanced networking functions into their operations.
        More specifically, NSF is considering a series of planning
    workshops designed to enable:
      --campus Chief Information Officers, researchers, and partners to
            provide advice on the nature of programs and requirements
            following the period of the vBNS cooperative agreement
      --institutions and regions to evaluate their readiness for advanced
            networking, and to plan and provide input regarding their
            related requirements; and
      --the Partnerships in Advanced Computational Infrastructure and the
            leading edge supercomputing sites to evaluate and make
            recommendations regarding future networking resource needs, and
            means for enhancing education, outreach and training activities
            and broadening the spectrum of institutions involved.
        NSF is also in the early stages of exploring how best to more
    deeply involve these institutions in collaborative research in
    universal libraries.
        In addition to bringing computing and high-speed networking
    connections to EPSCoR states, NSF has undertaken two actions to
    increase EPSCoR researchers' understanding of potential uses of this
    infrastructure and to strengthen their ability to compete effectively
    for awards. First, NSF has expanded its outreach efforts to EPSCoR
    states. Site visits by NSF program officers provide a good opportunity
    for EPSCoR researchers to talk to NSF program staff about potential
    networking applications. Second, the AAAS is assisting EPSCoR
    institutions and researchers who want to submit proposals utilizing the
    networking infrastructure that has been extended to EPSCoR
    institutions. Working closely with NSF and EPSCoR state Project
    Directors, AAAS has conducted regional conferences and provided
    technical assistance for individual researchers.
                                     ______

                             National Science Board

                      Questions Submitted by Senator Bond

                         development of it2
        Question. While the goals of the initiative seem worthy, I am
    concerned that this idea may have been driven by the White House and
    not something that was developed in response to demands of the
    scientific community. What are the
        Board's views on IT2? What kind of feedback have you
    heard regarding this initiative?
        Answer. Increasing the Federal investment in information
    technology, as proposed by the Administration, has received the support
    of the NSB in a resolution (NSB 98-212) passed on November 19, 1998.
    The Board thoroughly reviewed NSF's IT2 proposal, was
    briefed by PITAC on its findings, and concluded that the proposed
    increase represents a solid investment in a rapidly changing area. In
    specific terms, Moore's Law holds that the productivity of computer
    information technology doubles every 18 months. That's been the rate
    since 1980. Projections suggest that this rate of growth will continue
    for another 15 years. Such a scientific record of productivity growth,
    combined with the prospects of continued change, was a critical element
    in the NSB discussions and resolution.
        As for community feedback on the initiative, I can report that
    communications to Board members have been enthusiastic. In addition,
    witnesses before the Subcommittee on Basic Research, House Committee on
    Science March 16, 1999, expressed support for the initiative, with
    PITAC Co-chairman Ken Kennedy stating ``Our initial response to the
    program is positive.'' Speaking at the National Research Council,
    former NSF Director Erich Bloch applauded the increased investment but
    urged that to be effective it must be sustained for the long term. And
    Stephen S. Wolff, of Cisco, strongly supported the principal findings
    and recommendations of the PITAC report, lauding the Administration's
    responsiveness in the form of the IT2 initiative.
                              performance measures
        Question. This subcommittee has been concerned about the
    Foundation's failure to provide a budget justification that meets the
    requirements of the Government Performance and Results Act. We believe
    that it is important for all NSF initiatives and programs to be
    identified with specific funding as well as quantifiable goals and
    milestones. The goal statements for much of the fiscal year 2000
    performance plan--especially in the areas of research investments and
    training--appear to be as general and nonquantitative as last year.
    What are the Board's views on our concerns?
        Answer. The Board supports NSF reliance on quantitative and
    qualitative indicators as appropriate for capturing outcomes associated
    with basic research goals. For all parts of the NSF portfolio,
    quantitative performance measures are being developed where sensible. A
    Board committee reviewed the development of NSF's strategic and
    performance plans. It continues to work, through its Committee on Audit
    and Oversight (A&O) and in conjunction with NSF staff, to improve the
    quality of GPRA planning and review. I would note that the recent
    COSEPUP report, Evaluating Federal Research Programs, supports
    qualitative indicators as consistent with GPRA. This is reinforced by
    the finding from numerous studies that the long-term rate of return on
    investment in R&D exceeds 30 percent.
                           math and science education
        Question. This month the National Science Board released a report
    on math and science education. I understand that this report and its
    recommendations are in response to the so-called TIMSS report that
    basically said our middle and high school students are not doing as
    well in math and science education compared to their international
    counterparts. Would you please highlight the key findings and
    recommendations of the Board from this report?
        Answer. Triggered by the disturbing TIMSS results, the National
    Science Board report, ``Preparing Our Children: Math and Science
    Education in the National Interest'' (NSB 99-31, March 3, 1999),
    outlines what can be done to improve math and science achievement.
    TIMSS helped us calibrate what our students were getting in the
    classroom relative to their age peers around the world. We learned that
    U.S. textbooks, teachers, and the structure of the school day do not
    promote in-depth learning.
        To reduce what the TIMSS analysis discerned--a diluted, ``mile-
    wide'' range of material taught at each grade--the Board report
    recommends local community action in the national interest to:
      --Adopt rigorous content standards in math and science that reflect a
            consensus on skills and knowledge that guides classroom
            teaching and learning;
      --Ensure that teachers are well-prepared in the subjects they
            ultimately teach; and
      --Develop accountability mechanisms that tests students on what they
            are taught, teachers on the content that prepares students for
            admission to higher education and the workforce, and schools on
            their success in educating all students.
        Above all, the Board report suggests how scientists and engineers,
    both individually and through their institutions, can assist in
    creating a more seamless K-16 system for the teaching and learning of
    math and science. Scientists and engineers represent a special resource
    for improving local schools, supporting teachers, and boosting student
    achievement.
                        biocomplexity in the environment
        Question. Biocomplexity in the Environment has been described as a
    priority in the NSF budget request. In the past couple years, NSF
    emphasized a similar theme called ``Life and Earth's Environment.'' The
    increased level and emphasis on Biocomplexity in the Environment also
    appears to be in contrast to the National Science Board's position of
    not establishing a National Institute for the Environment in NSF. Does
    the Biocomplexity priority mean that you will be revisiting the
    establishment of a National Institute for the Environment?
        Answer. The Board carefully considered the NIE and expressed its
    views clearly in a resolution (NSB-98-65, March 1998). While the Board
    concluded that it would not be beneficial to establish an NIE, it
    concurred on the need for expanding research, education, and assessment
    on the environment. Consistent with this view, the Board created (NSB-
    98-161, August 1998) a Task Force on the Environment. Its purpose is
    twofold: to assist in defining the scope of the Foundation's role in
    environmental research, education, and assessment, and in developing
    policy guidance that NSF will use in designing an appropriate portfolio
    of activities, consistent with the overall National Science and
    Technology Council strategy. The Task Force report will be submitted to
    the Board at its May 1999 meeting.

                              subcommittee recess

        Senator Mikulski. This subcommittee stands recessed until
    April 15, when we will take testimony on the VA budget.
        Thank you very much.
        [Whereupon, at 11:30 a.m., Tuesday, March 23, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

     DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2000

                                  ----------

                            THURSDAY, APRIL 15, 1999

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

                         DEPARTMENT OF VETERANS AFFAIRS

    STATEMENT OF HON. TOGO D. WEST, JR., SECRETARY
    ACCOMPANIED BY:
            KENNETH W. KIZER, M.D., M.P.H., UNDER SECRETARY FOR HEALTH,
                VETERANS HEALTH ADMINISTRATION
            JOSEPH THOMPSON, UNDER SECRETARY FOR BENEFITS, VETERANS
                BENEFITS ADMINISTRATION
            ROGER RAPP, ACTING UNDER SECRETARY FOR MEMORIAL AFFAIRS,
                NATIONAL CEMETERY ADMINISTRATION
            MARK CATLETT, DEPUTY ASSISTANT SECRETARY FOR BUDGET

                    OPENING STATEMENT OF CHRISTOPHER S. BOND

        Senator Bond. Good morning. The subcommittee will come to
    order.
        Today we meet to consider the fiscal year 2000 budget
    request for the Department of Veterans Affairs. We welcome
    Secretary Togo West; Under Secretary for Health, Ken Kizer;
    Under Secretary for Benefits, Joe Thompson; Acting Under
    Secretary for the National Cemetery Administration, Roger Rapp;
    Deputy Assistant Secretary for Budget, Mark Catlett; and other
    VA officials here this morning.
        VA's appropriation request totals $42.5 billion, including
    $23.3 billion in mandatory entitlements and $19.2 billion in
    discretionary funds. Overall, discretionary spending for VA
    programs would be $56 million below the current level under the
    request submitted to us by OMB.
        The request includes $17.68 billion, a freeze at the
    current level for medical care, research and other programs
    within the Veterans Health Administration.
        The budget also includes $912 million for general operating
    expenses, $296 million for construction program, and $97
    million for the National Cemetery Administration.
        At the outset, let me say that the budget situation that we
    face this year will be incredibly tough. The caps on
    discretionary spending are roughly $30 billion below the fiscal
    1999 level. And there is a general agreement on the need for
    significant additional resources for defense and education
    spending.
        These priorities could further reduce the pot of funds
    remaining for other discretionary spending items.
    Unfortunately, the President's budget has made the situation
    more difficult by increasing spending by almost $25 billion
    above the budget caps for various Administration priorities,
    raising expectations that we simply will be unable to fill.
        Sadly, veterans programs were not among those priorities.
    Compared to many other departments and agencies, VA has fared
    quite poorly in the Administration's fiscal 2000 budget
    proposal.
        Mr. Secretary, I have to say I am deeply troubled by the
    budget before us.
        While many other programs are proposed for increases in the
    President's budget, VA would be held at current levels. While
    we are committed to maintaining the caps, you must set
    appropriate priorities within those caps.
        VA medical care should be among the priorities. The
    Disabled American Vterans call the budget horribly inadequate,
    and I think they may not be far off the mark.
        The conference agreement on the budget resolution, which is
    based on assumptions only, assumes an increase of $1.7 billion
    for VA medical care. Unfortunately, that is not likely to wind
    up in terms of dollars available to us for the VA.
        Unfortunately, given that these funds are not in the
    President's budget, and given that the caps represent a real
    cut below current levels, it will be extremely difficult for us
    in the Appropriations Committee to find the funds to come
    anywhere close to what is assumed in the budget resolution.

                           va's medical care program

        Today, we hope to ascertain with more precision what the
    needs are in the medical care program.
        The Veterans Health Administration recently identified
    several new critical requirements such as treating veterans
    suffering from Hepatitis C with a new and very expensive
    treatment regimen; increasing the emphasis on alternatives to
    institutional long-term care, which is extremely important in
    view of the aging veteran population; and the provision of
    emergency services in non-VA hospitals; not to mention normal
    inflationary requests.
        These requirements top $1 billion, and most of them are
    really what we would consider must-do requirements, not
    discretionary items. Yet, there are no new funds in the
    President's budget to accommodate these needs. Further
    exacerbating the problem is the fact that the VA will have less
    carryover funds next year than it does in the current year.
        VA was able to carry almost $500 million in medical care
    cost recovery funds from fiscal year 1998 into fiscal year
    1999, thus easing the budgetary situation. Yet, less than half
    of this amount is projected to carry into fiscal year 2000.
        VA's budget is predicated on its ability to come up with at
    least $1.1 billion in so-called management efficiencies. Yet,
    no details of these management efficiencies are provided in the
    budget. I am very much concerned about this objective and about
    the lack of detail.
        Where are the management efficiencies going to come from?
    How many hospitals will close their in-patient services? How
    many additional consolidations will there be? Are these
    management efficiencies really going to result in better care
    to more veterans?
        In this instance, I have to say: I am from Missouri, and
    you are going to have to show me.
        One has to question whether the goals VA has set for itself
    are realistic. VA's budget assumes the reduction of about 8,500
    FTEs. Last year, VA reduced 3,600 FTEs, but fell short of its
    own target by about 300 FTEs.
        GAO, which submitted testimony today that I will refer to,
    tells us VA will also fall short of its 1999 target of 2,598
    FTEs. The reason is simple: The staff reductions, particularly
    if they are accomplished through reductions in force, are
    tremendously difficult even if fully justified.
        Despite the downward trend line for staff reductions, VA
    assumes it will achieve employment reductions more than three
    times greater than the 1999 estimate. GAO in today's testimony
    submitted for the record, indicates if the Department fails to
    meet its savings goals, ``VA may need to use less desirable
    management actions, including large scale employee furloughs
    that could adversely affect veterans quality of care,
    especially waiting times.''
        GAO believes that the VA's transformation is losing
    momentum and that targets may not be met. Furloughs and other
    management actions which impact quality of care are not
    acceptable.
        Let me be clear about one thing: I do have a great deal of
    confidence in the VA medical system. VHA has been engaged for
    the last three and a half years in a dramatic reorganization
    and has managed to provide care to more veterans with fewer
    resources. It discovered there were a lot of wasteful practices
    in the system and has sought to make better use of the
    resources at hand.
        VA has been moving successfully toward meeting at least two
    components of the 30-20-10 initiative announced in the fiscal
    year 1998 budget to decrease per-patient cost by 30 percent and
    increase the number of patients by 20 percent, by the year 2002
    from the 1997 level.
        The changes VA has implemented have been remarkable,
    including a new emphasis on ambulatory services, which involved
    closing tens of thousands of unneeded in-patient beds and
    opening up hundreds of outpatient clinics; reducing unneeded
    administrative staff; establishing primary care case management
    teams; smarter procurement practices for pharmaceuticals and
    supplies; and merging the management of many medical
    facilities.
        However, since VA has already implemented scores of major
    realignments including a reduction of about 18,000 personnel in
    the past few years, I am just not confident that there are
    significant opportunities for additional savings without
    jeopardizing the quality of care for veterans or--dare I say
    it--closing under-utilized facilities which VA has not
    proposed.
        I understand, Mr. Secretary, you have vowed there will not
    be closures. GAO in its testimony says, ``This decision
    seriously threatens the continued progressed of VA's health
    system transformation.''
        Mr. Secretary, your announcement was perplexing in view of
    the fact that according to GAO, VA is spending hundreds of
    millions of dollars operating unneeded VA buildings. These
    dollars can and should be put to better use for veterans. VA
    should not be about maintaining buildings, but about providing
    the best care for veterans.
        I am also troubled about whether VA is making promises it
    cannot keep. Last year, VHA implemented an enrollment system as
    mandated by the 1996 eligibility reform law. VA chose to allow
    all veterans, not just the service-connected disabled and low
    income whom VA is mandated to care for, to sign up for care.
        GAO projects that by the end of the year, there will be 4.4
    million enrollees, while VA projects to provide care to only
    3.6 million veterans.
        While we know that not all enrollees will actually use VA
    medical services, each of them will be entitled to a full
    benefits package. And while we know the enrollment is only for
    one year, it creates an expectation that care will be available
    next year.
        The other critical concern that we have in VA's budget is
    its reliance on collections from third parties. VA's budget is
    predicated on its ability to collect $749 million in third part
    reimbursement and co-payments. Collections are to be the only
    source of increased revenues for VA.
        Yet VA has consistently performed quite poorly in this area
    and probably will fall below its fiscal year 1999 budget
    target.
        The Veterans Service Organizations, in their independent
    budget, said, ``We have lost our faith in the ability of the
    VHA to collect an adequate amount to make up for any budget
    shortfalls or to even reach their goal.''
        Improvements in this area are clearly essential, and VA
    ought to give strong consideration to privatizing or at least
    centralizing this function.
        Other critical concerns in the medical care program include
    whether VA is adequately managing its affiliations with medical
    schools as it continues its transformation to an outpatient-
    based system of care; and whether VA is providing adequate
    support to its special care programs which are so fundamental
    to VA's mission, such as spinal cord injury, blind
    rehabilitation and post-traumatic stress disorder.

                        veteran benefits administration

        On the benefits side, VA's budget includes an increase of
    roughly $50 million for the Veterans Benefits Administration
    and would provide 440 additional staff in the compensation and
    pension program.
        Additional resources are needed to address the unacceptable
    backlog of more than 400,000 pending claims and to improve the
    timeliness and quality of claims processing. While VBA recently
    implemented a reorganization similar to that in the Veterans
    Health Administration, and has underway numerous initiatives
    aimed at improving the processing of veterans claims, there
    continues to be an unacceptable length of time to process
    original disability claims, and it is getting worse, not
    better.
        VBA is lagging far behind its own target of 99 days to
    process rating-related claims this year, and it is taking more
    than 190 days to process an original disability claim. And
    apparently, next year's targets will not be met either. Forcing
    a veteran to wait more than six months for decisions on a claim
    is just not acceptable.
        We understand there have been some improvements in the
    quality of claims processing and that you have deemed this a
    higher priority than timeliness. Clearly, making the right
    decision on a claim is critical, and this should be of equal if
    not greater importance than timeliness. But when only about
    two-thirds of the claims are adjudicated right the first time,
    there clearly is tremendous room for improvement here as well.
        Mr. Secretary, the mission statement of the Veterans
    Benefit Administration is to provide benefits and services to
    veterans and their families in a responsive, timely and
    compassionate manner in recognition of their service to the
    nation.
        I wonder, however, whether a sign which apparently hangs
    above the desk of an employee of the Washington, DC, Regional
    Office is more reflective of reality. I understand that that
    sign reads, ``I can only please one person a day, and today
    ain't your day, and tomorrow isn't looking too good either.''
        VA claims that customer service is one of its top
    priorities; yet, according to a recent Washington Post article,
    a VA review of the Washington, DC, Regional Office found an
    abysmal state of affairs including a backlog of 10,000 pending
    cases, many of which were more than six months old. VBA's
    national objectives of timeliness, quality and customer
    service, apparently, have not filtered down to this regional
    office.
        I am concerned, Mr. Secretary, despite all of the
    initiatives that are being undertaken, that the DCRO may not be
    just one bad apple but reflective of the system generally. This
    is extremely troubling.

                         other concerns in va's budget

        Other concerns in the VA's budget include VA's decision to
    slash the state home construction program. This, in our view,
    is a cost-effective program with a proven record and a backlog
    of more than $100 million in priority projects.
        Before I close, I also need to say I am very disturbed
    about what has been reported to us as a pattern of questionable
    practices at the highest level of the Department. We are not
    going to go into specific details, but there have been
    allegations that have come to us from within the Department and
    elsewhere about waste, excessive travel expenditures, the
    hiring of limousines, chartered aircraft, lavish parties in
    honor of non-VA officials financed by the Representation Fund,
    and other actions which may not be illegal but certainly raise
    eyebrows.
        We have a lot more important issues to discuss than these
    allegations, and we know the Inspector General is investigating
    them. We have referred these to the Inspector General. I am
    troubled about what we have heard because there is a perception
    of abuse and morale problems that have been created.
        That leads to questions about the commitment of the VA
    leadership to the mission of the Department. And we will await
    the review of the Inspector General as to whether there is any
    basis to these allegations.
        We have asked the General Accounting Office to provide a
    written statement for the record, which I have referenced
    today, and which provides an excellent overview of some of the
    critical issues VA faces in its medical system.
        I ask unanimous consent that it be included following
    Secretary West's testimony.
        [Pause.]
        Senator Bond. Hearing no objection, it will be so ordered.
        I will now turn to my ranking member, Senator Mikulski, for
    her opening statement.
        Senator.

                         STATEMENT OF BARBARA MIKULSKI

        Senator Mikulski. Thank you very much, Mr. Chairman. And in
    the interest of time, I ask unanimous consent that my full
    statement be placed in the record.
        Senator Bond. Without objection.
        Senator Mikulski. Mr. Chairman, since the VA was founded,
    we have fought two World Wars, a Cold War, a Gulf War, and now
    our troops are engaged in both peacekeeping operations as well
    as a war in Yugoslavia.
        And this really shows that the conflicts, new conflicts are
    producing a new generation of people who will be veterans with
    unique needs.
        Today I want to say just simply that we have promised our
    veterans, our military that if they place themselves in harm's
    way, that we assure them, when they come back, a grateful
    nation will have a Veterans Administration that will help them
    have an education, be able to buy a home, and health care that
    is deemed necessary.
        We want to make sure that promises made are promises kept.
    And as we look at the budget this year, we want to look at
    particularly the veterans organization--VA generally, but I
    believe, as always, focus on VA medical because it is one of
    our largest areas of spending.
        VA set for its goal the 30-20-10 policy objectives, and we
    will be looking forward to a status report on the 30-20-10
    objectives. In addition to that, we want to be sure that issues
    related to the management of VA are being addressed. I have
    been concerned for some time about our ability to recoup from
    third parties or other parties a payment for our medical care.
        There are substantial questions that have come up about our
    ability to recoup essentially what we feel are bona fide areas
    of collection. VA collections are running behind projections,
    and there is a need for timely collections.
        The medical care budget assumes $740 million in private
    insurance collection for fiscal year 2000. This is a $124
    million increase over 1999. And the GAO has expressed
    skepticism about the VA's ability to recoup this. This will be
    essential in terms of our ability to recoup to really be able
    do the services we want.
        In addition to that, in the area of medical care, I hope
    through the questioning that we can talk about, of course, the
    unique needs of women and how that is being addressed,
    particularly in primary care facilities, and also long-term
    care.
        VA is a cameo of what the entire private sector health is
    facing: The excess beds in acute care; the need to decentralize
    and make more efficient primary care; and then with people
    aging in this country, the issues for long-term care; and then
    how we would meet the needs of veterans through long-term care
    facilities and even innovative thinking like home health care
    and assisted living. And we welcome your thoughts on innovative
    approaches that would meet compelling human need and yet be
    cost effective.
        Also, another area that I am concerned about is the long
    waiting time for disability benefits. And when I was chair, it
    took 180 days. We deemed that unacceptable. That was now--gee,
    Carrie, you were my staffer then--a decade ago, and we have
    reduced by 12 days. I understand it is 168 now.
        At this rate, I am going to have to sign up to be Strom
    Thurmond's----
        Senator Bond. It is 190.
        Senator Mikulski. Either way, I am going to have to sign up
    as Strom Thurmond's protege if we are going to do this one day
    a year--[laughter] aAnd be able to reduce this. However,
    really, veterans should not have to be in long waiting lines
    for disability claims. And either we have too many rules, too
    many regs, or we do not have the modern technology to be able
    to process the claims in a timely way.
        There are other issues that I would like to also raise, but
    let me say: We are very proud of the VA and that we are
    grateful for the facilities that are in Maryland. We have
    flagship institutions, our acute care facility in Baltimore
    that also does outstanding research. We have Fort Howard that
    has done an outstanding job in Perry Point that serves
    emotionally disturbed veterans or those with dementia.
        The community-based outpatient clinics that have grown are
    also meeting needs.
        And on another note, you know, I am a big believer in VA
    medical research because it is practical patient-care research.
    And what I like about VA medical research is it goes directly
    to practical patient care, but it also quickly moves into the
    civilian community. Like at University of Maryland, there is VA
    and it is staffed by professors and medicine from the
    University of Maryland.
        My recent gall bladder surgery that was all over CNN--so
    much for medical privacy. [Laughter.]
        But it was--the technique, that not only I but others have
    benefitted from, this laparoscopic approach, was developed by
    Drs. Zucker and Bailey in Baltimore using an aging veteran
    population that had so many medical complications traditional
    surgery would have placed them further at risk.
        That has now moved into the entire civilian population,
    saving lives, a quicker, faster return to private sector
    marketplace. And this is the kind of way where we can just see
    what the VA is doing that benefits not only veterans but all of
    America.
        So I look forward to pursuing these lines of questioning.
        Thank you very much.
        Senator Bond. Thank you very much, Senator Mikulski. We
    share your pride in the VA medical research. At the Truman VA
    in Columbia, we work very closely with the University of
    Missouri at Columbia.
        Senator Mikulski did mention the GAO report. And for my
    colleagues who have not read it, I do commend it to your
    attention because it gives a broader perspective on some of the
    issues that we will be dealing with here today.
        Senator Leahy, do you have an opening statement?

                           STATEMENT OF PATRICK LEAHY

        Senator Leahy. Thank you, Mr. Chairman. I will make it
    brief, because we are also having a markup in Judiciary, and I
    have to go to that.
        I think it is clear VA is facing a financial crisis. The
    balanced budget agreement of 1997 has flatlined VA health care
    funding at a time when health care needs of aging veterans has
    never been greater.
        Now, Mr. Secretary, you have been very good to meet with I
    think just about any member of Congress who has asked you to of
    either party. You know well the situation the Northern New
    England veterans are facing. You met with Senator Jeffords and
    myself and Congressman Sanders at some length on that. I do
    appreciate that.
        We Vermonters appreciate the time and effort you have been
    giving to our particular situation, the VA Hospital in White
    River Junction. I still want you up there at some time, so we
    can show you that.
        But, Dr. Kizer, I am so delighted you are coming on Monday.
    And I think that people are very much looking forward to that
    meeting. We will try to provide nice weather for you. If it is
    bad weather--remember, we are very close to New Hampshire, and
    sometimes the weather comes over to our side. [Laughter.]
        But if it is good weather, it is all Vermont weather.
    [Laughter.]
        I know the story of the problems we face in Vermont is
    being duplicated in a lot of the states around the country. I
    think--sometimes, I think of you as the fire fighter. You know,
    you get to the raging fire, you turn on the hose, and a little
    bit of water comes out. And then we say to you, ``Why haven't
    you put out the fire?''
        We have--you need resources. I hear from veterans who have
    to wait months for medical appointments or have to travel long
    distances for care. VA doctors are telling me they are leaving
    the system, very good doctors that are trained well through the
    system, that we have a lot of time and effort invested in them.
    But they are leaving the system because they worry about the
    future viability of it and all.
        But an anesthesiologist who left the VA, he was then hired
    by a private hospital and then was contracted back to the VA at
    twice his original salary, and that is--you know, that is not a
    way of doing it either.
        I do not think the Administration's medical care request of
    $17.3 billion is adequate. I hope that we can do something
    about that, we in Congress, and we can consider some of the
    areas outlined in the independent budget created by veteran
    service organizations.
        Mr. Chairman, I know you and Senator Mikulski struggle with
    this each year, and I--if I had to figure out how you get that
    through, I would have probably even less hair than I have now,
    as I tear it out. [Laughter.]
        I will leave, if I might, Mr. Chairman, some questions
    especially regarding computerized medical records and data
    control. I will leave those to be submitted for the record, if
    I might.
        Senator Bond. Without objection.
        Senator Leahy. And I ask that my whole statement be put in
    there.
        Senator Bond. Okay.
        Senator Leahy. But I did want to--I did want to express my
    appreciation of the Secretary's time--the amount of time he has
    spent with those of us who have concerns.

                               prepared statement

        And I want to express my appreciation to you and to Senator
    Mikulski for the amount of time you have spent and the amount
    of time you have spent listening to individual members of this
    committee.
        [The statement follows:]

                      Prepared Statement of Senator Leahy

        Mr. Secretary, as we enter the new millennium, it seems clear to me
    that VA is facing a financial crisis. The Balanced Budget Agreement of
    1997 has flat-lined VA health care funding at a time when the health-
    care needs of aging veterans have never been greater.
        Mr. Secretary, you know well the situation that Northern New
    England veterans are facing. We in Vermont appreciate the time and the
    effort that you have been giving to our particular situation at the VA
    hospital in White River Junction. I still want to invite you to come
    visit us in the near future.
        But I know that the story in Vermont is being duplicated in many
    states around the country. I cannot help but liken your situation to
    the fireman who turns on the hose only to find a trickle of water
    instead of a stream. I hear from veterans who have to wait months for
    medical appointments. I hear from veterans who have to travel long
    distances for care. I hear from VA doctors who are leaving the system
    because they are concerned about its future viability. In one case, I
    know of an anesthesiologist who left the VA, was hired by a private
    hospital, and then was contracted back by the VA at twice his original
    salary. I hope that is not indicative of VA's larger efforts to become
    more efficient.
        I do think that the Administration's medical care request of $17.3
    billion is not adequate and I hope that we in Congress can consider
    areas of concern as outlined in the Independent Budget that was created
    by veterans service organizations.

        Senator Bond. Thank you, Senator Leahy.
        As is the practice in this committee, the record will be
    kept open for seven days for questions from other members of
    the committee or statements that they wish to add to the
    record.
        And the statements that are--the questions that are
    submitted, we would appreciate, Mr. Secretary, you responding
    within five days, five working days if you can, for the record.
    We will, of course, welcome any additional statements or
    comments you wish to make.
        Let me turn now to Senator Hutchison for any opening
    statement that she wishes to make.

                   STATEMENT OF SENATOR KAY BAILEY HUTCHISON

        Senator Hutchison. Yes. Thank you, Mr. Chairman.
        And I do want to say that I noted the distinguished ranking
    members story of her gall bladder surgery and was pleased that
    she did not emulate a distinguished former President by showing
    us her scar. [Laughter.]
        Senator Bond. Now, I am out of that. You all can handle
    that. [Laughter.]
        Senator Mikulski. Lyndon Johnson.
        Senator Bond. Yes.
        Senator Hutchison. Yes, it was. It was a great Texan, as
    you know. [Laughter.]
        Let me say that I do appreciate the efforts that you are
    trying to make. And I know that many of your problems are a
    bigger veteran population and budgets that perhaps, you
    believe, do not meet the increase in your requests.
        But I also want to say that when I see veterans who are--
    feel that they have not had the promises kept to them that were
    made to them, it makes me feel like sometimes we are doing new
    programs and new things for people that have not yet been able
    to experience these programs. And we are not fully keeping the
    promises that we have made to people who have already served.
        And I would like to think that our priorities are not that
    skewed, that we do, in fact, keep the promises because so many
    of these people did serve, they have kept our country free and
    secure, and I want to make sure that we are a country that
    keeps its word, even though the people have already done their
    part.
        So with that in mind, I want to say that I think there are
    some good things you are doing with your budget requests, and
    then I think there are some problem areas. So I hope that all
    of us will work together to make sure that we are keeping the
    promises that we make.
        And I would say the biggest is medical care. The veterans
    expected to have good quality medical care. And I think we
    ought to be continuing to look for innovative ways to keep that
    promise. And as we have closed active duty medical facilities
    or downsized them, the veterans are the ones that have been
    squeezed out. So I think it is important that we keep as many
    of the veterans facilities as possible.
        My state has almost 2 million veterans. And we have a very
    active state program. And one of the things that I appreciate
    that you are doing is sharing in costs where our state is
    adding to veterans medical care state facilities. You are
    contributing so that it is less cost for you than having to
    serve those people without state help, and it is also helpful
    to the state to have that encouragement.
        So the extensions that you are doing in Floresville and
    Temple with state help, I think, is a good and innovative
    approach perhaps, which might be helpful in other states as
    well.
        But our state is more veteran supportive than most states,
    as you know. So we are happy to make the contribution and it
    helps to have the federal donation to go with that.
        But there is one--there are two particular areas in Texas
    that I want to leave as questions, and I am going to have to
    leave as some of my other colleagues are, but I would like to
    have answers. One is the veterans hospital in Kerrville about
    which Senator Gramm and I wrote to Dr. Kizer in February and
    the severe downsizing that we are looking at for that facility
    which serves 17,000 veterans for South Texas. So I hope that we
    will get a look at that and, hopefully, not see that kind of
    severe cut with that kind of service.
        Second, Texas with its very large number of veterans is
    broken up into three veterans integrated service networks. The
    centers controlling these areas are outside the state, and many
    veterans have said they have a lot of difficulty in getting
    service through these out-of-state centers.
        And I would leave the question with you for an answer on
    how we are going to improve the integration of these services
    and if there is any possibility that we could consolidate
    perhaps into one integrated service so that they would not have
    to go to separate places out of state where they do not feel
    that they are able to get as hands-on treatment.
        So those are the specific questions that I would like to
    have written answers for, and in general I share my colleagues'
    concerns about the number of days that it takes to get medical
    care.
        And I think we must be going in the wrong direction, and I
    hope that we will try to reverse that knowing, of course, that
    you do have severe budget constraints, but necessarily I think
    we have to put the priorities to keeping our word to these
    people.
        Thank you.
        Senator Bond. Thank you Senator Hutchison.
        Senator Craig.

                        STATEMENT OF SENATOR LARRY CRAIG

        Senator Craig. Mr. Chairman, thank you very much for the
    welcome and letting me spend a few moments sharing some
    concerns that are not unlike what you have heard from my
    colleagues.
        Let me focus on the budget you have brought to us against
    our Boise VA Hospital and Center. And I do that--and I do it
    annually to try to see what current budgets do to ongoing
    operations in an area that I know something about, because this
    is a veterans hospital that I visit at least twice a year, and
    just came away from visiting with that hospital and its
    director and medical staff a few weeks ago.
        So the thing that catches my eye most of all when we lay
    that facility against your budget are some of these figures.
    For example, the budget does not provide any money for about a
    4.8 percent pay increase, inflationary increase, and the
    increases in the mandatory workloads.
        What your budget does do to a facility that has already met
    the standards of downsizing and reshaping--and this is also a
    facility that has been building at our request, building a new
    outpatient facility, pharmaceutical facility, building a
    facility to expand another primary care team.
        The budget will force a reduction in staff of 5 to 10
    percent of the 1999 levels, and that is 2856 full-time
    employees, and eliminate programs such as substance abuse,
    potentially, post-traumatic stress disorder, and long-term
    care.
        Now, the reason these are important figures is because of
    this headline. Mr. Chairman, I want to put this in the record.
        Senator Bond. Without objection, it will be so admitted.
        Senator Craig. It says ``600 Idaho Veterans Await Care,''
    not ``are not getting care,'' but are being put on a primary
    care list, saying--they come because they need help, ``But we
    cannot give you help, so we will put you on a list. You just
    wait until we get to you,'' except, of course, for the very
    extreme cases.
        I am not sure that I can figure any way of finding that
    acceptable. And yet, it is strange that we have modernized this
    facility. We have made--it is a regional facility by definition
    in that region of the country, serving almost all of Idaho--
    except the north end that goes toward Wallawalla--and part of
    Nevada, parts of eastern Oregon, clear to almost over to the
    Blue Mountains of Oregon.
        So it is a very large facility, serving a regional
    population. And I am not sure what the numbers are as to that
    population base.
        But we now have created a facility for a fourth primary
    care team and cut the budget at a time when we knew these
    demographics were turning on us because of our aging veterans
    population. And why we have done what we have done there at
    that facility to expand its capabilities, expecting that 70,
    80-plus-year-old World War II vet to be soon coming--well, they
    are there, and they are standing in lines waiting.
        I am not going to let that happen. I cannot let that
    happen. I do not think this committee is going to let that
    happen.
        So we will work together because I appreciate your
    challenges. I am not disputing them in any sense of the word.
    And I am all for downsizing, and I am all for wringing out
    inefficiencies.
        The last at least two budget cycles, and maybe three--and I
    have watched it happen because of my regular visits to that
    facility. I have watched the inefficiencies come out. I have
    watched the leaning up and the cleaning up of those staffs. And
    now, I see a waiting list growing. That is just not acceptable.
        And so we will work together to see if we can resolve that
    because we must for the sake of that facility and all that it
    does, like others. It has a wonderful working relationship with
    the University of Washington Medical Center for geriatric care,
    and it is leading the region, if not the country, in a lot of
    marvelous work as was reflected by the Senator from Maryland as
    our VA hospitals and centers do.
        But when I am faced with headlines and when I am faced with
    veterans who are standing in lines that produce those headlines
    that some 600 are now waiting to be served, then we have a
    problem. And I hope we can solve it.
        Mr. Chairman, I have several questions that I would ask--I
    am going to have to go to another hearing. And I will submit
    those for the record. But those questions will be: Where are
    the efficiencies to come from, reflecting your budget and our
    cuts and our need to change?
        And I have submitted for the record, of course, the news
    article that really speaks to the hub of the issue and is
    probably reflective of many centers around the country and how
    we monitor and handle that situation because I want to go home
    after this budget cycle and say that--what I would really like
    to say is that we have put enough in the budget to establish
    the fourth primary care team as planned, as designed and built
    for because of the aging populations we knew were coming.
        And that is not what we are saying, and that is not what
    this budget says. That is what I would like to say at the end,
    and that is what I am going to work for, Mr. Chairman.
        Thank you very much.
        Senator Bond. Thank you very much, Senator Craig. We will
    submit your questions for the record.
        I would refer you to, as I have all members of the
    committee, the GAO report on where possible savings might be
    adopted.
        Senator Craig. Yes.
        Senator Bond. And also we have attempted in each year to
    provide more funds than requested in the President's budget,
    but there is still very, very extreme stress throughout the VA
    system.
        With that, Mr. Secretary, we are ready for your testimony.
    We will, of course, have the full statement that you have
    submitted as part of the record, and would ask, if you could,
    to summarize for perhaps about ten minutes. And we will have
    some questions, orally. And then it appears that you will have
    a bounty of questions to answer for the record.
        So, Mr. Secretary, welcome to the committee.

                         Statement of togo d. west, jr.

        Mr. West. Thank you Mr. Chairman. You have already
    identified the members seated at the table with me.
        Mr. Chairman, members of the committee, I thank you for the
    opportunity to appear before you to present and discuss the
    President's proposed budget for the Department of Veterans
    Affairs for fiscal year 2000.
        The total budget authority is $43.6 billion. It is devoted
    to continue to provide high-quality care and services for our
    veterans and their families. It is a commitment, as you have
    also pointed out, and other members of the committee, within
    the broad principles of fiscal responsibility to which both
    this body and this Administration are committed.
        Statutory caps on spending have undeniably affected this
    budget request, as they have to a greater or lesser extent, for
    every other department or agency in the Executive Branch.
        On the other hand, that discipline has, to the credit of
    both the Congress and the President, produced a level of
    economic performance that benefits veterans and Americans, I
    might also add, to the credit of Americans everywhere.
        Nonetheless, the improvements that VA has accomplished in
    recent years and that we produce in this budget are based on
    our continued mission of providing the highest quality of care
    and service.
        Our goal, Mr. Chairman and members of the committee, is to
    provide full enrollment of veterans for health care. And then
    to provide to those veterans the quality of treatment to which
    they are entitled.
        Transformation, as has been noted several times by this
    subcommittee, of VA health care, that is the Veterans Health
    Administration, is well underway. And we are now beginning to
    turn our attention to the transformation of the benefits
    delivery system.
        For veterans health care, the Veterans Health
    Administration's emphasis will continue to be to improve both
    its quality and its access; to continue to bring more health
    care to more veterans, closer to where they are and in
    circumstances that are conducive to the treatment they require.
        The budget provides $18.1 billion for health care, which
    includes $749 million in medical collections, to support
    174,420 FTE to provide medical care to eligible veterans. This
    is an increase, when added together, of $200 million over the
    1999 enacted amount. We plan to provide for 3.6 million
    patients, 54,000 more than in fiscal year 1999.
        We intend to support more than 673,000 inpatient visits to
    VA medical centers and 40 million visits to outpatient clinics.
        We are proposing $50 million in additional funding for
    homeless veterans, $40 million in health care, and $10 million
    in mandatory transitional housing subsidies.
        We are continuing our aggressive response to Hepatitis C
    infection among veterans by increasing the $114 million set
    aside in 1999 to $250 million in fiscal year 2000.
        The budget also proposes to increase spending by $106
    million in VA's long-term care alternative programs, and offers
    continued support for our goal that has been mentioned several
    times here, to decrease the cost of caring for each patient by
    30 percent from the 1997 baseline; to increase the number of
    patients treated by 20 percent; and to increase alternative
    sources of revenue to augment our budget by 10 percent of the
    direct appropriation.
        This budget of $316 million will support more than 2,104
    high-priority research projects. This level of funding, Mr.
    Chairman and members of the committee, will maintain operations
    in VA medical research centers in the areas of Gulf War
    illness, diabetes, Parkinson's disease, spinal cord injury,
    prostate cancer, depression, environmental hazards, women's
    health issues, and VA rehabilitation centers.
        We view this research effort as an opportunity to continue
    our focus on VA's core competencies and to insure that we
    maintain our leading edge in treating our veterans with special
    needs. We believe that by continuing to research illnesses
    associated with our veterans' experience in the Gulf War, for
    example, we will be better able to address their health care
    concerns, and we will also generate confidence in our
    commitment to that important veterans population.
        Our research efforts on behalf of women veterans should
    move us forward in caring for a traditionally under-served
    population. The fact is, as more women serve in our military,
    they must be certain, they must be assured, that they, as
    veterans, will receive the same high-quality treatment our male
    veterans have long enjoyed. We intend to provide that
    certainty.
        Last year, the Administration proposed a three-year
    demonstration program to collect reimbursement from Medicare
    for health care services provided to Medicare eligible
    veterans, upper income veterans without compensable
    disabilities. We make that proposal again this year, Mr.
    Chairman. Beginning in fiscal year 2000, it is the Department
    of Veterans Affairs' top legislative priority.
        Funding generated from this program is not included in our
    fiscal year 2000 budget proposal, however. If it is enacted, VA
    will accrue some additional revenues in fiscal year 2000.
        I point out, that Medicare subvention is budget-neutral and
    adds no additional costs to the overall budget. It will allow
    us to bill Medicare at rates lower than those in the private
    sector and provide veterans with additional options in
    selecting high-quality health care.
        Our current emphasis in the Veterans Benefits
    Administration is to ensure that we are on a path to improve
    our system, so that it ensures veterans that we are handling
    their claims quickly, and more importantly, that we are
    handling them correctly.
        Our budget for the discretionary portion of VBA budget is
    some $860 million, supporting 11,437 FTE. That amount
    represents a $49.6 million increase over the 1999 budget, and
    an additional 164 FTE. With that increase, combined with
    transferring FTEs from other areas within VBA, we will be able
    to move 440 additional claims decisionmakers into the claims
    process in fiscal year 2000 for the purpose of bringing
    improvement to timeliness and quality of claims processing.
        And we propose in this budget to invest $30 million in
    information technology; a down-payment, if you will, to re-
    engineer our regional offices and move us toward an
    electronically based claims processing system; perhaps one of
    the single best promises of long-term permanent improvement in
    the timeliness and accuracy of processing.
        We ask for $21.6 billion to provide compensation, pension,
    and burial allowances for more than 3 million veterans and
    their families.
        In fiscal year 1998, Mr. Chairman and members of the
    subcommittee, some 550,000 veterans died. That's a rate of
    approximately 1,500 a day. We are told by the estimates of the
    National Cemetery Administration that those numbers of deaths
    will increase until the year 2008, when they will peak.
        We are responding to this continuing increase by building
    new national cemeteries, by extending the service life of
    existing cemeteries, and by encouraging states to build state
    veterans cemeteries.
        The request this year for operating our cemeteries, $97
    million, is $5 million more than the 1999 enacted level. It
    includes $153,000 and 23 FTE for the activation of four new
    national cemeteries and their initial operation in Ohio, New
    York, Texas, and Illinois; more openings than at any other time
    in the history of the system.
        With the opening of these four new cemeteries, we
    anticipate that 77 percent of the nation's veteran population
    will live within a reasonable distance of a veterans cemetery,
    reasonable distance being defined as roughly 75 to 80 miles.
        In grants, we requested $11 million for the state veterans
    cemeteries program. We have requested $40 million for the state
    extended care program. We have requested $31.6 million for the
    homeless grant and per diem program, an increase of $12 million
    over last year's budget. Of that latter amount, $7 million will
    be targeted for grants and $24 million will be for per diem.
        Mr. Chairman, we believe that in delivering to you and to
    the committee, the fiscal year 2000 budget, it is a workable
    budget. Though, as you and others have pointed out, it is
    admittedly challenging. It is a budget that we intend will
    provide for continuing increases in access to primary health
    care for our veterans.
        It is a budget that will continue to maintain the specialty
    programs our veterans rely on VA for which they know that VA
    can provide, when other medical facilities may not always be
    able to meet that need.
        It is a budget that provides assurances that there will be
    improvements in claims processing, especially in accuracy, but
    we will not neglect timeliness, as well.
        And it provides assurances that when our veterans' lives
    have ended, they will be treated honorably. They will find
    their final resting place, a place of honor, located within a
    reasonable distance of their families.

                               prepared statement

        We believe these are worthy objectives, Mr. Chairman. We
    seek your support for this budget, and of this committee.
        We are ready to answer your questions.
        [The statement follows:]

                    Prepared Statement of Togo D. West, Jr.

                            i. introductory remarks
        Mr. Chairman and members of the Subcommittee, the President's
    budget for fiscal year 2000 reflects a sincere effort to meet the
    Nation's obligations to its veterans in a fiscally responsible way.
    There is no question that the statutory caps on spending, as agreed
    between the Administration and Congress, constrain the request for
    funding for this Department as they do for every other department and
    agency. On the other hand, it is also undeniable that this fiscal
    discipline has produced economic performance that benefits veterans as
    well as all other Americans.
        Nonetheless, the accomplishments we have achieved and the
    improvements we propose with this budget represent strides in our
    mission of providing top-quality care and services. The transformation
    that is well underway in our health-care system, and just beginning in
    our benefits-delivery system, is powered by an absolute dedication to
    that mission. Fundamental change in our service-delivery systems is a
    prerequisite to dramatically improve performance.
        This change in where and how we provide care and services is
    difficult and sometimes controversial. It has been and must continue to
    be accomplished in full consultation with veterans and other
    stakeholders. We have found that many of the health-care changes
    questioned a few years ago are now applauded as significant steps
    toward better care. Better access through Community Based Outpatient
    Clinics (CBOCs), primary care, and improved quality are results of the
    changes we have made. Approval of ``Buy-Out'' legislation and Medicare
    Subvention would better enable us to accomplish our mission. We expect
    the same transformation of our benefits-delivery system. Our
    comprehensive approach to benefits processing strives for accuracy and
    real-time information on the status of veterans' claims. Timeliness
    will get better when we process claims correctly the first time, and
    claimants' satisfaction with our system will improve as they are kept
    better informed throughout the process.
    ii. highlights of department of veterans affairs (va) fiscal year 2000
                               budget submission
        Our budget request builds on VA's previous accomplishments and
    positions us for the future. Here are some of the highlights of our
    request.
    For the Veterans Health Administration (VHA)
        The budget provides $18.1 billion, including $749 million in
    medical collections, to provide medical care to eligible veterans. VA
    will open 89 new outpatient clinics and treat 54,000 more patients in
    2000 than in 1999, a 1.5 percent increase.
        We are proposing $50 million in additional funding to help homeless
    veterans, including $40 million in medical care and $10 million in
    mandatory transitional housing subsidies. We are asking for a $136
    million increase in VA's efforts to combat Hepatitis C and an increase
    of $106 million in VA's long-term care alternative programs.
        While not included in the budget, the Administration will continue
    to seek authorization of a pilot program whereby VA could receive
    reimbursement from Medicare for covered services provided to certain
    Medicare-eligible veterans. This program will help us to increase
    alternative revenues.
        The budget includes a legislative proposal to authorize VA to cover
    the cost of out-of-network emergency care for enrolled veterans with
    compensable disabilities related to military service. This legislation
    would ensure that these veterans have access to emergency care when
    treatment in VA facilities is not an option.
    For the Veterans Benefits Administration (VBA)
        For benefits processing, the budget provides $860 million, $49
    million more than the funding level enacted in 1999. This is a six
    percent increase and will ensure that compensation, pension, education,
    and housing benefits to veterans will continue to be delivered while we
    continue the process of reengineering the way we deliver benefits. Four
    hundred and forty FTE will be added to help us process disability
    claims more efficiently.
    For the National Cemetery Administration (NCA)
        The budget requests $97 million, $5 million more than the fiscal
    year 1999 enacted level, for the operations of the National Cemetery
    Administration. This increase will provide funding for the activation
    and first year operations of four new National Cemeteries.
    In other areas (Construction, the Capital Asset Fund, and Smoking
            Cessation)
        We are requesting new budget authority of $296 million for the
    Department's construction programs. Our request provides funding for
    four major construction projects and provides resources for minor
    construction, a proposed new Capital Asset Fund, and grants for State
    veteran's nursing homes and cemeteries.
        The Capital Asset Fund is a proposal that would authorize the
    establishment of a five-year pilot program allowing VA to sell,
    transfer, or exchange its excess properties and keep 90 percent of the
    proceeds. VA would then reinvest those proceeds into non-recurring
    capital needs to benefit veterans.
        A significant portion of the money from the fund would be retained
    by the local area or network in which the property has been disposed.
    This proposal would also direct ten percent of the net proceeds from
    sales to local continuum of care for the homeless through the
    Department of Housing and Urban Development. That money would include
    assistance to local homeless veterans. We are asking for authority to
    spend $10 million in fiscal year 2000 to fund the administrative start-
    up costs of the program.
        We're also asking for $56 million to establish smoking cessation
    programs for veterans who began to smoke during military service. This
    program will be designed to reach veterans throughout the country by
    using contractors.
                 iii. improved va strategic planning processes
        As a Department, we are placing greater focus on the outcome of our
    actions and policies. As we develop our long-term vision for the
    Department and our goals, we are placing greater emphasis on
    understanding the impact our programs have on veterans and their
    families. We believe this will help us to better link our resources to
    programs that benefit our veterans.
                           iv. additional information
        Mr. Chairman, those are the highlights of our fiscal year 2000
    budget request. Let me now provide you with some additional details.
    On VHA's Budget
        In the area of health-care for veterans, our fiscal year 2000
    request recognizes the dramatic changes that have occurred in the past
    four years. In that time, we have changed the organizational structure
    of the Veterans Health Administration. We have found new ways to help
    fund our medical programs. We have gotten rid of conflicting and
    confusing rules on eligibility. And we have changed the culture of VA
    health-care.
        In addition, we have increased the number of veterans treated,
    improved the quality of our care, and improved customer satisfaction.
    At the same time, we have reduced the per-patient cost of providing
    care.
        The goal of our Department is to provide world-class quality
    health-care to as many veterans as possible. We will continue to insure
    that taxpayers receive full value for the funds they entrust to us. Our
    resources will continue to be shifted from inpatient specialty care to
    primary care delivered on an outpatient basis.
        VA has successfully organized a system of coordinated health-care
    delivery focused on continuous quality improvement that is patient-
    oriented, ambulatory care-based and results driven. We now treat
    patients in the most appropriate settings for their problems. Veterans
    have embraced the use of primary care providers and care teams for
    their health needs.
        These strategies will assure the viability of the health-care
    system well into the next century. They will also prepare VA to
    continue to meet the diverse health-care needs of the veteran
    population. We believe that the new VA system should serve as a model
    for future integrated health-care systems, both public and private.
        In 1998, our Department committed to the goals of reducing per-
    patient cost for health-care by 30 percent, serving 20 percent more
    veterans, and increasing alternative revenue sources to 10 percent of
    all Medical Care funding. VA is still committed to meeting these goals,
    while assuring that quality of care is maintained in our system.
        VA is on track towards its long-range goals of 30/20/10. Compared
    to the 1997 baseline, we project the following results in fiscal year
    2000: reduce per-patient cost by 18 percent, serve 16 percent more
    veterans, and increase non-appropriated funding to 5.1 percent of the
    Medical Care budget.
        This will be accomplished in large measure by continuing to shift
    excess acute inpatient resources to expand and enhance outpatient care
    and other types of care in the most appropriate setting.
        Medicare subvention would allow VA to collect funds from Medicare
    for health-care services provided to Medicare eligible, higher income
    veterans without compensable disabilities. Adoption of this
    demonstration program is VA's top legislative priority.
        We urge you to work with us this year to ensure Congress passes a
    demonstration project as soon as possible.
        We will not be able to obtain 10 percent of our funding from
    alternative revenue sources in the future if Congress does not pass the
    Medicare subvention pilot legislation. If this pilot proves successful
    in improving outcomes and lowering costs, our goal would be to open up
    VA reimbursement throughout the system. I ask for your support of the
    Administration's proposal in this area.
        I have already highlighted some of the major aspects of VHA's $18.1
    billion budget. The $106 million we requested for additional long-term
    care will allow us to expand our home and community-based care programs
    for our older veterans. The $50 million for homeless programs will
    allow us to support 1,385 new community-based beds and treat 12,000
    more homeless veterans.
        VA is also proposing a change in appropriation language. It would
    provide for two-year spending availability for up to 5 percent of our
    resources, excluding those funds set aside due the required deferral of
    funds medical equipment.
        We support this proposal because it promotes more rational spending
    decisions and recognizes the need for management flexibility during
    this period of significant change for VA health-care.
        As I mentioned earlier, the Administration is requesting
    authorization of a new smoking-cessation program for any honorably
    discharged veteran who began smoking in the military. The program would
    be delivered by private providers on a per capita basis. Any veterans
    who began smoking in the military would be eligible for this new
    program, to the extent resources are available. The Administration will
    seek authorization of this program in the near future.
        Once this program is authorized, the Administration will submit a
    budget amendment requesting an appropriation of $56 million for this
    new activity. It is estimated that between 500,000 and 600,000 veterans
    would avail themselves of this valuable program over the next five
    years.
        For Medical and Prosthetic Research, a total of $316 million and
    2,838 employees will support more than 2,100 high priority research
    projects to enhance the quality of health-care of the veteran
    population. This level of funding will allow us to maintain the
    operation of research centers in the areas of Gulf War veterans'
    illnesses, diabetes, Parkinson's disease, spinal cord injury, cancer,
    prostate disease, depression, environmental hazards, women's issues, as
    well as rehabilitation centers and Health Service Research and
    Development field programs.
        In these areas, no other federally supported clinical or research
    entity can initiate or complete such critical and ambitious research
    activities on behalf of America's veterans. Our Department will
    continue to increase the amount of non-appropriated research funding we
    receive from the private and public sectors.
        The Balanced Budget Act of 1997, Public Law 105-33, allows VA to
    retain all collections from third parties, copayments, per diems, and
    certain torts after June 30, 1997. These collections are deposited in
    the Medical Care Collections Fund and are available for transfer to the
    Medical Care appropriation. The funds remain available to VA until they
    are expended.
        For fiscal year 2000, VA estimates that more than $761 million will
    be collected through this effort-and revenues will grow to over $1.2
    billion by 2004. To accomplish this growth, we are in the process of
    changing our billing rates to reasonable charges for inpatient and
    outpatient procedures; identifying more patients having insurance; and
    improving our debt collection efforts.
        The Medical Administration and Miscellaneous Operating Expenses, or
    MAMOE, activity is requesting $61.2 million in appropriations to fund
    573 employees who will support VHA operations in fiscal year 2000.
    Transfers of $415,000 and $7.1 million in reimbursements will
    supplement these funds.
        This request is somewhat different from past years in that it
    includes reimbursement authority for activities related to the
    Facilities Management Service-delivery Office. Facilities Management
    will begin to receive reimbursement from VHA, VBA and NCA for field-
    related project management.
        This reimbursement will allow VA to use appropriated funds to hire
    additional staff in the areas of quality management and performance
    measurement. Capital policy activities will continue to be funded by
    the appropriation.
                                on vba's budget
        For five years, I have traveled throughout this country, first as
    the Secretary of the Army and later as the Secretary of Veterans
    Affairs, talking with servicemembers and veterans. I never fail to hear
    from veterans about issues of veterans benefits. And, every veteran
    applying for benefits is concerned about the length and quality of the
    decision-making process. I am a lawyer, and my profession has a saying,
    ``Justice delayed is Justice denied.'' This means that, in effect, for
    every day a decision is delayed, that benefit is, in fact, denied.
        Yet, timeliness is not the only criteria. It is of no use to our
    veterans for us to process their claims with record speed if we get it
    wrong. Accuracy is also critical. The number of appeals and remands for
    additional information take up too much staff time, and, more
    importantly, too much of our veterans' time.
        This budget emphasizes a commitment to restoring the Veterans
    Benefits Administration's credibility and trust. Through several
    leadership initiatives, VA seeks to reverse negative perceptions and
    make the goal of ``world class customer service'' a reality.
        The Veterans Benefits Administration has developed four overall
    themes that it intends to address. These include: restoring VBA
    credibility and trust; achieving dramatic progress in improving
    performance; building knowledge regarding program outcomes; and
    establishing a rational resource acquisition and investment approach.
        The Balanced Scorecard is VBA's centerpiece for establishing a
    clear process for setting strategic objectives and priorities and for
    measuring the progress they have achieved. VBA's fiscal year 2000
    budget request is $860 million and 11,437 full-time equivalent
    employees or FTE. This represents an increase of $49 million and 164
    FTE above the 1999 level. By combining this increase in the number of
    employees with positions available due to efficiencies in other areas,
    VBA will be able to increase its number of benefits adjudicators by
    440.
        Demographics indicate that many of our experienced employees will
    be retiring within the next five to eight years. In order to avoid a
    two to three year skill gap, which will exacerbate our service-delivery
    challenges, we must stabilize the Compensation and Pension workforce
    for the future by hiring and training additional resources immediately,
    before the actual losses occur.
        Our compensation and pension objectives include working towards the
    goals of completing rating-related actions in 74 average processing
    days, completing non-rating actions in 17 average processing days,
    achieving 96 percent national accuracy rate for core adjudicative
    rating work, and attaining 90 percent overall satisfaction among
    veterans with the way claims are handled.
        Besides the electronic claims processing pilot project I mentioned
    earlier, here are some other initiatives we are taking to meet these
    goals:
        We have developed a multi-year initiative, which requires funding,
    for four comprehensive training, performance support, and certification
    systems for service-delivery positions. The four systems are for new
    rating specialists; veterans service representatives; advanced rating
    specialists; and decision-review officers.
        We are currently developing formal partnership agreements with
    veterans service organizations, both at the national and local level.
    The partnership agreements will allow us to train service organization
    representatives to properly submit fully developed claims and will
    allow them to access VBA information systems. This will allow VBA
    employees to devote their time to decision-making, not claims
    development.
        We are asking for funds to continue an initiative that will provide
    claims development, disability examinations, and rating decisions for
    service persons awaiting discharge from active duty. VA plans to have
    transition teams present at each of the 20 largest military separation
    points in the U.S. and to support, on a part-time basis, about 30
    additional sites. This should allow VA to reach about 80 percent of all
    DOD separatees.
        Our Systematic Technical Accuracy Review, or STAR, program will
    improve the accuracy of C&P claims processing by implementing a new
    national accuracy review program to provide current and diagnostic
    information about the accuracy of the work being produced at VA
    regional offices. We have requested funds for additional staffing, the
    creation of a database, and administrative expenses to aggressively
    implement this program.
        VBA intends to merge Adjudication and Veterans Services Divisions
    in all of its regional offices. Through this program, called the
    ``Conversion to Service Center'' initiative, veterans will interact
    directly with the VA employees processing their claims. They will
    receive more specific information on their claims' status, and they
    will also know what evidence is needed for decisions and what they can
    do to expedite action.
        Funds requested for the enhancement of education activities include
    providing for expanding imaging technology. Imaging technology now in
    use for claims processing in Atlanta and St. Louis will be extended to
    Muskogee and Buffalo throughout fiscal year 2000.
        The budget request for the housing program assumes that, if it is
    cost effective, VA will join other Federal housing loan guaranty
    programs and eliminate the in-house home-loan property management and
    disposal activities of foreclosed homes by using discretionary
    authority current law grants the Department.
        VBA will contract for an A-76 study in 1999 to ensure the most
    cost-effective approach for disposing of foreclosed properties. This
    study will include a comparative analysis of selling foreclosed
    properties for cash versus direct VA financing.
        Funding has also been included in this budget to provide for
    financial accounting improvements the housing program needs. When
    completed, these improvements will enable the Loan Guaranty general
    ledger system to meet Federal Financial Management Integrity Act
    requirements. This is necessary in order for VA to achieve an
    unqualified audit opinion on their annual financial statements.
        Administrative expenses to support the insurance program are made
    available from excess earnings from the National Service Life
    Insurance, United States Government Life Insurance and Veterans Special
    Life Insurance programs.
        Also included for this program is a new initiative to promote
    insurance self-service. The insurance program has experienced
    significant success with its interactive voice response system. This
    initiative will be the next step in expanding veterans' direct access
    to their insurance records and benefits.
        In this budget, we are requesting $10 million to expand a current
    on-going pilot program on electronic claims processing. VBA is working
    with a consortium of five companies to develop an electronic work
    environment through imaging and other technologies. We expect to see
    improvements in customer service, processing timeliness and accuracy as
    a result. If successful, this demonstration project will pave the way
    for a significant reengineering of how claims are processed.
        VA's benefits programs provide assistance to veterans in
    recognition of their service to their country and to aid their
    transition to civilian life. The Administration is requesting $21.6
    billion to support fiscal year 2000 compensation payments to 2.3
    million veterans, 300,000 survivors and 633 children of Vietnam
    veterans who were born with spina bifida, and to support pension
    payments to 381,000 veterans and 268,000 survivors.
        We propose to provide a cost-of-living adjustment, or COLA, based
    on the change in the Consumer Price Index, to all compensation
    beneficiaries, including spouses and children receiving dependency and
    indemnity compensation. The percentage of the COLA is currently
    estimated at 2.4 percent, which is the same percentage that will be
    provided, under current law, to veterans pension and Social Security
    recipients. The increase would be effective December 1, 1999, and would
    cost an estimated $293 million during 2000.
        If Congress approves, VA will pay full disability benefits to
    Filipino veterans residing in the United States who currently receive
    benefits at half the level that U.S. veterans receive. The cost of this
    legislation is estimated to be $25 million over five years.
        VA also proposes to charge a fee to lenders participating in VA's
    Home Loan Program. The fee would give VA the authority to charge
    lenders a fee of $25 for each VA loan that is guaranteed. The fees
    would be earmarked for use in developing, maintaining, and enhancing a
    VA Loan Information System that would interact with the information
    systems used by lenders.
        Also relating to benefits, an appropriation of $1.5 billion is
    being requested for the Readjustment Benefits program. The money will
    provide education opportunities to veterans and eligible dependents and
    for various special assistance programs for disabled veterans.
        Education benefits will be provided for about 450,000 trainees in
    fiscal year 2000 including 281,000 training under the Montgomery GI
    Bill. This request includes funds for the annual Consumer Price Index
    adjustment, which is estimated to be 1.8 percent effective October 1,
    1999, for education programs.
    On NCA's Budget
        In fiscal year 1998, approximately 550,000 veterans died-nearly
    1,500 a day. The National Cemetery Administration estimates that the
    annual number of veterans' deaths will peak in the year 2008 before
    beginning to decrease. NCA is preparing for this increase by building
    national cemeteries, extending the service life of existing cemeteries,
    and encouraging states to build state veterans cemeteries.
        Our request for the NCA continues to position VA to meet these
    future requirements. The request includes funding and new employees to
    address the fiscal year 2000 growth in interment workloads at existing
    cemeteries, including anticipated growth at the new Tahoma National
    Cemetery. This cemetery will experience the accelerated workload
    increase typical of a new cemetery, which is far in excess of the
    annual growth rates of mature cemeteries.
        It includes additional funding and FTE to continue the activation
    of the new Cleveland-area national cemetery, and for the first full
    year of operations at the new Abraham Lincoln National Cemetery near
    Chicago, the new Dallas/Ft. Worth National Cemetery, and the new
    Saratoga National Cemetery near Albany, NY.
        It also includes funding to replace some cemetery equipment that
    has exceeded its useful life, for customer service initiatives, and to
    cover the increased cost of an integrated data communications project.
                         v. additional funding requests
    For General Administration
        VA is asking for $206 million in funding for the Office of the
    Secretary, six Assistant Secretaries and three VA-level staff offices.
    This request, along with $4.7 million associated with credit reform
    funding, will provide a total resource level of $210.7 million.
        When compared to the original fiscal year 1999 appropriation, the
    fiscal year 2000 request is $7 million higher. The budget authority,
    along with $117 million in estimated reimbursements, will provide for
    an estimated total authority for obligations of $323 million in fiscal
    year 2000. FTE will increase by 111 in fiscal year 2000 from the 1999
    current estimate of 2,490. This increase occurs primarily in the
    reimbursable activities.
        Here are some of the areas where we will use this increased funding
    and number of employees.
    For the Board of Veterans' Appeals
        We are requesting $41.5 million in funding for the Board of
    Veterans' Appeals for fiscal year 2000. The Board's marked improvement
    in timeliness, increase in productivity, and reduction of the appeals
    backlog in fiscal years 1995 through 1998 exceeded our most optimistic
    expectations.
        This level of funding will give us the opportunity to continue to
    improve our timeliness in this area. BVA and VBA have adopted a joint
    performance indicator that is a system-wide measure of how long it
    takes to resolve an appeal made by a veteran. In fiscal year 2000, we
    project that it will take an average of 545 days--45 fewer days than we
    anticipated it to take in 1999.
    For the Office of Information and Technology
        This is the first budget request since the reorganization of the
    Office of Financial Management that resulted in the information
    management function being moved to the newly created Office of
    Information and Technology.
        VA's newly created Office of Information and Technology is
    requesting budget authority of $21.3 million and an average employment
    of 217 to support VA Information Technology policy and program
    assistance, the VACO Campus Office Automation Platform and Local Area
    Network, and other efforts. The Austin Automation Center is separately
    supported by the Franchise Fund. Budget authority and $43.1 million in
    net reimbursements will provide an estimated obligation availability of
    $64.4 million in fiscal year 2000.
        The Department is on schedule in meeting the Y2K challenge. In
    fiscal year 1999, we have met the timeframes for bringing all of our
    systems into production by March. This gives us nine months to address
    any remaining issues.
    For the Office of Human Resources and Administration
        The Office of Human Resources and Administration (HR&A) is
    requesting $105.4 million in total obligation authority and an average
    employment figure of 806. The requested budget authority is $48.7
    million. Included in this figure is $450,000 for program oversight of
    the arming of VA police officers.
        The total figure for HR&A reimbursements is $56.7 million. This
    includes $28.3 million and 235 FTE for HR LINK$ and $27.7 million and
    260 FTE for the Office of Resolution Management (ORM). In fiscal year
    2000, the Department is again requesting that the operations of ORM and
    Office of Employment Discrimination Complaint Adjudication (OEDCA)
    located in the Office of the Secretary be funded through reimbursement
    from its customers.
        In summary, a total appropriation of $912.4 million is requested
    for the General Operating Expenses (GOE), $706.4 for VBA and $206
    million for General Administration in fiscal year 2000. This funding
    level, combined with $158.1 million of administrative costs associated
    with VA's credit programs, which are funded in the loan program
    accounts under credit reform provisions; $10.7 million in
    reimbursements from the Compensation and Pensions account for costs
    associated with the implementation of the Omnibus Budget Reconciliation
    Act of 1990 as amended; and $36.8 million from insurance funds' excess
    revenues, together with other reimbursable authority, will provide
    $1.255 billion to support operations in the GOE account.
    On the Office of the Inspector General's Budget
        To support the Office of the Inspector General in fiscal year 2000,
    $43.2 million and an average employment of 374 FTE are requested. This
    represents an increase of $7.2 million and an increase of 12 FTE from
    the 1999 resource level. The increase in budget authority is primarily
    due to contracting out of financial audit functions and, increases
    associated with acquiring additional FTE. Contracting out the financial
    audit will free up 39 FTE. These actions will enable the OIG to staff
    new initiatives and focus on several priority audits and
    investigations.
                                vi. other issues
    The VA Capital Investment Board
        The Department formally established the VA Capital Investment Board
    (CIB) in July 1997 and produced the VA's first Capital Plan in 1999.
    The CIB's membership consists of top management from throughout the
    Department. The CIB was established primarily to ensure that all
    significant capital investments are based on sound business principles
    and also support the VA's strategic and performance goals.
        Recognizing the need to enhance capital asset planning for fiscal
    year 2000, we have initiated a new capital investment planning process
    to improve the selection methodology for all significant capital
    assets, including construction, equipment, and information technology,
    in support of the budget request.
        Capital investment proposals that meet specified thresholds (such
    as major construction projects, equipment, leases and information
    technology) are scored on how well the project application addresses
    the 20 sub-attributes of five major criteria.
        The five major criteria are: One-VA Customer Service, Return on
    Taxpayer Investment, High Performing Work Force, Risk, and Comparison
    to Alternatives. The first three criteria relate to the Department's
    strategic goals, while the last two address improved business
    practices.
        All significant capital investment proposals that are requested in
    the fiscal year 2000 budget have been scored and ranked by the board to
    ensure that they meet the VA's strategic goals and are sound
    investments.
        The Department capital planning process will be continually refined
    in order to meet the constantly changing needs of the Department.
    Major and Minor Construction
        I am requesting new budget authority totaling $60 million for the
    major construction program. The major construction request includes
    funding for a surgical suite project at Kansas City, MO; a spinal cord
    injury and rehabilitation project at Tampa, FL; a patient environment
    project at Murfreesboro, TN; and a facility rightsizing and gravesite
    development project at Leavenworth, KS. Additional funds are provided
    to remove asbestos from Department-owned buildings and to support
    advanced planning and design activities.
        We are also requesting new budget authority totaling $175 million
    for VA's minor construction program. The request will be used to make
    improvements to ambulatory care settings, patient environment, and VA's
    aging infrastructure. Funds are also requested for nursing home care,
    clinical improvements, correction of code deficiencies in existing
    facilities, and the elimination of fire and safety deficiencies.
        Funds requested in the minor construction budget would also support
    VBA construction requirements and NCA gravesite development and
    improvements to existing National Cemetery Administration roads and
    buildings.
    State Extended Care Facilities and State Veterans Cemeteries
        The fiscal year 2000 request of $40 million for the Grants for the
    Construction of State Extended Care Facilities will provide funding to
    assist States to establish new, or renovate existing nursing homes and
    domiciliaries; and the fiscal year 2000 request of $11 million for the
    Grants for the Construction of State Veterans Cemeteries will provide
    funding to assist States to establish, expand, or improve State
    veterans cemeteries.
                                vii. conclusion
        Mr. Chairman, veterans from all periods of service should be
    satisfied that this budget is a budget that protects their interests
    and lives up to the nation's commitment to them.
        I want to thank the members and staffs for your continued interest
    in our Department. I look forward to continuing to work with you on
    behalf of our nation's veterans and their families. We owe our veterans
    the best service we can provide.
                                     ______

                  [General Accounting Office, April 15, 1999]

              Progress and Challenges in Transforming Health Care

                            (By Stephen P. Backhus)

        Mr. Chairman and Members of the Subcommittee: We are pleased to
    contribute this statement for the record for the Subcommittee's
    deliberations on the fiscal year 2000 budget request for the Department
    of Veterans Affairs' (VA) health care system. In this request, VA is
    seeking a funding level of $18.4 billion to serve 3.65 million
    veterans.
        Between its establishment in 1946 and 1995, VA's health care system
    grew into our nation's largest direct provider of health care, serving
    veterans at over 600 locations nationwide. These included 181 locations
    where VA owned over 4,700 buildings and 18,000 acres of land. VA's
    system focused primarily on hospital care, using high technology and
    medical specialization.
        VA's system, however, did not keep pace with such societal and
    industry changes as:
      --a market-based restructuring of American healthcare, including the
            rise of managed care;
      --a rapid growth in scientific and medical knowledge available to
            treat illnesses and injuries; and
      --an overall aging of the veteran population, including declining
            numbers of potential system users and evolving medical needs.
        In October 1995, VA began to transform its system from a hospital
    operator to a healthcare provider that relies on community-based,
    integrated networks of VA and non-VA providers to meet veterans' needs
    more efficiently and effectively. In January 1997, VA proposed a 5-year
    plan to operate within a fixed annual appropriation of $17 billion
    through fiscal year 2002. To accomplish this, VA planned to reduce per
    patient costs by 30 percent, increase patients served by 20 percent,
    and reduce reliance on appropriations by 10 percent.
        Since VA's transformation began, we have visited over 100 VA
    medical facilities and spoken with over 500 officials, as well as many
    veterans, including representatives of veteran service organizations.
    We also examined hundreds of documents, including VA's budget
    submissions and studies done by VA's Office of Inspector General and
    others. Based on the insights developed during these efforts, our
    statement today focuses on (1) VA's transformation progress to date,
    (2) challenges that remain to be confronted, and (3) the implications
    for VA's fiscal year 2000 budget.\1\
    ---------------------------------------------------------------------------
        \1\ For 1996 and 1997 hearings of this subcommittee, we provided
    assessments of VA's transformation progress. See VA Health Care:
    Opportunities to Increase Efficiency and Reduce Resource Needs (GAO/T-
    HEHS-96-99, Mar. 8, 1996) and VA health Care: Assessment of VA's Fiscal
    year 1998 Budget Proposal (GAO/T-HEHS-97-121, May 1, 1997).
    ---------------------------------------------------------------------------
        In summary, VA's transformation continues to make significant
    progress. Over the last 3 years, VA has enhanced benefits and served
    500,000 additional veterans, while realizing a nonappropriated revenue
    surplus of $496 million that remains available for future use. This was
    accomplished primarily because VA's management initiatives reduced
    operating costs by almost $1 billion. The most notable initiatives
    involved shifting veterans' care to appropriate settings and
    reengineering administrative and clinical processes.
        This year, however, our work shows that VA's transformation appears
    to be losing momentum. VA, for example, has prolonged decisions
    concerning much needed restructuring of aged capital assets, including
    hospital closures, which could result in unnecessary expenditures of
    billions of dollars over the next several years. VA's transformation
    cannot be successfully completed until these and other critical
    challenges are adequately addressed.
        In our view, VA's fiscal year 2000 budget is based on the unduly
    optimistic expectation that its ongoing transformation will generate
    needed efficiencies of $1.4 billion in savings. VA assumes, for
    example, that employment reductions in fiscal year 2000 will be more
    than 3 times greater than expected fiscal year 1999 reductions. VA has
    not taken the underlying management actions--such as aggressively
    addressing all potential facility integrations and service
    consolidations--that appear necessary to make a threefold reduction
    possible. If VA had made such difficult decisions earlier, it might not
    need to realize this level of savings. Moreover, VA may ultimately need
    to use less desirable management actions, including large-scale
    employee furloughs, to operate within its proposed budget. Such actions
    could adversely affect all veterans' quality of care, especially
    waiting times. VA could avoid such undesirable outcomes for higher
    priority veterans if, as the Congress intended, VA uses its new
    enrollment process to manage access to VA health care services within
    available resources.
                                   background
        VA's health care system currently touches the lives of 15 percent
    of our nation's 25 million veterans. The rest rely on private
    insurance, other public programs, or their own resources to finance
    their health care needs.
        VA uses hundreds of delivery locations to provide services such as
    primary care, specialized medical care, mental health, geriatrics, and
    extended care. In addition, VA supports medical education and research
    through its affiliation with 107 medical schools, and provides medical
    backup to the Department of Defense and other federal, state, or local
    agencies during national emergencies.
        VA began its transformation by creating 22 regional offices to make
    basic budgetary, planning, and operating decisions for veterans living
    within defined geographical areas; VA's headquarters and over 150 large
    hospitals made such decisions previously. These offices oversee between
    5 and 11 large hospitals, as well as many clinics or other delivery
    locations.
        The primary focus of VA's transformation is to reduce reliance on
    large hospitals by developing local or regional networks that provide a
    continuum of care grounded in ambulatory settings. To encourage this
    transformation, VA implemented a new resources allocation process that
    bases funding decisions on user populations rather than facilities.
        In addition, the Congress passed the Veterans Health Care
    Eligibility Reform Act of 1996, which furnished tools that VA said were
    key to a successful transformation and provided VA the means to develop
    its 5-year financial plan, including
      --new eligibility rules which allow VA to treat veterans in the most
            appropriate setting;
      --introduction of managed care principles, such as a uniform benefits
            package, which allows VA to provide a continuum of services,
            including preventive medicine; and
      --an expanded ability to purchase services from private providers and
            to generate revenue by selling excess services to nonveterans.
        At that time, both the Congressional Budget Office and we concluded
    that such reforms could generate additional demand for services,
    primarily due to increased use of outpatient services. The
    Congressional Budget Office also estimated that rising utilization
    would, by extension, produce dramatic cost increases, potentially
    billions of dollars.
        To address such concerns, the Eligibility Reform Act also required
    VA to implement a veterans' enrollment system to manage access in
    relation to available resources. It established seven priority
    categories, with the highest priorities given to veterans with service-
    connected disabilities.
        Each year, VA is to enroll veterans in those priority categories
    for which there are sufficient resources to provide care that is timely
    and acceptable in quality. The act also requires VA to maintain
    capacity for veterans with special disabilities, including treatment
    for spinal cord injury, blindness, amputation, and mental illnesses.
        At VA's request, the Congress also authorized VA to retain all
    collections from third parties (including recoveries from insurance
    companies and certain tort claims), copayments, and per diems,
    beginning July 1, 1997. VA is to deposit these collections in a Medical
    Care Collections Fund and use them to supplement appropriations to meet
    veterans' health care needs. VA may spend these funds in the year
    collected or any subsequent year.
             va has taken major steps forward in its transformation
        As part of the transformation, VA's networks have implemented
    hundreds of management initiatives that have significantly enhanced the
    efficiency and effectiveness of VA's health care system.\2\ For
    example, during fiscal years 1996 through 1998, VA reduced inpatient
    workload by 38 percent and bed days of care per 1,000 veterans by 47
    percent. This allowed over 20,000 hospital beds to be closed and
    numerous administrative and clinical services to be consolidated.
    ---------------------------------------------------------------------------
        \2\ VA Health Care: Status of Efforts to Improve Efficiency and
    Access (GAO/HEHS-98-48, Feb. 6, 1998).
    ---------------------------------------------------------------------------
        At the same time, VA used savings from its efficiencies to finance
    improvements in veterans' access to, and quality of, care. For example,
    VA served an additional 500,000 veterans, in part, by opening over 183
    new community-based clinics, creating about 1,000 primary care teams,
    and purchasing specialty care from private providers. VA's performance
    indicators suggest that the quality of care is improving overall.
    Veterans' rating of ambulatory care quality has risen and the reported
    numbers of problems have fallen.
        VA appears on track toward meeting its goals of reducing per-
    patient costs, serving more veterans, and increasing nonappropriated
    revenue sources by fiscal year 2002. Compared with its fiscal year 1997
    baseline, VA projected and realized the results, shown in table 1, for
    fiscal year 1998 (year 1 of VA's 5-year plan).

                           TABLE 1.--VA'S 5-YEAR GOALS
                                 [In percentages]
    ------------------------------------------------------------------------
                                                         VA fiscal year
                                                  --------------------------
                 30-20-10 initiatives                    1998
                                                  ------------------   2002
                                                   Results    Goal     Goal
    ------------------------------------------------------------------------
    Reducing per patient costs...................       10        6       30
    Serving more veterans........................        9        5       20
    Increasing nonappropriated funding...........        4        4       10
    ------------------------------------------------------------------------

        More importantly, VA expects to have more resources available in
    fiscal year 1999 than its 5-year plan projected, as shown in table 2.

      TABLE 2: COMPARISON OF VA'S ESTIMATES FOR ITS FISCAL YEAR 1999 BUDGET
                            [In billions of dollars]
    ------------------------------------------------------------------------
                                                          Fiscal year 1999
                                                       ---------------------
                                                          VA's 5-
                          Funding                          year       VA's
                                                          plan's     current
                                                        projection  estimate
                                                           (1/97)    (1/99)
    ------------------------------------------------------------------------
    Appropriated......................................        17.0      17.3
    Other Sources.....................................         0.9       1.1
                                                       ---------------------
          Total.......................................        17.9      18.4
    ------------------------------------------------------------------------

        Because of efficiency savings, VA needed to spend, in fiscal year
    1998, only $170 million of its medical care collections. This allowed
    VA to carry forward about $496 million for use in fiscal year 1999.
        VA's management initiatives that contributed to these dramatic
    results include:
      --establishing primary care as the dominant delivery model;
      --shifting medical care from inpatient to outpatient settings;
      --consolidating administrative and clinical services; and
      --establishing networks of VA and non-VA providers.
    Establishing Primary Care As Dominant Delivery Model
        VA established primary care case management to help ensure that
    patients are served in the most appropriate settings and resources are
    coordinated and best organized to address patients' specific medical
    conditions.
        Before 1995, primary care providers managed less than 20 percent of
    VA's patients. Since then, VA has successfully oriented veterans to the
    principal concept of primary care. VA, for example, reports that close
    to 80 percent of veterans responding to its annual patient survey are
    aware that one provider or primary care team has responsibility for
    managing their medical care. This, in effect, relieves high-cost
    specialists from day-to-day patient management responsibilities.
        To enhance primary care access, VA has established over 1,000
    primary care teams at large medical facilities and opened over 183
    community-based outpatient clinics. These clinics provide primary care
    closer to veterans' homes, especially those living in underserved,
    often remote, areas. Currently, VA has approved 272 community clinics
    to open in fiscal years 1999 and 2000 and expects to open about 200
    more by fiscal year 2003.
    Shifting Medical Care to Outpatient Settings
        Advances in medical technology and practices, for example, have
    afforded VA significant opportunities to shift medical care to
    outpatient settings. Because of such new technologies as laser,
    endoscopic, and other less invasive surgical techniques, many surgeries
    are now performed in a doctor's office or outpatient clinic or require
    shorter lengths of stay when performed in hospitals.
        In addition, changes in medical practice and the development of
    psychotherapeutic drugs to treat mental illness have led to fewer and
    shorter hospital admissions for psychiatric patients and to the
    deinstitutionalization of many long-term psychiatric patients.
        VA has implemented management initiatives to identify patients who
    can be served more cost-effectively in alternatives to inpatient
    settings, including treatment of many chronically and catastrophically
    ill patients at home rather than in a hospital.
        Before 1996, VA had no systemwide external preadmission screening
    program or other utilization review programs to ensure that patients
    are treated in the most appropriate settings. In that year, we
    recommended that VA develop such programs.\3\ Subsequently, VA
    implemented management initiatives to:
    ---------------------------------------------------------------------------
        \3\ VA Health Care: Opportunities for Service Delivery Efficiencies
    Within Existing Resources (GAO/HEHS-96-121, July 25, 1996).
    ---------------------------------------------------------------------------
      --review 100 percent of planned admissions to determine patients'
            appropriate level of care; and
      --perform continuing stay reviews to determine the appropriateness of
            each additional day of hospitalization.
        During fiscal years 1996 through 1998, VA's inpatient workload
    declined 38 percent and bed days of care per 1,000 patients dropped by
    47 percent. This allowed VA to close 20,000 hospital beds, a 40-percent
    reduction.
        This decrease in inpatient usage has been matched by major
    increases in VA's outpatient care workload. During fiscal years 1996
    through 1998, VA's outpatient visits increased 19 percent. Of note, VA
    performed over 90 percent of certain surgeries, including
    colonoscopies, arthroscopies, cystoscopies, breast biopsies, and
    cataract surgeries, on an ambulatory basis in fiscal year 1998.
    Consolidating Administrative and Clinical Services
        VA also has implemented a variety of initiatives that consolidated
    duplicate or underused services. VA, for example, integrated the
    management teams of two or more large medical facilities in 24 markets;
    this effort involved a total of 50 facilities. VA also consolidated
    many other administrative and clinical services at these facilities,
    which saved millions of dollars in unneeded operating costs.\4\
    ---------------------------------------------------------------------------
        \4\ VA Health Care: Lessons Learned From Medical Facility
    Integrations (GAO/T-HEHS-97-184, July 24, 1997).
    ---------------------------------------------------------------------------
        Based on our work, VA appears to have an opportunity to achieve
    even more significant savings by consolidating duplicate or underused
    services. This is because VA still operates 17 large medical facilities
    that compete with these newly integrated facilities in 10 markets, as
    well as operating 44 large facilities in 19 other markets that compete
    with each other to serve veterans.
        Recently, we recommended, and VA agreed, that veterans' needs
    should be assessed in these 40 markets and steps taken to integrate,
    consolidate, or close unneeded services. This could result in billions
    of dollars in additional savings over the next 5 years that could be
    reinvested to improve veterans' access to high-quality care.\5\
    ---------------------------------------------------------------------------
        \5\ VA Health Care: Capital Asset Planning and Budgeting Need
    Improvement (GAO/T-HEHS-99-83, March 10, 1999).
    ---------------------------------------------------------------------------
    Establishing Networks of VA and Non-VA Health Care Providers
        VA has implemented important initiatives to establish integrated
    networks of VA and non-VA providers. VA has made the most progress by
    far in establishing new community-based clinics. Some notable progress,
    however, has been made purchasing inpatient care from private hospitals
    or military facilities, as well as developing joint ventures and
    sharing agreements with the Department of Defense.
        About half of VA's new community clinics operated through contracts
    with non-VA providers during fiscal years 1996 through 1998. These
    clinics helped to reduce VA's costs and improve access because they are
    located closer to veterans' homes. VA expects these clinics primarily
    to refer veterans to VA facilities for specialized diagnostic
    procedures, treatment, or hospital admissions, although referrals may
    also be made to other non-VA providers.
        In addition, some VA hospitals located in rural areas have
    contracted to provide inpatient care with non-VA hospitals. These
    initiatives, according to VA, have been successful from a cost-
    efficiency perspective and also have received high satisfaction scores
    from veterans.
        At the close of fiscal year 1998, VA and the Department of Defense
    had negotiated almost 1,000 facility-level sharing agreements covering
    more than 10,000 services ranging from laundry, blood, and laboratory
    services to major medical and specialty care services. There are also
    four joint ventures under way for the construction and operation of
    medical facilities, with four additional agreements near completion.
        We are currently reviewing these sharing agreements to assess the
    benefits for veterans, military members, and beneficiaries, as well as
    efficiency savings for VA. Recently, the Congressional Commission on
    Servicemembers and Veterans Transition Assistance reported that
    opportunities exist for greater sharing and partnering between VA and
    the Department of Defense. Of note, the Commission made several
    recommendations, including the development of a joint, clinically based
    formulary and joint procurement of future information technology.
    further transformation progress will require va to confront formidable
                                   challenges
        As VA's transformation proceeds through its fourth year, it now
    turns to face the most onerous challenges it has encountered to date.
    These include: closing unneeded hospitals, restructuring capital
    assets, restructuring VA's medical education role, maintaining capacity
    to serve special disabilities, improving resource allocations,
    improving revenue collections, and implementing an enrollment process.
        VA's failure to aggressively confront these challenges could result
    in the unnecessary expenditure of billions of dollars over the next
    several years.
    Closing Unneeded Hospitals
        The success of VA's strategies to transform its health care
    system--shifting inpatient care to more appropriate settings,
    establishing primary care in community clinics, and improving
    efficiency through staff reductions, service consolidations, and bed
    closures--has produced excess inpatient capacity at most VA hospitals.
    As VA's transformation continues, VA's need for a large number of full-
    service hospitals will continue to diminish, thereby challenging VA to
    make difficult decisions concerning hospital closures.
        VA and the private sector have reacted very differently to
    declining inpatient workload. In the private sector, over 500 hospitals
    were closed as health care practices were transformed. As we have
    reported, VA instead has chosen to reduce operating beds at its
    hospitals or shift services such as inpatient surgery among
    hospitals.\6\ This approach often leaves VA operating only a small part
    of most hospitals' inpatient capacity.
    ---------------------------------------------------------------------------
        \6\ VA Hospital: Issues and Challenges for the Future (GAO/HEHS-98-
    32, Apr. 30, 1998).
    ---------------------------------------------------------------------------
        VA demonstrated the feasibility of closing underused hospitals when
    it closed the Martinez, California, hospital because of earthquake
    concerns. VA replaced it with a modern outpatient clinic supplemented
    by existing VA inpatient locations and contract care, efficiently
    meeting veterans' needs in that market. VA reports that veterans'
    satisfaction with these changes is high, including satisfaction with
    quality of care.
        At a March 1996 hearing before this Subcommittee, VA stated that it
    would look to close additional facilities; since then, VA in essence
    has closed four hospitals by shifting inpatient care to other VA
    locations or contracting with non-VA providers. In each location, VA
    continues to provide outpatient care as well as nursing home care in
    three locations.
        Last year, we reported that VA could save $20 million a year and
    care could be improved if veterans were served at one less location in
    Chicago.\7\ Veterans' benefits, for example, could be enhanced if VA
    used the savings to purchase primary care closer to veterans' homes. In
    response to our recommendation, VA agreed to initiate a market-based
    assessment of its health care delivery in the Chicago market. This
    market assessment is scheduled for completion soon.
    ---------------------------------------------------------------------------
        \7\ VA Health Care: Closing a Chicago Hospital Would Save Millions
    and Enhance Access to Services (GAO/HEHS-98-64, Apr. 16, 1998) reports
    that asset operations and maintenance costs for four VA hospitals in
    Chicago generally represent about 25-35 percent of the hospital's
    operating budgets.
    ---------------------------------------------------------------------------
        VA is to be commended for its willingness to study how it could
    improve its efforts to meet veterans' needs in this market. The extent
    to which VA is committed to taking action on the basis of study
    findings remains uncertain, however. Last month, VA stated publicly
    that no additional hospitals will be closed in fiscal years 1999 or
    2000. This decision seriously threatens the continued progress of VA's
    health system transformation.
    Restructuring Capital Assets
        VA's massive, aged infrastructure could be the biggest obstacle
    confronting VA's ongoing transformation efforts. VA's challenges in
    this arena are twofold: deciding how its assets should be restructured,
    given the dramatic shifts in VA's delivery practices, and determining
    how a restructuring can be financed in a timely manner.
        VA spends a major part of its health care budget--about 1 out of
    every 4 health care dollars--to operate, maintain, and improve its
    facilities, generally referred to as the costs of asset ownership.
    Without a major restructuring, billions of dollars will be used in the
    operation of hundreds of unneeded VA buildings over the next few years.
        VA's transformation has largely ignored this capital asset dilemma,
    as VA's plans call for assets to continue operating over the next 5
    years essentially as they do today. Given VA's current and proposed
    budgets, it seems inevitable that VA's ownership of unneeded assets
    will eventually compromise veterans' health care services. On the other
    hand, restructuring its capital assets could reduce budget pressures or
    generate revenues that could be used to enhance veterans' health care
    benefits.
        Recently, we recommended that VA's capital asset planning should be
    based on rigorous market analyses, a business tool that has produced
    positive results in the private sector.\8\ Such analyses include the
    determination of veterans' health care needs in a market, a comparison
    of life-cycle costs of asset ownership, and alternatives analysis to
    enable VA to evaluate options for meeting needs in the most cost-
    effective manner.
    ---------------------------------------------------------------------------
        \8\ Va Health Care: Capital Asset Planning and Budgeting Need
    Improvement (GAO/T-HEHS-99-83, Mar. 10, 1999).
    ---------------------------------------------------------------------------
        We identified 106 markets in which VA owns 4,700 buildings and
    18,000 acres of land, which it uses to operate 181 major delivery
    locations. VA has agreed to conduct market analyses in the 40 markets
    where multiple VA facilities compete with each other to serve veterans
    (VA operates assets at 115 locations in these markets) as well as 66
    markets served by a single VA location.
        Until VA completes these market assessments, it will be challenged
    to make capital investment decisions to ensure that scarce resources
    are not invested in assets that VA will vacate in a few years.
    Recently, we recommended, and VA agreed, that more of its capital
    investment decisions--specifically minor construction and certain
    nonrecurring maintenance--should be subjected to more rigorous
    management review. Toward that end, VA plans to institute an improved
    investment decision-making process that involves top managers' review
    and approval, based on newly enhanced guidance and criteria for
    assessing the future of the affected asset within VA's ongoing
    transformation.
        Once VA has developed an asset restructuring plan, it will be
    challenged to finance needed investments in a timely manner. Toward
    that end, VA proposes a 5-year demonstration that would allow it to
    sell, transfer, or exchange up to 30 excess or underutilized
    properties, deposit proceeds into a new Capital Asset Fund, and use the
    Fund to invest in more appropriate assets. This proposal is compelling
    because it would provide VA incentives to dispose of properties no
    longer needed to meet veterans' needs. VA asserts, and we agree, that
    disposals are currently a cumbersome and lengthy undertaking with
    limited benefits to VA, primarily because proceeds' use is limited to
    improving nursing homes.
                   restructuring va's medical education role
        Transforming VA's health care delivery system from an inpatient to
    an outpatient focus, increasing reliance on primary care, and
    integrating services in fewer hospitals require VA and medical schools
    to restructure their affiliation arrangements.
        Since VA's medical education program began in 1946, 132 VA medical
    facilities have affiliated with 107 medical schools to provide training
    opportunities for medical students and residents. These agreements
    complicate VA's restructuring efforts, particularly integrating
    administrative and clinical services across two or more medical
    facilities.
        VA assists in the training of health professionals for its own
    needs and for those of the nation through its partnerships with
    affiliated academic institutions. Each year, about 91,000 medical and
    other students receive some or all of their clinical training in VA
    facilities. In fiscal year 1999, VA expects to spend $750 million for
    education and training of health professionals.
        VA also assists in supporting medical research in connection with
    the provision of medical care and treatment to veterans. The affiliated
    medical schools are an integral part of VA's research effort. For
    fiscal year 1999, VA expects to spend $682 million for research ($316
    million from the medical and prosthetic research appropriation and $366
    million in medical support from the medical care appropriation).
        VA's successful transformation to a predominantly primary care
    model, with its consequent deemphasis of inpatient, specialty care, has
    direct implications on VA's education role. As previously discussed,
    VA's management initiatives have decreased inpatient usage by 38
    percent and increased outpatient workload by 19 percent. This
    underscores a need to train more primary care physicians and fewer
    specialty physicians.
        In light of these changes, VA established a Residency Realignment
    Review Committee and a Research Realignment Advisory Committee. In
    response to these committees' recommendations, VA set a goal to more
    equally divide resident training positions between specialty and
    primary care by 2002; previously, about 70 percent of residents were
    enrolled in specialty training and 30 percent in primary care. In doing
    this, VA plans to eliminate 250 specialty positions and shift another
    750 to primary care. To date, VA appears on track toward meeting its
    goals.
        As VA's transformation continues, its management initiatives should
    increasingly involve consolidating programs to eliminate redundancy
    among nearby VA facilities or the potential closing of facilities. This
    will, by necessity, increase the potential for conflict between medical
    schools' best interests and veterans' best interests.
        Because VA provides a major source of medical training and research
    opportunities, medical schools clearly have a vested interest in VA
    hospitals staying open. As such, it will be difficult to achieve a
    proper balance between VA's primary mission--serving veterans' health
    care needs--and its secondary missions--supporting education and
    research. VA must take care to prevent stakeholders, such as medical
    schools, from unduly influencing the ongoing transformation of its
    health care system.
        At present, medical schools have concerns about potential
    consolidations of VA medical facilities. It seems inevitable that
    medical schools will need increasingly to share inpatient educational
    and research opportunities at a single VA facility. VA must work
    closely with medical schools to ensure that such restructuring is
    accomplished without compromising VA's efforts to improve its
    efficiency and effectiveness.
    Maintaining Capacity to Serve Special Disabilities
        VA is struggling in its efforts to address congressional concerns
    that it is not appropriately maintaining its level of certain high-cost
    specialized services as its transformation progresses.
        The Congress required VA to ensure that its capacity to provide
    specialized treatment and rehabilitative services for veterans with
    certain disabling conditions is not reduced below October 1996 levels
    and that veterans with these conditions have reasonable access to care.
    The Congress identified four disabling conditions requiring specialized
    care: spinal cord dysfunction, blindness, amputation, and mental
    illness. For this requirement, VA defined mental illness to include
    only veterans with serious mental illness and included two additional
    conditions: traumatic brain injury and post-traumatic stress disorder.
        VA cites a 2-percent increase in patients served as evidence that
    it is maintaining capacity to serve special disabilities. But this
    aggregate measure could mask potential adverse effects experienced by
    individual services and delivery locations. VA plans to develop outcome
    measures to reflect the overall capacity of its special disability
    services.
        Last year, we noted that unclear service definitions and cumbersome
    data systems hindered VA's development of additional outcome measures.
    As a result, it is difficult to establish a baseline for comparison
    purposes, assess the accuracy of reporting at the local level, and
    reconcile differences among individual facilities,' networks,' and
    headquarters' data.\9\
    ---------------------------------------------------------------------------
        \9\ VA Health Care: VA's Efforts to Maintain Services for Veterans
    With Special Disabilities (GAO/T-HEHS-98-220, July 23, 1998).
    ---------------------------------------------------------------------------
        To date, VA has designed functional measures for seriously mentally
    ill patients and patients with a primary diagnosis of substance abuse.
    VA, however, has generally not performed the program evaluations
    necessary to determine whether these are the most appropriate or
    sensitive measures for assessing responses to treatment and changes in
    health outcomes.
        Until adequate outcome measures are available, VA continues to use
    its traditional process measurements, such as number of veterans served
    and resources expended, including dollars, staffing, and beds. These
    measures remain important indicators and should be continually
    reviewed.
    Improving Resource Allocation
        VA's new resource allocation system is improving the equity of
    resource allocations among networks. The system's promise for achieving
    equitable access may not be fulfilled, however, because of VA's
    inadequate oversight of how resources are allocated within networks and
    historical access inequities are addressed.
        To improve equitable access to care, the Congress enacted
    legislation in 1996 requiring VA to develop a plan for equitably
    allocating resources to ensure that veterans with similar economic
    status and eligibility priority have similar access to VA health care,
    regardless of the region in which they live. In response, VA began
    implementing a new allocation process.
        Previously, VA allocated resources directly to facilities on the
    basis of their budget for the previous year. VA's new process allocates
    funds to the 22 networks based on the number of veterans each serves.
    Networks, in turn, allocate resources to the facilities in their
    geographic area.
        As we reported to you in September 1997, this new process is
    correcting long-standing regional funding imbalances that have impeded
    veterans' equitable access to services.\10\ Over the last 2 years,
    funding has shifted from the Northeast and Midwest to the southern and
    western regions where more veterans reside. Each network has increased
    the number of veterans it serves, albeit to varying degrees, and
    improved current users' access to care.\11\ VA's management
    efficiencies were instrumental in achieving this outcome.
    ---------------------------------------------------------------------------
        \10\ Va Health Care: Resource Allocation Has Improved, but Better
    Oversight Is Needed (GAO/HEHS-97-178, Sep. 17, 1997).
        \11\ VA Health Care: More Veterans Are Being Served, but Better
    Oversight Is Needed (GAO/HEHS-98-226, Aug. 28, 1998).
    ---------------------------------------------------------------------------
        VA, however, maintains that networks should not use its new process
    to allocate resources to facilities and that they should, instead,
    develop allocation methods appropriate to local circumstances. Such
    resource allocations are the crucial link in VA's allocation strategy
    to convert resources to services.
        In spite of this enormous challenge, VA has done little to ensure
    that networks achieve equitable allocations. VA says that it has not
    provided criteria for equitable allocation of resources within networks
    because developing such criteria would be contrary to its reengineering
    philosophy, which decentralizes authority and accountability for these
    allocations to the network directors. In addition, VA has not
    adequately reviewed the equity of networks' allocations or measured
    improvements in the equity of veterans' access to care.
        Networks we analyzed have not incorporated criteria in their
    allocations to improve equity in spite of historical inequities they
    identified. As a result, in spite of the considerable effort VA has
    invested in its new resource allocation process, resources may not be
    equitably allocated in many markets.
        Monitoring networks' progress in achieving equitable access to care
    represents a significant challenge. Today, VA does not know what
    progress, if any, is being made towards equitable access to care for
    our nation's veterans. This is because VA has neither developed
    indicators needed to do so nor included equity of access as a
    performance goal for network managers.
        Developing and implementing such indicators will be a major
    challenge both technically and in obtaining stakeholders' agreement.
    Without establishing such indicators and monitoring them, however, VA
    can neither assure stakeholders that equity of veterans' access is
    improving nor take corrective actions, if needed, to improve resource
    allocations.
    Improving Revenue Collections
        VA faces a major challenge increasing its medical care collections
    from third parties and veterans, as well as reimbursement from sharing
    agreements with the Department of Defense.
        VA's collections grew slightly between fiscal years 1997 ($520
    million) and 1998 ($560 million). VA's 1998 collections were about 94
    percent of its stated goal. For fiscal year 1999, VA set a goal of
    $637.5 million. As of March 1999, collections are averaging about $46
    million a month, which appears sufficient to meet VA's goal, given that
    collections were historically higher during the last quarters of fiscal
    years 1997 and 1998. VA's fiscal year 2000 budget sets a goal of about
    $762 million and VA expects collections to grow to more than $1.2
    billion by fiscal year 2004.
        VA expects such growth for three reasons. First, VA assumes that
    changing its medical care billing rates to reasonable charges for
    inpatient and outpatient procedures will increase revenues. VA,
    however, has neither historical data nor experience to estimate the
    effect of reasonable charges on revenues.
        Second, VA assumes that it will increase its revenues by
    identifying more insured patients. However, VA finds it very difficult
    to keep this information current because veterans are not required to
    tell VA if they have insurance or when changes occur in their insured
    status.
        Third, VA plans to improve its debt collection improvement efforts
    to boost revenues. In 1998, VA's Inspector General cited uncollected
    debt as one of VA's significant management problems. To improve medical
    care debt collection, VA has efforts under way to more aggressively
    pursue insurance claims, including timely appeals of denied claims. For
    example, VA is using a centralized approach to monitor claims and is
    exploring ways to recover debts as an offset to veterans' federal
    income tax refunds.
        Despite a large number of sharing agreements for services between
    VA and the Department of Defense, several barriers are likely to
    inhibit effective sharing or prevent new agreements from being reached.
    These barriers include conflicting agency guidelines, beneficiary
    perceptions about sharing, and incompatible or unreliable information
    systems. VA and Defense have recently embarked on a joint initiative to
    revitalize sharing efforts at the national level for certain critical
    services.
        In its fiscal year 2000 budget, VA again asks the Congress to
    authorize VA's reimbursement from the Medicare Trust Fund for medical
    services it provides to Medicare-eligible veterans. VA seeks this
    authorization anticipating that Medicare reimbursement will become an
    important source of revenue.
        If authorized, VA's efforts to realize such revenues, without
    adversely affecting veterans, could pose a daunting challenge. Since VA
    initially proposed receiving Medicare reimbursements, it implemented a
    new veterans' enrollment process that has significantly increased
    workload. As such, VA faces considerable uncertainty about its capacity
    to target another patient population. Doing so could place veterans'
    access to care at risk if this increased workload forces VA to choose
    between serving veterans who have Medicare and those who do not.
    Implementing an Enrollment Process
        VA faces a significant challenge determining how many veterans to
    enroll, given the uncertainties surrounding new enrollees' medical
    needs and VA's available resources.
        The Eligibility Reform Act of 1996 required VA to establish and
    operate a system of annual patient enrollment to manage access to VA
    health care services within available resources. VA began testing an
    enrollment process on October 1, 1997, prior to the mandated enrollment
    date of October 1, 1998. At that time, VA announced its decision to
    enroll all veterans that apply during fiscal year 1999, that is, for
    enrollment priorities 1 through 7. As of December 1998, VA enrolled
    about 3.9 million veterans, according to VA's budget office.
        VA is also challenged to assess the impact of its fiscal year 1999
    enrollment decision on veterans' health care delivery. VA, for example,
    lacks the baseline data needed to assess the impact of its fiscal year
    1999 enrollment decision on the timeliness of veterans' medical care.
        During the course of our ongoing review of VA's enrollment process,
    almost all of VA's network directors reported that enrollment has
    increased demand for services. About half cited a slight increase in
    the waiting times to schedule both primary and specialty care
    appointments. Over one-third noted that access to care for higher
    priority veterans (priority groups 1 to 4) has been adversely affected
    to some extent.
        Finally, several directors commented that they are experiencing
    increased demand by veterans whose primary care is provided elsewhere
    but who obtain from VA the specialty care and services not covered by
    their private insurance or Medicare, such as pharmaceuticals,
    eyeglasses, and hearing aids.
        VA is assessing the cost implications of its fiscal year 1999
    enrollment decision. VA's data shows that, after the first 3 months of
    fiscal year 1999, about $3.6 billion was spent meeting veterans' health
    care needs. Of this, about half was spent serving veterans in priority
    categories 1 to 4, and half was spent serving categories 5 to 7. Of
    note, veterans in category 5 accounted for about 46 percent of the $3.6
    billion.
        VA plans to announce its fiscal year 2000 enrollment decision by
    August 1, 1999. VA, however, publicly stated last month a desire to
    enroll all veterans who apply and to serve all enrollees in fiscal year
    2000. VA's current projections show that about 4.4 million veterans
    could be enrolled by the end of fiscal year 1999.
        VA could find this to be quite challenging because, as the
    following section discusses, VA's fiscal year 2000 budget does not
    contain sufficient funding to maintain current service levels (3.6
    million veterans), unless VA's transformation produces required
    savings.
                 va faces a budget dilemma in fiscal year 2000
        VA will be severely challenged to serve all veterans seeking to
    enroll and maintain quality of care in fiscal year 2000 with an $18.4
    billion budget. This is primarily because VA's budget is based on an
    unduly optimistic assumption that VA's transformation will save $1.4
    billion in fiscal year 2000. VA's cost estimates also may be
    significantly understated, given the increased enrollments over the
    last 6 months and considerable uncertainties surrounding veterans'
    medical needs.
        VA estimates that $19.23 billion would be needed to maintain
    current service levels (3.6 million veterans) in fiscal year 2000, if
    no management efficiencies are realized. By contrast, VA estimates its
    fiscal year 1999 spending level to be $18.36 billion. This $870 million
    difference involves primarily payroll increases for existing employees,
    inflation, and other mandatory rate changes.
        VA plans to use another $525 million of its efficiency savings to
    enhance services. Of this, $281 million will be used to: treat veterans
    with hepatitis C ($135 million); enhance extended care services ($106
    million); and expand services for homeless veterans ($40 million). In
    addition, VA proposes that $244 million be used to expand its benefit
    package for certain veterans. VA requests congressional authorization
    to finance emergency care at non-VA facilities for veterans enrolled in
    priority categories 1 to 3. Currently, only certain veterans with
    special eligibility have such benefits.
        To allow VA to operate within a proposed budget of $18.4 billion,
    VA needs to achieve management efficiencies of $1.4 billion. In
    general, VA estimates that initiatives could yield about $514 million
    in personal services savings, essentially by reducing its employment
    level by 8,529 full-time equivalents.
        This presents a formidable challenge, given that an employment
    reduction goal of 8,529 is significantly higher than the reduction of
    3,606 that VA achieved in 1998 or the 2,518 that VA expects to achieve
    in 1999. Interestingly, VA had initially set goals of 3,978 and 2,607
    in its budget requests for fiscal years 1998 and 1999, respectively.
        To achieve a personal services savings goal of $514 million in
    fiscal year 2000, VA needs to achieve the 8,529 employment reduction
    before fiscal year 2000 starts, only 5 months from now. The longer VA
    needs to reach this goal during fiscal year 2000, the greater the
    number of employees that ultimately must be reduced (to meet its goal)
    because VA will have to spend some projected savings to pay salaries
    and benefits in fiscal year 2000.
        VA estimates that the remaining $876 million will be achieved
    through nonpersonal services savings. If VA is unable to meet its
    employment reduction goal, it will have to increase nonpersonal
    services savings beyond this target level. This, too, could prove
    challenging, given the rapid increases in nonpersonal costs, especially
    medications and prosthetics.
        VA's budget did not specify the nature of the management
    initiatives. VA's networks, however, have identified over the past year
    a variety of efficiency initiatives, including additional facility
    integrations, bed closures, and service consolidations, which reflect
    necessary shifts in patient care delivery practices. In most cases,
    these changes will require reductions in force, as well as staffing
    adjustments through normal attrition, in order to better configure VA's
    workforce to meet VA's transformation objectives.
        VA's networks are currently revising their plans to develop
    alternative ways to realize savings of $1.4 billion in fiscal year
    2000. At a recent congressional hearing, officials from three networks
    expressed concerns about their abilities to achieve required efficiency
    savings. They testified that their plans would likely include
    significant furloughs of workers, as well as curtailment of proposed
    service enhancements and delay of services when medically appropriate.
        In addition, VA may need to save more than $1.4 billion because
    veterans' demand for medical care, as well as the numbers of veterans
    demanding care, may be significantly higher than VA estimated at the
    time its fiscal year 2000 budget was developed.
        VA's budget, for example, included $135 million to expand treatment
    of veterans who have hepatitis C, based on an assumed prevalence rate
    of 5.5 percent among its veteran user population. VA data, based on a
    small, unscientific sample, suggests that this rate, and hence
    treatment costs, could be much higher. To better estimate costs, VA
    recently conducted a nationwide sample of veterans using VA facilities
    and expects results to be available shortly.
        VA's budget also assumes that an additional 54,000 veterans will be
    served in fiscal year 2000, bringing the total served to 3.65 million.
    To date, 3.9 million veterans have enrolled, and VA currently estimates
    that 4.4 million could enroll by the end of fiscal year 1999.
        VA's rapidly rising fiscal year 1999 enrollments could also
    increase VA's fiscal year 2000 efficiency savings requirements by $200
    million or more. This is because VA plans to carry forward $216 million
    of fiscal year 1999 revenue collections to finance fiscal year 2000
    health care costs. VA could be required to spend this potential surplus
    in fiscal year 1999 if newly enrolled veterans require greater-than-
    expected health care expenditures in fiscal year 1999.
                            concluding observations
        VA has made significant progress transforming its health care
    system but appears to have a long way to go before achieving its goal
    of operating integrated networks of VA and non-VA providers that
    efficiently and effectively serve veterans. VA needs to aggressively
    confront its pending challenges, especially capital asset and medical
    education restructuring, in order to maintain the impressive momentum
    generated during its transformation's initial years. Absent this, VA
    could waste billions of dollars to meet veterans' needs over the next
    several years.
        Meeting veterans' medical needs within VA's proposed spending level
    will be problematic. To do so, VA needs to achieve significant
    management efficiencies, but has no clear sense of the true magnitude
    of its resource needs. To remedy this, VA needs answers to such
    critical questions as:
      --How many veterans will enroll for VA health care in fiscal year
            2000?
      --How prevalent are enrolled veterans' high-cost medical needs,
            especially for hepatitis C?
      --How many management efficiency savings will be realized in fiscal
            years 1999 and 2000?
      --What will the Congress decide to do concerning VA's proposed
            benefit expansions?
        VA's budget dilemma forces it to confront difficult choices
    concerning its fiscal year 2000 enrollment decision--namely, how many
    priority categories can be prudently enrolled, given the uncertainty of
    estimates of potential costs and available resources. VA's current data
    suggest that sufficient resources may not be available to serve
    veterans enrolling in all seven priority enrollment categories. VA's
    uncertainties become more manageable if VA enrolls veterans in the
    manner the Congress intended--namely, veterans in those priority
    categories for which there are sufficient resources to provide timely
    access to high-quality care.
        We remain concerned about VA's ability to deal with such
    uncertainties, primarily because of VA's publicly stated desire to
    serve all veterans who apply for enrollment. If VA experiences
    significantly higher costs than it currently estimates or significantly
    lower efficiency savings, enrolling all veterans who apply could
    require VA to take actions, such as large-scale employee furloughs,
    that could adversely affect the quality of care for all veterans.

                      medical care management efficiencies

        Senator Bond. Thank you very much, Mr. Secretary.
        VA expects to provide care to an additional 54,000
    patients, while cutting net staffing by almost 7,000 next year.
    The budget says there will be $1.14 billion in management
    efficiencies, an additional savings of $244 million and 1,500
    in FTE, if proposed legislation authorizing emergency room care
    is enacted.
        What specific cuts to medical services, staff, and programs
    will be made to meet the $1.14 billion target?
        Mr. West. We have asked for our network directors and our
    medical center directors to respond with proposals as to how we
    will meet these. I think that Dr. Kizer is just beginning to
    receive those responses. When he has reviewed them, he will
    discuss them with me, but we do not have specific information
    at the moment.
        I know the things that we expect they will do, but you
    asked for specific cuts. It is true that the change in acute
    beds is beginning to slow down, but by the same token, there
    are a number of continued facility combinations, facility
    mergers, that still remain to be done.
        I noticed in the GAO report to which you referred earlier,
    the GAO identified some 40 markets in which we can look what
    GAO considers duplication of facilities, and we have had
    discussions about that. I believe some of that will be
    reflected, as well, in what Dr. Kizer will be receiving.
        Yes, it is challenging, but I believe that we will develop
    the plans and that we will make them work.

                        medical care budget formulation

        Senator Bond. One thing that worries me, Mr. Secretary, is
    there are two ways to go about things. One is to push down from
    the top and say you will do this. And the other is to go from
    the bottom up and say what kind of efficiencies we can make,
    and put those together to come up with a number.
        When I build a budget, I like to find out from the ground
    up, where we can make the efficiencies and maybe establish
    slightly tougher targets. I am very much concerned that this
    budget proposal may cause some serious disruptions.
        Number one, I would like to know when we will see the
    specifics. I might as well turn to Dr. Kizer, and ask for Dr.
    Kizer's view on whether we will be able to increase patient
    care without degradation in the quality, within this budget,
    and how we are going to meet the new demands on the budget,
    such as Hepatitis C and long-term care enhancements with these
    proposed cuts.
        Mr. West. Let me answer the first part of your question, if
    I might. And that is whether we are going to push down or have
    them bring their plans up. You are right. It is a tendency of
    all of us, well, of this person in leadership, to say, ``Here
    is what you are going to do,'' but that is not the way we have
    structured this. This is not the way that VHA, under Dr.
    Kizer's leadership, has made its inroads in the last three
    years.
        The plans will start at ground level, Mr. Chairman, and
    will come forward from medical center directors through network
    directors to Dr. Kizer, and eventually to me.
        Senator Bond. Dr. Kizer.
        Dr. Kizer. Well, it is certainly clear that the budget, as
    has been stated by all, presents many challenges to the marked
    improvements in quality of care that have been achieved in the
    recent years.
        Specifically, in response to your question, the plans have
    come in. They are in the process of being reviewed. On initial
    review of the plans, there are elements or proposals that are
    not acceptable to, at least, this person. And so, we do expect
    to go back and forth with the networks. And hopefully, by the
    end of May, we will have the level of specificity and
    concreteness that you desire.

                                  hepatitis c

        Senator Bond. Let me go back to that Hepatitis C question.
    That is one that bothers me. Your budget assumes that there
    will be a 5.5 percent prevalence in the VA patient population
    of Hepatitis C. Some initial studies have suggested prevalency
    rates may be 10 to 20 percent.
        Do you have any better information on it? And what happens
    if the rate is 10 to 15 percent, rather than 5.5 percent?
        Dr. Kizer. I believe it is well known that there is a
    difference of opinion between the Department and OMB on the
    prevalence rate of Hepatitis C among veterans. And what was in
    the budget reflects OMB's position. We feel that the prevalence
    rate is higher than that.
        At the current time, data that we have would suggest that
    the prevalence rate is probably in the range of 8 to 10
    percent. On March 17, we did testing of some 26,000 blood
    samples that were obtained from throughout the country. And
    when one adjusts that for various factors, and recognizing that
    the analysis is not final, the seropositivity rate is about 8
    percent. I think it is 7.8 percent, with the adjustments.
        When you look at all of the testing that has been done so
    far this year, of the approximately 30,000 tests that have been
    done throughout the VA, the seropositivity rate of those is
    about 20 percent, recognizing many of those tests were done on
    individuals who were known to be at risk.
        So, our best data, at this point, and recognizing this
    database continues to evolve, is that the lower level of the
    range is around 8 percent. And it may well be higher than that.
        Now, the other thing, just to be complete is to recognize
    that the standard of treatment is rapidly evolving. And what is
    considered standard treatment today, includes some testing as
    the length of tests and the length of treatment and other
    things are greater today than some months ago, which does
    increase the cost per patient for a treatment, as well.
        Senator Bond. Thank you, Dr. Kizer. That is a bit
    disquieting. I turn to Senator Mikulski.
        Senator Mikulski. If I could just follow up on the
    Hepatitis C issue for a moment. Eight to ten percent, could you
    tell us, Dr. Kizer, how that compares to rates in the general
    population? Is it higher there? And what is the etiology of
    such a high percentage at the veterans facilities?
        Dr. Kizer. I can tell you two things with regard to
    comparability to the non-VA population. One is data that is
    available today, which is quite limited from the general
    population. That data suggests that in the general population,
    the rate is somewhere around 1.8 or 2 percent.
        Senator Mikulski. I am sorry. I cannot hear that. What----
        Dr. Kizer. However----
        Senator Bond. 1.8.
        Senator Mikulski. 1.8.
        Dr. Kizer. 1.8 to 2 percent. However, I think one has to be
    cognizant that is very limited data. A growing concern from the
    limited amount of data that has become available from under-
    served populations, which suggests that the rate may be
    considerably higher in some sub-populations within the general
    overall population. There just has not been adequate testing
    done yet of the general population to know.
        Senator Mikulski. What is the etiology at the Veterans----
        Dr. Kizer. Clearly, within the veteran population this is
    age linked. The higher rates of seropositivity are found in
    Vietnam era veterans. Whether it was related to exposure to
    blood during combat in Vietnam or some of the other routes that
    are known to transmit the disease are not entirely clear, based
    on scientific data at the moment.
        Senator Mikulski. Is this also from drug abuse?
        Dr. Kizer. It can occur from either intravenous or
    injection drug use, or from intra nasal snorting of cocaine,
    using straws.
        Senator Mikulski. Well, I think--I think this is of great
    interest to the committee, from essentially the standpoint of
    epidemiology. And we will not take our hearing today to go into
    the entire epidemiology, but really the routes of this either--
    whether it was combat exposure or in combat zone exposure or
    whether this also comes from abusive behavior at various other
    points, I think, would be of interest to the committee.

                two-year spending availability for medical care

        Let me move on, though, and--and Secretary West, in your
    testimony there was an item on page five that goes down, that
    says--if you go to page five of your testimony, it says, ``VA
    is proposing a change in appropriation language. It would
    provide for two-year spending availability for up to 5 percent
    of our resources, excluding those funds set aside due the
    required deferral of funds for medical equipment.''
        Are you asking for a two-year appropriation? This is--this
    really caught my eye. What does that mean, operationally?
        Mr. West. The easy answer is yes.
        Senator Mikulski. Sir, would you pull the microphone a bit
    closer?
        Mr. West. I am sorry. The quick answer is yes, as to that
    proportion, up to 5 percent of our resources. Yes, we are.
        Senator Mikulski. So, you want a two-year appropriation for
    95 percent of your resources.
        Mr. West. No. No. I think it is up to 5 percent.
        Senator Mikulski. Oh. I got it backwards.
        Mr. West. Up to 5 percent.
        Senator Mikulski. I thought you were asking for 95 percent.
        Mr. West. No. Up to 5 percent----
        Senator Mikulski. Actually, I----
        Mr. West. Up to 5 percent----
        Senator Mikulski. You know, I am somebody who is interested
    in a two-year budget; particularly for those things that are
    usual and customary expenditures, as compared to special needs
    or special populations.
        So, you would want a 5 percent.
        Mr. West. And it is not even 5 percent of the whole. It
    excludes those funds that are set aside due to the required
    deferral of funds for medical equipment.
        Senator Mikulski. For medical equipment.
        Mr. West. They would not be included in the universe from
    which we ask the 5 percent.
        Senator Mikulski. Okay. Can you understand why I was a
    little----
        Mr. West. I do. 95 percent is a lot.

                          capital asset fund proposal

        Senator Mikulski. I thought it was just--yes. Now, I would
    also like to go to the issue--there are many issues that were
    related to the GAO report. I know, within the GAO report, you
    received many excellent kudos, really, Dr. Kizer, on efforts to
    transform veterans health care. And I think we are well aware
    of those issues, but one of which was the capital asset
    planning, in which you have 4,700 buildings, 18,000 acres of
    land, et cetera.
        Do you want to--we need to really get a hand on our assets.
    They are recommending some type of capital asset approach.
    Could you tell us what that would be?
        Mr. West. Well, I am not very clear on the GAO's
    interpretation of it. What our approach----
        Senator Mikulski. What you want to do, in terms of getting
    your hands on your capital assets----
        Mr. West. Yes. Well, first of all, we propose to set up a
    capital asset fund. One of the points that the GAO report makes
    is it is their belief that there is no incentive for VA to look
    to the disposal of assets, as it were.
        That gets said in a lot of government agencies. Our
    response to that----
        Senator Mikulski. Just tell us what your plan is.
        Mr. West. Well----
        Senator Mikulski. What are you going to do with the capital
    asset fund? That is--that is a phrase.
        Mr. West. Well, its purpose is to make it easier for us to
    dispose of assets, rather than going through the existing
    governmental requirements and then for VA to put that money
    into a fund which we can then use for our own activities.
        Senator Mikulski. Well, I do not understand what it means
    that you do not have to go through what the government normally
    would do. What----
        Mr. West. Well, disposal of a capital asset is, of course,
    a fairly lengthy process, to include, as I recall, several
    different statutes. One statute makes a capital asset available
    for the homeless program. Another one says we have to offer
    these to other agencies, then to state agencies, before we can
    finally get to the point of disposing of it for a price.
        I presume that the capital asset fund idea would allow us--
    --
        Senator Mikulski. Well, Mr. Secretary----
        Mr. West [continuing]. To go more quickly through the
    process.
        Senator Mikulski [continuing]. First of all, I think--well,
    number one, we understand that the GAO report, plus your own
    administrative evaluation, says there needs to be a new
    contemporary approach to capital asset management.
        Number two, we would want you to have flexibility.
        Number three, however, we want to be careful that as you
    move to expedite this decision making process, that VA has very
    clear criteria. Number one, we do not want dumping in the
    community.
        Number two, as an example, where we have Loch Raven
    Hospital, that was going to be closed for the new facility
    downtown, that we opened some years ago. They were going to put
    it up for highest and best use and a lot of the kind of GSA
    swagger cliches.
        And what happened was, because it was an integrated
    neighborhood, Blockbusters came through and said, ``Drug
    clinics are coming and so on.'' When we stopped that, recycled
    it for one primary care and then an extended care rehab, one,
    we stabilized the neighborhood around it, but we have to be
    careful then, that when we are moving to, we do not have
    unintended negative consequences to the community near it, what
    this process need.
        And I know my time is up, but I want to just bring to your
    attention, Fort Howard. Fort Howard is an aging in place
    infrastructure that has served the long-term care needs of
    Marylanders, going back to even World War I. The dedication of
    your staff and ingenuity around asset management has kept an
    old building going. That building has to go.
        We now want to look at what to do. You are on prime
    waterfront property. We are talking about a long-term care
    facility. We do not want Taj Mahal-ing. But should it be a
    combination of new thinking, assisted living, home health care,
    because it is in the zip codes of veterans aging in place?
        So, we want you to be able to close down a building, where
    just to keep it going is so difficult, but have new thinking,
    in a way, either to recycle your--your land or--or if you are
    going to dispose it, there must be, as an old city council
    lady, what is the consequences to the neighborhood and how that
    is managed. It just cannot be dumping.
        Mr. West. Well, we agree with a process of including the
    community in the decision making.
        Senator Mikulski. Right. Now, I am going to--I know other
    members have it. I would like you--we are going to be briefed
    on the Fort Howard plan. And I would like you, sir--this could
    be a tool for innovation and new thinking. I would like you,
    sir, to personally stand sentry on the Fort Howard plan to make
    sure that we meet the needs of aging veterans; see where there
    can be innovation that is both compassionate and cost
    effective, and that we do not have any RIFs in the process. New
    buildings does not necessarily dump--changing buildings does
    not necessarily mean changing personnel.
        Senator Bond. Thank you very much, Senator Mikulski. I
    would like to turn to Senator Burns.

                   statistics on va facilities and employment

        Senator Burns. Thank you, Mr. Chairman. Boy, this is my day
    today. I had the Forest Service down the hall. And it has been
    a dandy day.
        Thank you for coming this morning, Mr. Secretary. And could
    you tell me how many hospitals we have in this country,
    veterans hospitals?
        Mr. West. Well, the number we are using is 172. I say it
    that way; those are medical centers. The definitions, I notice
    are----
        Senator Burns. Well, how many--how many----
        Mr. West. All right.
        Senator Burns. Then, let us----
        Mr. West. 172.
        Senator Burns. Okay. Now, does that also count your
    clinics?
        Mr. West. No, sir.
        Senator Burns. How many clinics?
        Mr. West. If you combined clinics, outpatient clinics, are
    about 600, with another 89 outpatient clinics in the fiscal
    year 2000 budget.
        Senator Burns. Okay. And long-term care facilities, nursing
    facilities.
        Mr. West. 132.
        Senator Burns. 132. Okay. How many employees do you have?
        Mr. West. Something in the neighborhood of 180,000 fulltime
    equivalents, I would say.
        Senator Burns. 180,000.
        Mr. West. And that is health care, which is about 90
    percent of our total.
        Senator Burns. Yes.
        Mr. West. Total.
        Senator Burns. 90 percent of that is health care.
        Mr. West. No. The 180,000 is 90 percent of our total. That
    is health care. I thought that is what you wanted. Do you want
    the total for the department?
        Senator Burns. Yes.
        Mr. West. 230,000 employees.
        Senator Burns. 230,000.
        Mr. West. It changes.
        Senator Burns. How many veterans do we have----
        Mr. West. I'm sorry.
        Senator Burns [continuing]. In those? How many people have
    you got in these facilities? Let us say, how many----
        Mr. West. What is the population?
        Senator Burns. How many people have you got in those
    hospitals right now?
        Mr. West. Let me just ask Dr. Kizer. Do you have a rough
    estimate of what our medical center and clinic population are
    together?
        Senator Burns. Well, and how many--and how many people
    are--are using the clinics?
        Dr. Kizer. Last year, we provided care, both inpatient and
    outpatient care to 3.4 million individuals.
        Senator Burns. Now, how many--how many in the hospitals?
        Dr. Kizer. Well, on any given day, there is 20,000, plus or
    minus.
        Senator Burns. 20,000. Well, that is all we are taking care
    of today. And that is what I am doing here now.
        Dr. Kizer. Well, we have, right now, in the system, around
    25,000 hospital beds, and we are running an occupancy rate of
    around 75-80 percent. So, somewhere, 20,000, 21,000, 22,000 on
    any given day.
        Senator Burns. How about--how about your clinics?
        Dr. Kizer. I would have to defer to the actual number that
    is seen----
        [The information follows:]

                            Daily Census Information

        In fiscal year 1998, VHA provided outpatient care to 3.3 million
    patients, generating a total of 35 million outpatient visits.

        Senator Burns. How many people--how people--how many people
    have you got in the nursing homes and long-term?
        Dr. Kizer. In the nursing homes there is approximately
    15,000 beds. And they are running 90 to 95 percent occupancy
    rates.
        Senator Burns. So, you have got 14,000, about, in long-
    term.
        Dr. Kizer. 13.5 thousand, roughly for VA nursing homes.

                              funding for montana

        Senator Burns. We increased the dollars last year in VA,
    but Montana took a hit for some reason or other. And they tell
    me it is because we--we opened a couple of clinics; one is
    Glasgow and one in Billings. And that--that money siphoned off
    dollars that usually went to Miles City or Fort Harrison. Is
    that a correct statement, do you know?
        Mr. West. I will let Dr. Kizer answer it. I would say, it
    is not unusual as a part of the transformation of this system
    that beds in medical centers are reduced as we open outpatient
    clinics.
        So--now that is my overall answer. Do you know the specific
    case of that one?
        Dr. Kizer. I would have to defer, but it is not
    unreasonable that a certain amount of money, as you reallocate
    to a greater number of facilities, there would be some changes
    of what would go to individual facilities.

                                  telemedicine

        Senator Burns. Well, we have got a little firestorm going
    on out there. And so far, we have not--we have not been able
    get too many folks' attention on this. And I am kind of
    concerned about it, especially when we have got 180,000 folks
    trying to take care of 34,000. And it looks like there should
    be some--you know, some help here, coming from somewhere. That
    does not sound too efficient to me, if it takes that many--that
    many folks.
        I will tell you that this is the most inefficient way. I do
    not know how come we are not issuing ID cards and sending them
    to the local hospitals in the first place, instead of--where we
    have got to deal with distances out there. And we have done
    nothing, as far as telemedicine is concerned or anything. And I
    would like to--I would like to see some kind of telemedicine
    facilities put in--in these hospitals, especially in the west,
    where we have got to deal with distances.
        If you are going to put outpatient clinics in areas, then I
    think they are going to have to be able to communicate, both on
    a diagnostic and health care--ongoing health care problems with
    whatever main facility that we are operating.
        I do not see any of those things happening; those
    innovative things that can keep us out of these busses that
    pick folks up and cart them 180 miles, just to get their blood
    pressure checked. That does not make a lot of--that does not
    make a lot of sense to me.
        I would like to just visit with you in my office one of
    these days, and we can go over some of those things. This is
    not the place for this, because that is sort of a parochial
    thing that we have got in the west, Mr. Secretary.
        But this is what I am looking at, right here.
        [Indicating.]
        Mr. West. I think you make good points about the use of
    telemedicine and other inventive, forward-looking devices that
    would deal with that. And I think that has been a hallmark of
    what Dr. Kizer's folks have undertaken. I would be glad,
    personally, to visit with you.
        Senator Burns. If we could take a look at that and see if
    we cannot make that work in some way or other, because--but I
    am still concerned about this little figure about how many
    people we have got and the facilities we have got, and then how
    many people who are actually using the facility today.
        Mr. West. As I would say, again, it is not unusual that
    hospital beds are turning into outpatient clinics. That is the
    way we have been able to bring health care closer to veterans.
        Dr. Kizer. Senator, I think, for the record, at least, we
    should make a comparison between the efficiency or the
    inefficiency, if you will, of VA health care to Medicare. And
    if you consider the capitation rate of VA health care at about
    $2,600 per person, and however efficient or inefficient that
    is, for a lesser scope of benefits and a product that does not
    have the same level of quality, Medicare is paying about $5,600
    a year. So, that gives you at least some sense of perspective
    and reference. And if you want to----
        Senator Burns. Well, I will not argue that figure with you.
    I am just--I am saying that you have a very, very strong
    argument. That is a very strong point. And I happen to agree
    with you on that--on that point.
        So, that--I just think people ought to understand, you
    know, where our figures are coming from, because if there is
    anything that is--that is really eating our lunch, it is--I
    think we are--I think, somewhere in your--Mr. Secretary, in
    your organization, I think we are little redundant in our R&D.
        What are we doing in R&D in the Veterans, that they are not
    doing somewhere else? I want to--someway or other, I want to
    help the folks out at the Armed Forces Pathological. They want
    to renovate out at Walter Reed.
        I want to help some of those folks do that, because there
    is a resource there that I think needs new facilities--but I
    want to--there are some things I want to do that actually
    contribute to the support of our Armed Forces, not only in the
    field, but also our veterans in the same way.
        I think we are a little redundant in some areas. But we
    will talk about that. I would like to sit down and visit with
    you about that sometime. If you get--if you happen to squirrel
    off about 15 minutes sometime, why, I would like to sit down
    and visit.
        Mr. West. I will do that.
        Senator Bond. Thank you very much, Senator Burns.
        Senator Harkin.

                  personnel reductions and closing facilities

        Senator Harkin. Thank you, Mr. Chairman.
        Mr. Secretary and Mr. Chairman, I am sorry I am a little
    late, but I understand some of the opening comments had to do
    with the same concerns that I have, and that is the impact of
    the VA medical budget on the care of Iowa veterans.
        I am really becoming more and more concerned about what is
    happening. Our local VA medical region officials have described
    a $27 million shortfall in VA medical care funding for Iowa.
    And that is during a time of double-digit medical inflation and
    an aging veterans population, which I am going to get more into
    with you in a minute, and a flat budget request for the VA's
    hospitals. It is not a big surprise that we have this
    shortfall.
        Last summer, the VA hospitals of central Iowa announced a
    reduction of some 94 of its hospital staff. Now, there are
    rumors that even more reductions are going to happen sometime
    soon.
        With this current shortfall, the rumors are ringing even
    more true. And I am now hearing about the possibility of VA
    hospital shutdowns in Iowa. This could have a tremendous impact
    on veterans in our state.
        And again, this $27 million medical care shortfall in my
    state really makes these rumors real. Recently, Mr. Secretary,
    you were asked at a public forum here in Washington, DC,
    whether the current VA medical budget will result in facilities
    being closed around the country. And you responded, ``Not on my
    watch.''
        I appreciate that strong statement of support. But does
    that statement also mean that VA facilities, whether in Iowa or
    elsewhere in the nation, will not also see substantial
    reductions in personnel or service? Does it extend to that,
    too, or is it just for shutdowns? And I am----
        Mr. West. I think I have an obligation to avoid giving
    overly categorical statements at any time. I recall--I think
    this was probably one of the winter meetings. And I spoke
    fairly specifically.
        I referred, first of all, to some rumors last year that we
    were closing vet centers. That is the issue to which I made the
    comment, ``Not on my watch.''
        With respect to closures of medical centers, medical
    facilities, I believe what I have said, and if not, I say it
    now, we have no plans to close any medical centers in this
    current fiscal year. Indeed, as far along as we are, there will
    not be any closures. And I know of no plans to close any in
    fiscal year 2000.
        With respect to your question on reductions, no, I do not
    make those categorical assurances. And I say this about the
    whole issue of how we reform the face of VA health care, as we
    continue what has been, now, a five-year program, to completely
    transform health care from medical center based to ambulatory
    care. That is what we were just talking about, turning hospital
    beds into clinic beds.
        I am going to leave it to our medical center directors, our
    network directors, to offer up in their areas to Dr. Kizer
    their best estimate, in consultation with their communities;
    that is, veterans there, service organizations, other
    interested people in those communities, how best health care
    can continue to be reformed and improved; getting more health
    care to more veterans. And in that, I put no restrictions on
    them, on what they can send forward, and what can be heard.
        So, my answer is: No closures in 1999. I know of no plans
    for closures in 2000. I put no restrictions on our planners, as
    to how they try to manage and send forward recommendations.
        And as to staffing reductions, they are already part of our
    budget. We are doing reductions in 1999. They will contribute
    to the level we must reach in fiscal year 2000 budget. I have
    seen a number as high as 8,000; I heard one mention 7,000; in a
    base of some 220,000 employees in the Department of Veterans
    Affairs. But I do offer this: When we do them, they will not be
    budget driven. They will be driven for the purpose of improving
    health care.
        How do I say that? As we learn that we can bring health
    care closer to veterans, in clinics that get closer to them,
    that very surely will mean there will be fewer beds in major
    medical centers.
        Now, I may have missed the origin of your point. I do not
    remember whether you were asking me about clinics or medical
    centers, but the point is, there will continue to be changes in
    the way health care appears in our communities across the
    nation, as we continue to try to improve it.

                              iowa city vamc study

        Senator Harkin. Well, we had a study done, with the
    University and with the Iowa City Veterans Medical Center in
    Iowa City, IA.
        Mr. West. That is a medical center.
        Senator Harkin. You are familiar with that. Well, there was
    a study done as to whether they were going to close it and
    transfer the veterans to the university hospitals. Another
    study showed that the VA center would save $16.6 million a year
    by closing its inpatient facilities, but would have to pay the
    university hospitals $22.4 million to care for the patients.
        So, it does not look like there would be any sense in
    closing that and shifting over the veterans.
        Mr. West. Well, but I hear you also saying, at one point,
    closing the facility, and at another time, closing the
    inpatient facility. This has happened in other medical centers
    across the country, as we look for the best way to deliver
    health care there.
        I do not know the specific plans there. Do you know the
    specific plans there?
        Dr. Kizer. Yes. A decision was made not to move forward
    there. As you know, the Iowa Medical Center has had a reduced
    census--quite a low census--in the last couple of years. The
    study was done, comparing the costs. And the decision was made
    to retain the services at the VA, because it was significantly
    cheaper than buying it across the street.
        Senator Harkin. Yes.
        Dr. Kizer. In other places, we have made the converse
    decision.
        Mr. West. Well, we do not make these decisions lightly.
        Senator Harkin. Let me just get into that. My time is
    running out.
        Mr. West. Sir.

                      providing health care in rural areas

        Senator Harkin. We talk about reducing population base. And
    I have got a running argument with some people on that. I just
    want to make it clear that you are right. There is a bigger
    population base for veterans in some other states in the nation
    than in Iowa; Arizona, Florida. When some veterans retire; they
    go down there to live.
        But what you have got to start looking at is not just base
    numbers, but also how old these veterans are and how poor they
    are and how sick they are. In Iowa a lot of people who have a
    little bit more money, may have moved to Arizona, they may have
    moved to Texas, or they have moved to Florida to retire.
        And what is left behind are the poorest, and the sickest,
    and the oldest. And those cost more money. And I do not--I just
    say this to you with all due respect, I do not think the VA is
    looking at it in those terms. I just keep hearing about a
    population basis.
        And I tell you, you have got to start factoring in that
    aspect, plus as my friend from Montana said, the rural areas,
    where they have to travel a great distance, where they do not
    have the facilities right around the corner, and where, because
    of the high incidence of near poverty--I will not say poverty,
    but near poverty, where these veterans are basically living on
    their social security checks and that is all.
        They do not have the wherewithal to just jump in the car or
    have someone drive them, because they are too sick to drive to
    the University of Iowa or to Iowa City or to the Des Moines
    Veterans Hospital.
        So, I just want your reassurance that you are going to
    start taking a look at not just population base, but age,
    income, and health problems, all combined in that veterans
    community.
        Mr. West. Senator, we have done that and will be happy, if
    you want to sit down outside this forum to go through some of
    that data, but we actually have comparisons in the different
    areas.
        I think the most difficult issue that we find in some parts
    of Iowa, as well as in Vermont and a number of other places in
    the rural areas, where you have a low population density, but
    you have elderly and sick veterans who need care, is how can
    they get to a clinic or medical center. And this is an issue
    that confronts not just veterans but rural health care
    everywhere. We are part of that, trying to figure how to do
    that.
        As for Iowa veterans, the acuity and the functionality of
    the population, the age of the population, et cetera, those
    things have been looked at. And we would be happy to share some
    of that information with you.
        [The information follows:]

                      Providing Health Care in Rural Areas

        VA has initiated a survey instrument to assess the health status of
    our patients nationwide. This instrument takes into account such
    factors as the patient's age, degree of illness, and area of the
    country in which he/she lives. We have completed initial work on this
    health assessment in order to establish baseline data on users of VA
    care. Our plan is to now extend the health assessment to all enrollees
    of VA care over the next several years. The health survey will also
    include information on health behavior such as smoking, alcohol abuse,
    physical activity and diet. We believe the assessment is pertinent for
    resource allocation decisions and as outcomes of care. For your
    information, we are including a recent article from the American
    Journal of Medical Quality which describes in great detail the Veterans
    Health Study thus far.
        [Clerk's note.--The article from the American Journal of Medical
    Quality, ``Health Status in VA Patients: Results from the Veterans
    Health Study,'' can be found in the subcommittee's files.]

        Senator Harkin. Well, I appreciate that, because--just one
    last thing, Mr. Chairman. You have indulged me. I appreciate
    that.

                    iowa community-based outpatient clinics

        I understand that the Iowa Veterans Office has delayed the
    start of the new community-based outpatient clinics, the CBOCs,
    in Iowa. And again, Iowa is a rural state. And I am wondering
    why is that happening? And if you could look into that, I would
    sure appreciate it.
        Thank you, Mr. Chairman.
        [The information follows:]

                                 CBOCs in Iowa

        Healthcare services to rural veterans in Iowa are provided through
    a variety of delivery sites and arrangements. Current active CBOCs in
    Iowa are located in Mason City, Waterloo, and Bettendorf, with primary
    care services provided in Dubuque through an extension of the Waterloo
    clinic (see below).
        Implementation plans continue on schedule for June 1999 for an
    approved CBOC in Galesburg, IL. No additional Iowa CBOC business plans
    have been submitted for approval at this time. In addition to CBOCs,
    complementary strategies are being utilized to provide services to
    veterans in rural areas of Iowa:
      --Health screening and enrollment activities continue throughout the
            Network with more than 150 clinic sessions so far in fiscal
            year 1999.
      --Primary care services will be provided in the Dubuque area through
            a traveling team based at the Waterloo CBOC. This service will
            begin on a part time basis with additional time being allocated
            if workload levels increase. Currently, VA is exploring the
            possibility of a lease for space in Dubuque.
      --Specialty care has been expanded to rural areas of Iowa via
            telemedicine, and telepsychiatry connections. Currently,
            connections for telemedicine exist between the Iowa Veterans
            Home in Marshalltown and all the Iowa VAMC facilities.
            Telepsychiatry connections exist at the Quad Cities, Mason
            City, and will soon be expanded to include Fort Dodge. This
            technology provides increased access to specialty care follow-
            up services. Additional connections via the Iowa Communications
            Network (ICN) are being explored across the state.

        Senator Bond. Thank you very much, Senator Harkin.
        Mr. West. Mr. Chairman, can I just say one thing about this
    issue of what gets reduced and what gets closed?
        We should not be making these decisions--and I think we are
    not, but we should not be making these decisions in a vacuum
    here in Washington. These are the kinds of things that require
    community discussion. Veterans, veterans service organizations,
    everyone who has a role, is discussing it before they even get
    here.
        I think, sometimes--because I know many of our directors
    and network directors are doing that, but sometimes when they
    attempt to start a discussion, it gets everybody excited, and
    it is back here in Washington as a decision before it has even
    been talked through.
        We will try to make sure that on any decisions like this,
    the community has a role in the planning before we get to
    making pronouncements here in Washington. I think that is very
    important.

                                 asset disposal

        Senator Bond. Thank you, Mr. Secretary. You know, as we
    look at these very difficult problems that you are facing, some
    great philosopher, and it might have been Dr. Kizer, said that
    VA should not be about maintaining buildings, but about
    providing the best care for veterans.
        Whoever said it, I think, was right. And I agree with that.
    And you have got some tough choices. You said there are no
    plans for closing any facilities in 2000.
        Yet, do you agree with the assessment of the General
    Accounting Office that hundreds of millions of dollars are
    spent each year, and they suggest that billions of dollars,
    over five years, are going to be used to maintain unneeded
    buildings, unless VA takes some significant steps to begin the
    process of getting rid of these unneeded buildings? Would you
    agree with the assessment? Is that a fair calculation by GAO?
        Mr. West. Are you----
        Senator Bond. Yes. You, sir, or to whom you ever would wish
    to----
        Mr. West. I think Dr. Kizer might have something he wants
    to say about that. And I am inclined to let him go first, but
    let me just say this.
        How can one quarrel with the observation or the conclusion
    that we spend a lot of money maintaining buildings? Of course
    we do.
        How can one quarrel with the observation that a lot of them
    are old? Of course they are.
        And I took a glance at the report this morning. They are
    right.
        And how can one quarrel with the observation that if some
    of those buildings that are tremendously old and that are big
    and that we pay a lot of money for overhead are standing half
    empty, that that is not at least something for us to look at,
    as we consider the changing face of the delivery of health care
    to veterans.
        We are not going to turn aside from that. But I am also not
    going to make pronouncements today that, ``Hey, everybody, get
    ready for a wave of closures.''
        I expect Dr. Kizer and his people to look at all of those
    factors, as they decide in discussions with the community and
    with the veterans there what we are going to do; how best we
    can going to continue to give health care, and even improve it,
    in the years ahead.
        Senator Bond. That is a fair assessment. But what we are
    looking at, in your budget, with the needs you have, the
    balance between closing unneeded buildings--it is either that
    or it appears likely that it is furloughs, RIFs, and other
    drastic personnel actions. And these are not happy choices.
        So, I would like to hear the solution from Dr. Kizer.
        Mr. West. Before he speaks, I want to say one thing about
    what you said, Mr. Chairman. Unneeded buildings. We must----
        Senator Bond. That's what they----
        Mr. West [continuing]. First determine that they are,
    indeed, unneeded.
        Senator Bond. Well, that was GAO's assessment. That is why
    I asked you if you accept the premise.
        Mr. West. Well, I do not accept that they are unneeded,
    because I do not know the specific buildings. That is what we
    expect our people to look at and to determine.
        Senator Bond. Okay. All right. Dr. Kizer.
        Dr. Kizer. This is always an interesting and scintillating
    discussion. And I would add just a couple of points.
        It is hard to argue with the rapidity of technology
    development and how health care has changed as a result; that
    when you have an infrastructure in which the average age of
    one's buildings is 38 years old, and when 40 percent of them
    are more than 50 years old, that there is certain to be
    substantial inefficiencies built into those, because those
    buildings were designed for a type of care in an era when
    things were done very differently than they are done today.
        The difficulty that you have, and it is a political
    difficulty, in that people view these buildings as the
    personification of health care, and this leap between
    understanding that we can provide better health care and more
    health care in alternative ways, is one that communities have a
    very hard time coming to grips with.
        And one of the things that we have, although you may not
    have had a chance to review it, there is a proposal out for
    review and comment, as we speak, for Capital Asset Realignment
    Committees. That would involve VA headquarters mandating that
    each network set up these committees that would be composed of
    primarily non-VA people, representing the veterans
    constituency, as well as some other folks, using consultants,
    and to look through exactly what are the service demands; what
    is the infrastructure that we have; where are the incongruities
    or the mismatches between facilities and needs, whether it be
    geographic site or just a physical plant in a site that may be
    otherwise well, and to come up with some recommendations.
        I believe that people in the local communities, if they are
    given the full information and some time to mull it over and
    they have confidence, they will end up making the right
    choices. And the folks actually can make the tough decisions
    about realignment of our capital assets that may be very
    difficult to make politically.

                           market assessment process

        Senator Bond. I know how difficult it is.
        Mr. Secretary, prior to your tenure, this committee got
    into a firefight over whether a new hospital was needed in
    northern California. And a market assessment was done. And
    following the recommendation that a new hospital was not
    appropriate, outpatient clinics were provided instead, saving
    tremendous amount of capital investment and operating costs.
        And I believe this committee was vindicated by our
    obstinacy in refusing to approve funds for a new hospital, but
    it was based on a market assessment.
        Is that process of market assessment appropriate? You have
    got nine markets where there are four or more facilities. And I
    have gotten into some trouble before mentioning them.
        I will not start that fight again today, but is a market
    assessment process appropriate? What resources do you need to
    make such assessments?
        Mr. West. Well, I do not have the answer to the second
    question, but the answer to the first is: Any tool that will
    inform us better about how well we are delivering care is
    useful. And if a market assessment will do that, and GAO thinks
    it does--and indeed, we have done market assessments before. It
    has been very successful.
        Senator Bond. But do you agree that market assessments
    are----
        Mr. West. Any tool. Any tool that will help us to
    understand better what we need to do to deliver better health
    care is not only acceptable, but desirable.
        Senator Bond. Is there any other tool, what other tool are
    you going to use, beside market assessments?
        Mr. West. Well, there are all sorts of surveys. We have
    even done market assessments before. I do not see how I can
    object to market assessments.
        Dr. Kizer. That process that you refer to is an inherent
    part of the--what I mentioned before; the Capital Assets
    Realignment for Enhanced Services [CARES] committees.
        Senator Bond. We have not received the copy of the
    directive for the record. We would be interested in seeing
    that.
        Dr. Kizer. We will get that to you today. It is a draft
    directive that, before it was promulgated in final form, I
    wanted to send it out to our various stakeholders for them to
    comment on it and see if we could not make it better than our
    first iteration.
        [The information follows:]

                               Market Assessments

        In recognition of VA's responsibility as a major land holding
    agency to provide prudent and cost-effective management of its
    extensive real estate portfolio, VA is taking a number of actions aimed
    at maximizing the functional contribution and reducing VA's overall
    cost of ownership associated with the over 22,000 acres and 140 million
    square feet of space under our control.
        To align our physical infrastructure to more effectively support
    the current healthcare needs of the Department, we are in the process
    of implementing an improved strategic planning process. To provide
    oversight and direction for this planning, each VISN will establish a
    Capital Assets Realignment for Enhanced Services (CARES) Steering
    Committee including membership representing veterans, the state, our
    affiliates, and our various missions. The CARES committee will develop
    semi-annual plans aimed at realigning any imbalance between VA capital
    assets and veterans needs. CARES plans will itemize historical, current
    and projected utilization and demand for healthcare services, describe
    current assets, and critically review the match of assets to the VISN's
    current and projected future demands. The plans will further consider
    alternatives to current service delivery modes, and will make
    recommendations as to proposed reuse or reconfiguration of capital
    assets to more efficiently provide services to veterans [see attached
    draft Directive].
        The Department has submitted legislation to authorize the
    establishment of a new five-year pilot and Capital Asset fund to
    significantly improve its management capabilities by encouraging and
    streamlining the process of converting properties we no longer need
    into productive assets. This proposal would allow the VA to dispose of
    these properties (including land, structures or any equipment
    associated with the property) by sale, transfer, or exchange, and to
    reinvest the bulk of the proceeds in more appropriate capital to
    benefit veterans. The Administration has also requested $10 million in
    appropriation to fund the administrative start-up costs of this new
    activity. Allowable deductions would include all costs of disposing of
    the asset such as site preparation, demolition, administrative
    expenses, etc. The pilot would raise the threshold for reporting
    disposals in an annual budget document from $50,000 to an amount equal
    to the cost of a major medical facility project (currently $4 million).
    For disposals under this threshold, a notice of intent would be
    provided to the local community and the congressional committees.
    Because of the resources that will directly benefit VA programs, the
    Department is moving quickly to establish procedures to implement this
    authority as an additional tool in our overall Asset Management
    program.
                                     draft
    Department of Veterans Affairs VHA DIRECTIVE 99-XXX
    Veterans Health Administration
    Washington, DC 20420
    April X, 1999
     veterans healthcare capital assets realignment for enhanced services
                          (cares) steering committees
        1. Purpose.--This Veterans Health Administration (VHA) Directive
    promulgates VHA policy regarding the establishment of Veterans
    Integrated Service Network (VISN) Capital Assets Realignment for
    Enhanced Services (CARES) Steering Committees and specific minimal
    requirements for their membership, reports, and plans.
        2. Background
        a. Since September 1995, the veterans healthcare system has
    undergone a profound transformation. Illustrative of the changes are
    the implementation of universal primary care, a major shift from
    inpatient to outpatient care, and marked improvement in a variety of
    performance indicators. Similarly, more than half of all acute care
    hospital beds have been closed, bed days of care per 1,000 patients
    have dropped 62 percent, the percent of surgery performed on an
    ambulatory basis has increased from a third to more than three-fourths
    of all cases, and the number of patients treated has increased over 20
    percent. Likewise, more than 270 new community-based outpatient clinics
    (CBOCs) have been planned and/or sited, 50 VA medical centers have been
    merged into local integrated delivery systems, and inpatient acute care
    has been discontinued at several VA medical centers. Myriad other
    service consolidations or program changes have also been completed.
        b. At present, VHA owns and/or operates an extensive inventory of
    capital assets located in all 50 states, Puerto Rico, the Virgin
    Islands, Guam and Samoa. These assets include over 22,000 acres of
    land, 4,700 buildings, and 140 million square feet of owned or leased
    space at over 1,200 locations. The replacement value of building
    supporting VA's healthcare mission is estimated at $35 billion. The
    average of VHA facilities is about 38 years. Many of VHA facilities
    were acquired from the military and are not sited near veteran
    population centers. Likewise the physical infrastructure of VHA was
    developed at a time when the dominant method of care required inpatient
    admissions and relatively long lengths of stay. The standards to which
    these facilities were designed and constructed decades ago are, in many
    cases, no longer deemed appropriate or acceptable for modern
    healthcare.
        c. In addition, the hospital or individual hospital service
    occupancy rates at many VA facilities today are less than needed for
    either efficient operation or optimal quality of care. This situation
    will likely worsen as current trends continue to shift more and more
    care to ambulatory and home settings. Perpetuating inefficient use of
    existing VA facilities diminishes the availability of funds that could
    be used to increase veteran access to care, to strengthen the service
    delivery capabilities of more functional VA facilities, or to otherwise
    enhance services for veterans.
        d. As we now begin to peer into the 21st century, it is clear that
    new healthcare and information management technologies, combined with
    advances in genomics and other medical sciences, the aging of the
    veteran population, budget constraints, and other developments will
    continue to further transform the delivery of veterans healthcare.
        3. Policy.--When visualizing VA healthcare in the 21st century, it
    is clear that in numerous locations, VA facilities and other capital
    assets are not well aligned with the location or needs of veterans.
    Therefore, it is imperative that each VISN begin a strategic planning
    process aimed at realigning imbalances or inequities between VA capital
    assets and veterans needs. The intent of such planning is to enhance
    services to veterans.
        a. To be successful, this capital assets realignment for enhanced
    services planning process must be open and broadly inclusive of VA
    stakeholders and VA health plan users.
        b. Likewise, to help ensure objectivity and impartiality of the
    process, assistance from knowledgeable outside and independent
    consultants is essential.
        4. Action.--To accomplish the above noted goal, each VISN is hereby
    directed to convene a CARES Steering Committee by July 1, 1999. This
    committee shall submit to VHA Headquarters, Office of the Under
    Secretary for Health, a CARES Steering Committee initial report and
    plan by December 31, 1999, and every six months thereafter. At a
    minimum, the Committees' reports shall be linked to the VISN business
    plan and shall:
        a. Review historical, current, and projected service utilization
    and demand for veterans healthcare services throughout the VISN and for
    each particular facility.
        b. Describe current VISN capital assets, including all owned and
    leased properties/buildings and other relevant federal and/or state
    facilities (e.g., State Veterans Homes). This review shall include at
    least a description of each asset's geographic location, services
    provided and treatment capacity, age physical condition, convenience or
    access, availability of parking or public transportation, and need for
    renovation or repair.
        c. Critically review the congruence or match between present VHA
    assets and the VISN's current and future projected demand for services.
        d. Make recommendations for how VISN capital assets could be
    reconfigured or rearrayed to better meet the demand for services.
        e. Consider alternatives to current service delivery modes that
    might allow the VISN to enhance services to veterans and/or serve more
    veterans.
        f. Membership of the CARES Steering Committee shall be selected by
    the VISN director and shall consist of at least the following:
      --1. a State Director of Veterans Affairs (or his/her
            representative);
      --2. a director of a State Veterans Home (or his/her representative);
      --3. three representatives from veterans service organizations or
            veterans advocacy groups;
      --4. a dean of an affiliated medical school (or his/her
            representative);
      --5. an Associate Chief of Staff for Research from a VA medical
            center;
      --6. an Associate Chief of Staff for Education from a VA medical
            center;
      --7. a representative from a state medical association;
      --8. a representative from a state hospital association;
      --9. a VA clinician knowledgeable about geriatrics/gerontology and
            long-term care; and
      --10. the VISN director and Clinical Manager, who will serve as Ex
            Officio members.
        g. The chair, vice chair and other officers of the CARES Steering
    Committee shall be selected by majority vote of the membership.
        h. The CARES Steering Committee shall establish operating rules and
    policies, and shall be given an operating budget by the VISN.
        i. The VISN Director may chair the first and/or second meeting of
    the Steering Committee until a chair is elected.
        5. Resources.--In developing its Capital Assets Realignment for
    Enhanced Services Strategic Committee plan, VISNs shall consider the
    ``Criteria for Potential Alignment of VHA Facilities and Programs''
    dated September 1995, A Guidebook for VHA Medical Facility Integration
    (1998), and other relevant internal and external reference sources.
        6. Follow-up Responsibility.--The Chief Network Officer (10N) is
    responsible for the contents of this directive.
        7. Recission.--This VHA Directive expires January 31, 2005.

                                Kenneth W. Kizer, M.D., M.P.H.,
                                            Under Secretary for Health.

        Senator Bond. We will give you any ideas we have. Thank
    you.
        Senator Mikulski.
        Senator Mikulski. I would just like to give some
    observation on the--first of all, Dr. Kizer, I found your
    description of the local teams to be very informative, as well
    as the Secretary's comments.
        Here is what I think: First of all, we are in the VA health
    care business. We are not in a VA real estate business. And I
    think the veterans will know that.
        They have developed an attachment to facilities, because it
    has usually been very important in the community, strong
    volunteer base, both from veterans organizations, as well as
    community, but really, deep down, what they want is continuity
    of care. And they say they want VA to be in the health care
    business and less worried about the real estate business.
        What I believe, because I do believe decisions must be made
    at the local level, though--but I do believe there needs to be
    national guidelines, national criteria, and national training
    of the people who will be organizing teams like that at the
    local level; and then oversight and supervision of the teams,
    so that you have the decision making, but you provide for local
    VA administrators, who will putting these teams together,
    because again, they have been in the VA administration
    business. They have not been in the real estate business.
        And that is why I know Senator Bond was focusing on market
    assessment. And we would want the involvement of private sector
    or non-profit private sector in the local community; the State
    Economic Development Commission; in Baltimore, it might have
    been the Baltimore Economic Development that says, ``This is--
    this is really the--what this asset is worth. These are other
    uses.''
        Perhaps--and I could go through a whole string of things;
    not creating destabilization, as well as that.
        So, think about national guidelines, national criteria, and
    national training, oversight and supervision, and then truly
    not just saying Well, we are going to have a meeting with the
    veterans to see what they want to do.
        That is important, but property is a very complex business
    for which there is specialties in that. So, that is one thing.

                               processing claims

        Second, I would like to go, though, to the disability
    issue. And Mr. Secretary, could you tell us what is the current
    processing time for claims? And what is your goal? And how do
    you hope to achieve it?
        Mr. West. For claims.
        Senator Mikulski. Yes. How long does the average--from the
    time someone applies, what is the average length it takes to be
    adjudicated?
        Mr. Thompson. Original compensation claim.
        Senator Mikulski. Yes.
        Mr. West. Speaking strictly about original compensation
    claims, Senator, that would be 198 days.
        Senator Mikulski. I am sorry. I cannot hear you.
        Mr. West. 198 days for original disability claims. All
    claims involving disabilities, of which original claims are a
    distinct minority, average 161 days.
        Senator Mikulski. How could that time be reduced? And what
    is the goal, Mr. Secretary? We have heard these two numbers.
    What is your goal, sir, in terms of----
        Mr. West. Well, in terms of time of processing, I have
    several goals, Senator.
        First of all, when I arrived, we knew we had improved the
    time of processing, but I was told by my Under Secretary, Joe
    Thompson, as he put his new process in place in VBA, that the
    time of processing claims was going to lengthen for a bit, as
    we tried also to improve accuracy and other considerations as
    part of his balanced scorecard approach.
        That has happened. He has put in his balanced scorecard
    approach. We are improving accuracy. And yes, we will try to
    improve timeliness, as well. But between now and, say, the end
    of this fiscal year, my goal is to continue to show improvement
    in accuracy, as well as beginning to make improvements in
    timeliness, as well.
        I think one of the things that has happened to this
    department, in the past, is that we too quickly got ourselves
    anchored to a number of days by a certain time line.

                   performance standard in processing claims

        Senator Mikulski. What is your performance standard, then?
        Mr. West. If I could finish that thought. What it did was
    to create a problem that VBA has tried to overcome; that is
    throwing all your assets, all your people, and all your best
    thinking into just finishing fast.
        Let me tell you what finishing fast can mean. It can mean
    that you put aside older claims. And you only treat the new
    ones coming in that are not too difficult. And so, you end up
    getting better numbers, but you are really not serving veterans
    better.
        So, the first performance standard is servicing veterans
    better.
        Senator Mikulski. What is the operational definition of
    that? What is the operational definition of serving veterans
    better? What is the operational definition of----
        Mr. West. It is the effect of our balanced scorecard.
        Mr. Thompson. If I might, to echo something the Secretary
    just mentioned, when we over-focus on speed, which we did as a
    department for a number of years, we start to trade off things;
    the accuracy of the decisions we made, the things that are not
    measured, and specifically phone calls.
        We had higher than a 50 percent blocked call rate, which
    means more than half of all veterans who called us got a busy
    signal.
        Mr. West. I hate to interrupt him, but you can improve the
    timeliness of claims if you turn off your phones and people
    stop answering them, and just do claims. And to some extent,
    that may have happened.
        Go ahead.
        Mr. Thompson. Appellate work, remands, fiduciary work; all
    of those things got put on the back burner, because we focused
    on one type of claim.
        We have adopted the operational definition of a good job is
    saying, ``You not only do it quickly, but you do it--you make
    the right call, you make the right decision.''
        As I mentioned last year, our error rate was 36 percent. We
    pay out billions of dollars in our programs--we are either
    doing a disservice to veterans or taxpayers or both when we
    make mistakes.
        I am happy to say, although it is nothing to write home
    about just yet, we have reduced those by about a fourth. We
    have gone down from 36 to 27 percent in a year.
        This is an enormously complex business. It takes years to
    train someone to do this job. To make adjustments in the error
    rates is a multi-tiered approach. It is not just simply pay
    more attention to what you are doing. As you mentioned,
    Senator, it has to do with technology. It has to do with over-
    complicated rules. It has to do with training. A host of
    issues.
        We want to build this system so it is strong and is capable
    of delivering great service to veterans. We feel that the only
    way you can do that is by looking at how long it takes to do
    it; how accurate are you; what veterans think about it; and how
    efficient are you in the process.
        We have established a system of measures that look at all
    of those things. It has taken some time to get that in place,
    but I am very comfortable that looking at the system, we are
    actually stronger than we were a year ago. I will admit that
    the cycle times are not good. I completely agree with your
    observation on that, but the system itself, from the base up,
    is stronger than it was.
        Senator Mikulski. Well, there--the two basic tools, of
    course, are accuracy and timeliness. I mean, that is also the
    way they--one, the way the taxpayers would evaluate you, and
    second, the way the public would be.
        But I feel I have been at this issue for a decade, both as
    chair and then ranking. Paul has a report there, where there
    was a GAO report in 1997. There was something in 1994. When--
    the NAPA report, et cetera. And we are always going to get
    there.
        And the question is: When? How? What? Because--and when I
    visited VA in Baltimore, trying to do disability, they had,
    like, shelf upon shelf upon shelf of manual upon manual upon
    manual, all of which were quite cumbersome. And each case
    required pulling down four or five different manuals.
        Certainly, there also needs to be an evaluation of the
    regulations, the decision making. I believe Dr. Kizer would say
    that there is even--since the original 1950 evaluation of what
    criteria went disability, et cetera. Technologies have changed.
    Certainly, if you can go in a hospital and you are out in one
    day, it does not mean you that you are still a--no patient. But
    disability has even been evaluated. Things that were once--just
    because it is chronic, does not mean that it is disabling.
        I am not, again, in the rehab disability evaluation
    business, but there seems to me a way that we must really, by
    the end of this century, get our hand on this.
        Mr. Thompson. I quite agree on the things you mentioned.
    The system itself was fundamentally weak and right across the
    board, whether you look at regulations----

                         resources needed to meet goals

        Senator Mikulski. Well, do you need more people? I know my
    time is up. Do you need more people?
        Mr. Thompson. Yes, we do.
        Senator Mikulski. What do you need?
        Mr. Thompson. We have asked to move 440 people into the
    disability claims process. New hires, combined with
    transferring FTEs from other areas with VBA, will enable us to
    move 440 additional claims decisionmakers into the claims
    process.
        Senator Mikulski. As I understand it, the Administration's
    budget calls for only a very modest increase in this area. Is
    that correct?
        Mr. West. It calls for 164 new positions. Those new
    positions go directly to them. At the same time, as a result of
    some duties that are changing in VBA, they are getting a total
    of 440 claims decisionmakers. That will muscle it up.
        But at the same time, Senator, I am not going to let our
    people say to the folks working for them, Abandon everything
    else you do in that office; just to get the days on those first
    claims shortened.
        They must do the other things. For example, if they get it
    wrong, but get an answer out, they have still delayed the
    veteran getting what he is due on his claim.
        We want the accuracy improved, because that deals with the
    most egregious problem, which is lengthy processes that go on
    and never end.
        Senator Mikulski. Well, this--if I might, Mr. Chairman----
        Senator Bond. Please.

                        washington, dc, regional office

        Senator Mikulski [continuing]. With your indulgence, follow
    up on the D.C. field office. I was very disturbed by the
    March--excuse me, the April 10 report by the Post that says the
    D.C. field office was in chaos. There was a backlog of 10,000
    cases. The field office has 158 staff, down 250 of--down from,
    excuse me--down from--by 100, from five years ago.
        Do you want to comment on this article? The 10,000 cases.
    These are in my Montgomery County, Prince George's County, and
    also the greater metropolitan area benefits.
        Mr. West. I do want to comment. First of all, it is
    unacceptable. I mean, that is just the fact.
        Senator Mikulski. What's unacceptable? The article or the
    D.C. field office?
        Mr. West. No. There is nothing wrong with the article. The
    article is based on a report made by Under Secretary Thompson's
    team that went in there and reviewed it and wrote up their
    findings. It is our self-assessment. It identifies an
    unacceptable condition.
        Under Secretary Thompson has several efforts underway. He
    has a team in place and a person on his immediate staff
    directly responsible for it. So, first and foremost, we found
    the situation. And we found it because of the new system he has
    put in place, whereby peers from other parts of that network
    went in and looked at it.
        Senator Mikulski. Well, then, what is the plan? Now, that
    we have agreed that you found it and it is unacceptable, what,
    then, is the plan?
        Mr. Thompson. First, to echo the Secretary, it is a serious
    situation there.
        In the short-run, we will put the resources and the
    leadership in there to get control of the immediate workload
    situation. By this summer, we should have that under control.
        Senator Mikulski. What does that mean? I mean, are you
    going to bring 500 people? Are you going to bring six people?
    Those are abstractions. What does--what are you really
    specifically talking about?
        Mr. Thompson. Well, specifically we are----
        Senator Mikulski. I do not mean to be terse, but I----
        Mr. Thompson. That is fine.
        Senator Mikulski [continuing]. Need specifics.
        Mr. Thompson. We are bringing people in to help the
    regional office. We are also moving work out, temporarily, at
    this point, to Baltimore, Roanoke, other parts of the network,
    to help them bail the water out of the boat.
        Senator Mikulski. How many people are you bringing in?
        Mr. Thompson. We are only bringing in a handful to work in
    the regional office.
        Senator Mikulski. What is a handful?
        Mr. Thompson. About five or six and that includes managers,
    as well.
        Senator Mikulski. So, the rest, then, will go on to
    overburden people in Baltimore, Roanoke, and so on.
        Mr. Thompson. Well, there----
        Senator Mikulski. You just said that when you go to solving
    one problem, another part collapses.
        Mr. Thompson. The situation is this: Wherever we draw from,
    they need the resources. There are no flush places in the
    United States. Wherever we try to help, we are going to have to
    draw from someone who also needs the help. It is a matter of
    balancing priorities.
        This system, in VBA has gone down farther than any of the
    operating lines in VA; 18 percent over the last few years, as
    the work has continued to build. It is important to understand
    that there are no magic solutions. It takes years for someone
    to learn the business. If I hire five people today, there----

             plans to solve problems at Washington Regional Office

        Senator Mikulski. I understand that. We have discussed
    that. Let us go to the plan here, sir.
        Mr. Thompson. Okay. We will get the work under control this
    summer. In the long-term, there is a different problem and it
    is a chronic problem with that office. That office has
    traditionally served as the farm team for VA headquarters. What
    that means, specifically, is, as we have trained people in
    these very complex jobs, the temptation has been great to hire
    them away into VA headquarters and other areas of the
    government in Washington.
        The grades in our regional office are not nearly as high as
    they are in headquarters facilities. There are probably more
    than 100 people in VA headquarters, who at some point in their
    careers, were at the Washington regional office.
        Over the long haul, it is hard for them, despite----
        Senator Mikulski. What are we----
        Mr. Thompson [continuing]. All the other things.
        Senator Mikulski. What are we going to do about it?
        Mr. Thompson. That is what we are crafting now. I will be
    glad to sit down with you, as we decide what needs to be done.
        Senator Mikulski. Do you now have a plan for that, sir?
        Mr. Thompson. We have the short-term plan and we are
    working on the long-term solution.
        Senator Mikulski. And what do you envision the long-term
    solution to be, Mr. Secretary?
        Mr. West. It is not clear. I will have to wait and see. He
    has put in a team and he has a deputy on his staff directly in
    charge of it.
        First, what we did was send in the team that told us what
    the story is. Now, we need a team to look at several options.
        One of them, quite frankly, is to stop treating that office
    that way. This is no knock on the personnel in that office. The
    fact is, though, they are constantly retraining themselves, as
    their good people keep leaving.
        And so, one thing to do is just allow them to grow and
    strengthen themselves.
        Another might be to reform the mission of that office,
    entirely.
        I do not announce that here today, but I am saying, as a
    long-range----
        Senator Mikulski. You will evaluate it.
        Mr. West. As a long-range solution, those are two of the
    key things to look at; to either allow them to exist there and
    not constantly be raided, as we need good and talented people
    in Central Office, so they can grow and mature. Second, we
    could reform their mission in some way, so that their workload
    is permanently assigned elsewhere. We need to work through
    that, Senator, before we decide which of those to do.
        In the meantime, as a short-term effort, we are diverting
    some of that work. We are sending in a team to help those who
    are there with the remaining work.
        Senator Mikulski. Well, I know that the Chairman will ask
    additional questions in this area. And let me say this: Number
    one, yes, I would like a report on the specifics of those
    short-term, long-term. And I know the Chairman does, as well.
        In addition to that, as part of both dealing with the
    10,000 case backlog there, my concern is that as you shift it
    to other offices in the region the temporary shift could become
    a permanent shift, or they themselves fall behind. I want to be
    sure that this truly is a short-term, time-limited one, and
    that the D.C. field office meet its responsibility to the
    constituency area to which it has been assigned, so that
    Roanoke does not collapse; Baltimore does not collapse; or
    wherever you are going, because you already said they are
    working under, at best, spartan circumstances or even skimpy,
    quite skimpy, circumstances. And I do not have the exact
    personnel numbers in those areas, but you know best.
        [The information follows:]

                    Plans to Solve Problems at Washington RO

        We are providing a summary of the short-term actions we have
    undertaken to begin to bring the Washington Regional Office workload
    back under control. The more fundamental issues related to the long-
    term solution and the appropriate mission for the office are complex
    and will take additional time to resolve. We will provide the Chairman
    and Senator Mikulski with copies of our long term plans as they are
    developed.
                       short-term action plan--april 1999
                           washington regional office
    Restructure Veterans Service Center
        Recruit new Veterans Service Center Manager.
        Recruit for critical positions to include: Assistant Service Center
    Manager, Master Rating Specialist and clerical personnel.
        Define clear lines of responsibility and authority by establishing
    work assignments, job descriptions, and performance standards.
        Establish the following operational elements with clear lines of
    responsibility and authority:
      --2 Claims Servicing /Processing Groups
      --1 Customer Service /Contact Group
      --1 Claims Establishment /Mail Management Group
        Centralize foreign cases to designated staff.
        Stratify and assign work based on complexity level.
    Mail and Folder Management
        Place all mail under end product control.
        Establish and strictly enforce a standard operating procedure that
    ensures all employees update both the Benefits Delivery Network and
    COVERS (Folder Tracking) systems as claims are processed.
        Use experienced claims examiners to screen all authorization and
    rating work on the floor.
    Other Actions
        Detail the Veterans Service Center Manager from Oakland to evaluate
    and recommend changes to process.
        Establish a Service Delivery Network Help Team to review and
    finalize all cases over six months old.
        Broker claims requiring rating action to the Satellite Rating
    Activity in Huntington, WV and other regional offices.
        Assign rating specialists to review the quality of requests for
    medical exams and make direct telephone inquires in the event of
    deficient exams.
        Establish an aggressive training plan for the Veterans Service
    Center.

        Senator Mikulski. And as former Secretary of the Army, you
    know we need to really now be able to deploy, because this is a
    9-1-1 situation. We do not want it to be a permanent situation.
        So, having said that, Mr. Chairman, I know you have
    questions. Thank you.
        Senator Bond. Thank you, Senator Mikulski. And I would note
    that Senator Mikulski's leadership on this has been consistent
    throughout. And she has strongly advocated for more personnel
    for VBA. And I believe since I have taken over as chair of this
    committee, we have added more people above the OMB budget
    request for VBA. So, this committee is concerned about the
    problem. And the ranking member and I are going to continue to
    review that.
        I have about completed my questions for this hearing. I
    want to touch on two areas quickly. And then I will submit a
    number for the record.
        Senator Mikulski. And so will I.

                          medical school affiliations

        Senator Bond. And Senator Mikulski will, as well.
        With respect to academic affiliations, VA plays a critical
    role in the education of medical students. And I think that has
    already been referred to today. There are about 9,000 residency
    positions through affiliations with 107 medical schools.
        What impacts have there been on VA's affiliation over the
    past several years, as VA has closed thousands of acute care
    beds, reduced staffing, reallocated to ambulatory care? What is
    the VA doing to preserve those critical relationships with
    affiliated universities, at the same time transitioning to a
    more appropriate number of residents in specialized programs?
    And I would address that to Dr. Kizer, I believe.
        Dr. Kizer. I believe we have strengthened those
    affiliations and actually have become a more valuable training
    resource than we were before, although some of the medical
    schools still do not understand that. We have shifted to
    provide venues of care that are more typical of what is going
    to be utilized in the 21st century, and we have provided the
    opportunities for both enhancing our care, but also provided
    training sites for the universities that are, in general, less
    replete with than we are.

                          medical staffing reductions

        Senator Bond. We have heard concerns expressed about some
    of that. We will share those individual concerns with you. And
    as we also look at research facilities, particularly in
    Columbia, MO laboratories, we will discuss later, but I guess
    the last and most important question, Mr. Secretary and Dr.
    Kizer, given the fact that VA did not meet its FTE reductions
    last year and will not do so this year, you have got a much
    higher goal for fiscal year 2000; 8,000 work-years. That is in
    the budget you submitted to us.
        And it appears that to meet the goal, a lot of these FTEs
    need to be off the payroll by October 1. At least, that is
    according to GAO.
        How are you going to get it done? Are you looking at
    significant furloughs? Obviously, this is RIFs, furloughs.
    Normal attrition is not going to get you there. This is
    something that we are very much concerned about and the impact
    it is going to have on care and provision of services. How are
    you going to get there?
        Mr. West. Actually, before he answers, I would say normal
    attrition or attrition of some sort can be very helpful, if we
    make up our minds to do it. They have 35,000 employee turnovers
    every year. If only five of six spaces are filled, there will
    be an impact. Now, I do not propose that that is the way that
    will happen.
        Second, I saw the GAO comment. I noticed, for example, that
    with respect to the medical affiliations that you asked about a
    minute ago, they seem to think that the medical schools will
    cause us not to do the things we need to do; because if we do,
    it dries up some of the training for their specialists.
        Well, GAO also said that business about having to get all
    of these folks off the rolls at the outset of 2000. I do not
    think that is true. You certainly cannot wait until the end of
    2000. And the earlier you do it, the sooner you get the
    savings.
        Indeed, Dr. Kizer wrote me a memo a while back that said
    before we even start on 2000, make sure we do as much as we can
    in 1999. So----
        Senator Bond. We have a copy of that memo, I think.
        Mr. West. Third----
        Senator Bond. That was interesting.
        Mr. West. Third, you have buy-out legislation proposed by
    us now. I think it has just gotten up here. I hope so. That
    authority will be important to us as we do this.
        So, yes, from my point of view--and I know you want to hear
    it from Dr. Kizer's point of view--it would be a stretch, but I
    do not think it is, by any means, impossible.
        Senator Bond. Dr. Kizer.
        Dr. Kizer. The challenge is a steep one. And I can assure
    you that your concern is probably much less than mine. But
    the----
        Senator Bond. I do not doubt that. I will buy that.
        Dr. Kizer. The other reality that we have to deal with is
    the longer that it takes to initiate these reductions, the
    deeper the cuts have to go. That is just the basic premise of
    federal government personnel rules. And so, there is a need to
    make those changes as rapidly as possible, to minimize what
    might be considered the uncontrolled aspects, that would
    develop if they get delayed into the next year.
        Mr. West. I think the biggest complication of the whole
    effort is me, Mr. Chairman. Because when proposals for RIFs
    come up to me, I take my time on them. I want to make sure that
    they really are needed and that they will not effect care to
    our veterans. And so, I can process them quickly, when they are
    justified, and it will be tough, but if we have to, we can do
    that.

                      protocol for processing vha actions

        Senator Bond. Item six in Dr. Kizer's memo of February 8,
    said, ``I therefore request that we quickly establish a
    protocol for rapidly processing requests or actions to right-
    size the VHA health care system.''
        Is that protocol ready? Has that been done?
        Mr. West. Well, the protocol is simply that I have assigned
    somebody to go get the packages when Dr. Kizer has them ready,
    and get them directly to me as quickly as possible. That is
    what that is all about. It is: How can we make sure that when
    VHA releases its proposal to the Secretary, that the packages
    do not wander around for so long that by the time they get to
    me personally and that I act on them, that the results are
    useless to the managers in the field who have been waiting for
    them?
        And the protocol is that I have assigned someone on my
    staff, directly, to shepherd them from the time they leave VHA
    to me.
        [The information follows:]

                      Protocol for Processing VHA Actions

        The Deputy Chief of Staff has been assigned the responsibility of
    tracking and shepherding the RIF/Staffing Adjustment packets from the
    time VHA recommends approval, through the formal staffing process,
    until it reaches the Secretary for approval. A report on the status of
    reduction in force requirements is maintained to assure visibility and
    timely processing within the Headquarters.

                         Additional committee questions

        Senator Bond. It sounds like my favorite cartoon character
    of old, Walt Kelly's famous Pogo. We have met the enemy.
        And we will count on you to deal with that.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                      Questions Submitted by Senator Bond

             potential staffing efficiencies through restructuring
        Question. VA expects to provide care to an additional 54,000
    patients next year, while cutting staff by 6,949. The budget says there
    will be $1.14 billion in ``management efficiencies''--and additional
    ``savings'' of $244 million and 1,580 FTE if proposed legislation
    authorizing emergency room care is enacted. What specific cuts to
    medical services, staff and programs will be made to meet the $1.4
    billion target?
        Answer. In all budget years, facilities and VISNs are encouraged to
    continue efforts to identify potential staffing efficiencies through
    restructuring. Initiatives such as internal reorganizations, changes in
    missions and programs, elimination or reduction of services,
    consolidations of services or functions between two or more facilities,
    reallocation of workload, or redirection of staff and other resources,
    etc., occur at VA facilities across the system. This is a necessary
    part of sound, health care management that serves to improve the
    delivery of services to patients.
        Intensified budget pressures will likely accelerate VHA's re-
    engineering efforts, requiring greater cost savings. If VHA is to
    continue its efforts in maximizing efficiencies and quality, it must
    have the tools required to carry them out. We believe that we must use
    all the available mechanisms including normal attrition, early-out
    authority, budget authority, RIF and staffing adjustment authority, to
    re-engineer our workforce, since staffing accounts for about two-thirds
    of VHA expenditures.
        Following the release of the President's budget, the VHA networks
    were asked to develop plans addressing the management improvements
    necessary to achieve the significant savings required to operate within
    the proposed fiscal year 2000 budget. Those plans are currently being
    reviewed. In general, the plans show that we will need to continue to
    significantly reduce staffing and restructure our health care delivery
    methods. Staffing reductions would be achieved through attrition,
    buyouts, if approved by Congress, and, when necessary, reductions-in-
    force. Limitations on enrollment for lower priority veterans may also
    be examined. Several headquarters and field-based review teams are
    examining the network plans, and we will have a more complete national
    plan by the end of June. Finally, we will continue to reform our
    business processes (e.g., the purchase of medical and surgical
    supplies) to achieve efficiencies.
        Question. Without knowing the specific cuts which are planned, how
    can we assess the adequacy of your budget?
        Answer. Specific actions are being reviewed and a national plan
    should be completed sometime in June.
        Question. Do you believe VA will be able to increase patient care
    without any degradation in the quality of care with the budget you
    propose?
        Answer. No matter the budget level, we will ensure quality by
    carefully monitoring through a comprehensive performance management
    system. Despite flat budgets in the past, we have been able to increase
    the number of patients treated and outpatient visits, while
    simultaneously improving our quality of care performance and customer
    satisfaction. To become competitive in quality and service
    satisfaction, and to achieve necessary financial discipline, VHA has
    embarked on a more business-like approach to operations that forces us
    to take tough, but necessary actions. Our actions have resulted in
    significant efficiencies while we have concurrently achieved
    significant quality improvements.
        Question. Do you agree with GAO's assertion that VA's
    transformation seems to have lost some of its momentum over the last 12
    months?
        Answer. The perceived loss of momentum reflects the expected
    maturation of many major VHA transformation initiatives. The early
    start-up phase was characterized by a flurry of escalating activities.
    Currently, the framework for VHA's transformation has been established.
    Program officials are undergoing a period of refinements to streamline
    and improve upon what has gone before. During the third phase of
    change, quality transformation will be the defining characteristic.
    With few exceptions, external reviewers, including the Office of the
    Inspector General, the General Accounting Office and independent
    consultants, have consistently supported the organizational directions
    that VHA is pursuing.
        Question. Given that VA did not meet its FTE reductions last year,
    and will not this year, do you really believe you can meet the fiscal
    year 2000 projections of about 8,000 workyears?
        Answer. The challenge in meeting the management efficiencies set
    forth in this budget is a steep one. However, we have made significant
    progress in the past, and we have the energy to continue. As mentioned
    earlier, if VHA is to continue its efforts in maximizing efficiencies
    and quality, it must have the tools required to carry them out. We
    believe that we must use all the available mechanisms including normal
    attrition, early-out authority, budget authority, RIF and staffing
    adjustment authority, to re-engineer our workforce, since staffing
    accounts for about two-thirds of VHA expenditures.
        Question. When will these FTEs need to be off the payroll by
    October 1, in order to realize sufficient savings? Why were the planned
    FTE reductions not met for fiscal year 1998 and fiscal year 1999?
        Answer. To optimally achieve the desired savings, staff reductions
    would occur effective October 1, 1999. In fiscal year 1998 and fiscal
    year 1999, Congress provided additional funding that affected VHA's
    overall management strategy and allowed for the retention of staff
    above those levels budgeted. In addition, VHA was granted authorization
    to carry over Medical Care Collection Funds (MCCF) collections to
    support medical care operations.
                              va's request to omb
        Question. I understand that VA's request to OMB was $1.2 billion
    more than what is in the final President's budget. What specifically
    were the additional funds requested for, and why did the President deny
    VA's request?
        Answer. The attached tables list VA's budget submission to OMB for
    budget authority. We respect your desire for information on the budget
    process, but must insist on the maintenance of open communication
    within the Executive Branch and my Department which requires
    confidentiality particularly on budget matters. If all written and oral
    communications made in the decision making process are subject to
    review and public examination, there would be an adverse effect on the
    candor in the opinions provided me in reaching decisions on budget
    matters.

          BUDGET AUTHORITY NET--COMPARISON OF THE FISCAL YEAR 2000 OMB SUBMISSION TO PRESIDENT'S BUDGET REQUEST
                                                [In thousands of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                                        President's
                                                                      OMB submission      request       Difference
    ----------------------------------------------------------------------------------------------------------------
                         DISCRETIONARY PROGRAMS

    Medical Programs:
        Medical care................................................      17,950,287      17,306,000        -644,287
            Medical care collections fund...........................         749,141         749,141  ..............
            Proposed legislation....................................         577,100  ..............        -577,100
                                                                     -----------------------------------------------
              Subtotal, Medical Care................................      19,276,528      18,055,141      -1,221,387
        Medical and prosthetic research.............................         336,877         316,000         -20,877
        Other Medical--Smoking Cessation Program Proposal...........  ..............          56,000          56,000
        MAMOE.......................................................          67,896          60,785          -7,111
                                                                     -----------------------------------------------
          Total Medical Programs....................................      19,681,301      18,487,926      -1,193,375
                                                                     ===============================================
    Construction Programs:
        Construction, major projects................................         135,000          60,140         -74,860
        Construction, minor projects................................         175,000         175,000  ..............
        Parking revolving fund......................................  ..............  ..............  ..............
        Capital asset fund proposal.................................          50,000          10,000         -40,000
        Grants for State homes......................................          60,000          40,000         -20,000
        Grants for State cemeteries.................................          11,000          11,000  ..............
                                                                     -----------------------------------------------
          Total Construction Programs...............................         431,000         296,140        -134,860
                                                                     ===============================================
    Veterans Benefits Administration:
        Education loan program account..............................               1               1  ..............
        Vocational rehabilitation loans program account.............              57              57  ..............
                                                                     -----------------------------------------------
          Total Veterans Benefits Administration....................              58              58  ..............
                                                                     ===============================================
    General Operating Expenses & Misc.
        Veterans Benefits Administration (GOE and  Credit)..........         731,920         706,457         -25,463
            Veterans housing benefits program fund program account..         150,231         152,231          -2,000
            Native American veterans housing loan program account...             503             503  ..............
            Education loan program account..........................             214             214  ..............
            Vocational rehabilitation program account...............             415             415  ..............
                                                                     -----------------------------------------------
              Subtotal, Credit Reform...............................         151,363         153,363          -2,000
                                                                     -----------------------------------------------
              Total, Veterans Benefits Administration w/Credit......         883,283         859,820         -23,463
                                                                     ===============================================
    General Administration..........................................         224,664         206,000         -18,664
        Credit Reform (General Counsel):
            Veterans housing benefits program fund program account..           4,727           4,727  ..............
            Native American veterans housing loan program account...              17              17  ..............
                                                                     -----------------------------------------------
                Subtotal, Credit Reform (General Counsel)...........           4,744           4,744  ..............
                                                                     -----------------------------------------------
                Subtotal, General Administration w/Credit...........         229,408         210,744         -18,664
                                                                     -----------------------------------------------
                Total General Operating Expenses w/out Credit.......         956,584         912,457         -44,127
                Total, Credit Reform--Administrative................         156,107         158,107           2,000
                                                                     ===============================================
    National Cemetery Administration................................         103,312          97,311          -6,001
    Office of Inspector General.....................................          43,959          43,200            -759
                                                                     -----------------------------------------------
          Total General Operating Expenses and Misc.................       1,259,962       1,211,075         -48,887
                                                                     ===============================================
    Proprietary Receipts:Medical Care Collections Fund..............        -761,560         761,560  ..............
                                                                     -----------------------------------------------
          Total Discretionary Programs..............................      20,610,761      19,233,639      -1,377,122
                                                                     ===============================================
                         MANDATORY PROGRAMS \1\

    Benefit Programs:
        Compensation and pensions...................................      21,568,364      21,568,364  ..............
            COLA increase...........................................         293,300         293,300  ..............
            Proposed legislation....................................           5,000           5,000  ..............
                                                                     -----------------------------------------------
              Subtotal, Compensation and pensions...................      21,866,664      21,866,664  ..............
        Readjustment benefits.......................................       1,469,000       1,469,000  ..............
        Veterans insurance and indemnities..........................          28,670          28,670  ..............
        Guaranteed transitional housing loan program for homeless              9,600           9,600  ..............
         veterans...................................................
        Veterans housing benefit program fund program account.......         282,342         282,342  ..............
                                                                     -----------------------------------------------
            Total Benefit Programs..................................      23,656,276      23,656,276  ..............
                                                                     ===============================================
    Proprietary Receipts:
        GI Bill.....................................................        -180,700        -180,700  ..............
        Post-Vietnam era veterans education account.................          -1,432          -1,432  ..............
        National service life insurance.............................        -195,790        -195,790  ..............
                                                                     -----------------------------------------------
          Proprietary Receipts from the Public......................        -377,922        -377,922  ..............
                                                                     ===============================================
    Trust Funds:
        Post-Vietnam era veterans education account.................           3,719           3,719  ..............
        General post fund...........................................          32,351          32,351  ..............
        National service life insurance.............................       1,050,450       1,050,450  ..............
        U.S. Government life insurance..............................           5,220           5,220  ..............
        National cemetery gift fund.................................              90              90  ..............
                                                                     -----------------------------------------------
          Total Trust Funds.........................................       1,091,830       1,091,830  ..............
                                                                     ===============================================
    Intragovernmental Transactions:
        Post-Vietnam era veterans education account.................          -2,287          -2,287  ..............
        National service life insurance.............................          -1,710          -1,710  ..............
        U.S. Government life insurance..............................  ..............  ..............  ..............
                                                                     -----------------------------------------------
          Total Intragovernmental Transactions......................          -3,997          -3,997  ..............
                                                                     ===============================================
          Total Mandatory Programs..................................      24,366,187      24,366,187  ..............
                                                                     ===============================================
          Total Department of Veterans Affairs......................      44,976,948      43,599,826     -1,377,122
    ----------------------------------------------------------------------------------------------------------------
    \1\ The mandatory program estimates were revised after the initial OMB submission by VA to reflect technical and
      economic assumption adjustments.

                                  hepatitis c
        Question. VA's budget estimates spending $250 million to treat
    veterans with Hepatitis C. VA now believes the prevalence rate is
    closer to 8-10 percent. What is the total amount needed given the
    revised anticipated prevalence rate?
        Answer. The $250 million budget figure is based upon a prevalence
    rate of approximately 5.5 percent. On March 17, 1999, VA conducted a
    one-day national point prevalence testing activity to estimate the
    prevalence rate for VA patients who were having blood drawn and who
    agreed to be tested. This testing activity was not scientifically
    designed to accurately measure the prevalence in all veterans or in all
    VHA users. Rather, it was designed to be quick step that would verify
    and improve on the existing data. Anomalies in the data from this
    testing activity have been observed and analyzed. The measured
    prevalence, not considering obvious data inconsistencies, was 6.6
    percent. Using 6.6 percent as a baseline, experts have estimated the
    true prevalence to be 8-10 percent, at minimum, based on what is known
    of the inconsistencies in the data. Assuming an estimate of 8 percent,
    the expected rise in the cost will be between $50 and $100 million
    above the initial estimate.
        Question. Why didn't VA do a better job sooner to estimate the
    prevalence rate?
        Answer. The understanding of the true prevalence rates both inside
    and outside VA is not well documented. The VA initiative is the largest
    surveillance activity ever undertaken and required substantial planning
    and logistical coordination. No other entity has even begun to address
    prevalence or any other Hepatitis C-related activities as broadly or
    aggressively as VA.
        Question. Will VA provide the treatment to all patients who would
    benefit?
        Answer. VA will provide appropriate treatment to all patients for
    whom it is clinically appropriate and who wish to be treated.
                                   enrollment
        Question. Legislation enacted in 1996 required VA to create an
    enrollment system. Once enrolled, veterans are entitled to receive a
    full continuum of medical services. VA decided to allow all veterans--
    regardless of their income or disability status--to enroll. How many
    new veterans have enrolled for care who are not low-income or service-
    connected, and at what cost?
        Answer. Priorities 6 and 7 include veterans who are not low-income
    or service-connected. Priority 6 veterans are mostly veterans receiving
    care for disorders associated with exposure to a toxic substance,
    radiation, or for disorders associated with service in the Gulf War or
    World War I and Mexican Border veterans, and compensable zero percent
    service-connected veterans. Priority 7 veterans are nonservice-
    connected veterans and zero percent non-compensable service-connected
    veterans with income and net worth above the statutory threshold and
    who agree to pay specified co-payments.
        For these veterans, as of February 26, 1999, there were
    approximately 55,525 current enrollees in Priority 6, of which 6,281
    were new to the VA system (not VA patients in fiscal year 1996--fiscal
    year 1998). Approximately 605,108 current enrollees are estimated to be
    Priority 7, which include 231,592 estimated to be enrollees new to the
    system. These estimates include an estimate of those veterans who
    currently have not been assigned a priority because they lack a current
    means test. Based on current data and trends, we expect 766,000
    Priority 7 enrollees by the end of fiscal year 1999, 378,000 (or 49
    percent) to be users. In estimating the costs for Priority 7 patients
    in fiscal year 1999, we applied the same relationship of part year to
    full year performance experienced in fiscal year 1998 to fiscal year
    1999 year-to-date actuals. Through March 1998 we expended 44.1 percent
    of the full year, total fiscal year 1998 priority 7 costs ($311 million
    of $706 million). Applying that spending rate to $349 million spending
    to date (through March 1999), results in an estimated cost of $761
    million for fiscal year 1999, an increase of $85 million over fiscal
    year 1998.
        Question. Why did you decide to allow all veterans to enroll when
    funds are so tight? Aren't you risking the quality of care and the
    ability to provide a full benefits package to those veterans who VA is
    mandated to provide care to (low-income and service-connected)?
        Answer. Last year, before deciding to enroll veterans through all
    priorities, VA weighed all the available information and carefully
    considered the implications of the decision. It was VA's belief that VA
    could provide a comprehensive package of health care services to both
    mandatory and discretionary veterans seeking VA enrollment. VA
    projections last year of the expected number of fiscal year 1999
    enrollees are very close (less than 1.5 percent variance) to the actual
    number who have applied for enrollment this year from both eligibility
    groups. The marginal cost of the Priority 7 enrollees, especially those
    who are new to the system, are quite low, with considerable offsets
    from copayment and third-party payments. Fiscal year 1999 data will be
    used to better predict cost and utilization of this group of veterans
    in the future.
        Question. Are any networks having problems meeting the health care
    needs of veterans who have enrolled?
        Answer. Appointment waiting times have increased in some specialty
    clinics, and in some areas new users wishing to get their primary care
    from the VHA are being put on waiting lists for a period of time before
    they are taken into the system. However, at this time the VHA is
    maintaining its ability to provide needed acute care to all veterans as
    medically indicated.
        Question. Will VA be able to continue providing care next year to
    those enrolled individuals who are not low-income or service-connected
    next year under the budget you have requested? If so, will there be
    services denied to higher priority veterans?
        Answer. VA will continue to utilize both an internal VA model and
    an external actuary model to make these projections. An integrated
    analysis will be provided to VA's senior management this summer in
    order to assess the level of enrollment that will be supportable for
    fiscal year 2000. Services within VA's defined comprehensive services
    package will not be denied to higher priority veterans.
                              asset restructuring
        Question. There may be a real opportunity for ``savings'' in the
    health care budget by improving VA's use of its capital assets and no
    longer operating and maintaining unneeded buildings. GAO states that
    ``VA's asset planning indicates that billions of dollars might be used
    to operate hundreds of unneeded buildings over the next five years or
    more.'' Has VA developed an estimate of how much savings could be
    realized by excessing unneeded space and better asset management?
        I understand a commitment was made by Dr. Garthwaite to the House
    Veterans Affairs Committee to conduct market assessments as GAO
    recommends. What is the cost and the timeframe involved?
        Please describe the process VA will undertake to conduct these
    assessments, how VA will prioritize which assessments to conduct first,
    and how VA will involve the community and all stakeholders in these
    assessments to ensure the recommendations will be viable.
        Answer. VA does not have an estimate of how much savings could be
    realized through improved capital asset planning and management. Based
    on the size of the portfolio, and the significant changes in health
    care that are shifting care away from hospitals to outpatient settings,
    we do, however, expect significant savings can be achieved. To align
    our physical infrastructure to more effectively support the current
    health care needs of the Department, we are in the process of
    implementing an improved strategic planning process. To provide
    oversight and direction for this planning, it is proposed that each
    VISN will establish a Capital Assets Realignment for Enhanced Services
    (CARES) Steering Committee, including membership representing veterans,
    the state, our affiliates, and our various missions. The CARES
    committee will develop semi-annual plans aimed at realigning any
    imbalance between VA capital assets and veterans needs. CARES plans
    will itemize historical, current and projected utilization and demand
    for health care services, describe current assets, and critically
    review the match of assets to the VISN's current and projected future
    demands. The plans will further consider alternatives to current
    service delivery modes, and will make recommendations as to proposed
    reuse or reconfiguration of capital assets to more efficiently provide
    services to veterans. Note that this proposal is currently out for
    review and comment.
        Dr. Garthwaite agreed that we should conduct the market assessments
    that GAO recommended and recognized the need for outside consultant
    support in this effort. Within funding limits, and consistent with
    legislative requirements and our final CARES policy, we expect to
    assess all the multiple market areas identified by GAO. We have
    estimated that the total contracting support could cost from $35-$40
    million. VA may also need to modify its major construction
    appropriation language in order to fund this contracting support.
                             medical care cost fund
        Question. VA's budget presumes an increase of $124 million in
    collections from third-parties and co-payments, for a total of $761
    million. Unfortunately, VA's performance has consistently lagged behind
    its targets. Given performance to date in fiscal year 1999, I
    understand VA can expect to collect just over $600 million, compared to
    its original estimate of $677 million, a difference of $77 million.
    What are the ramifications of failing to meet your target, and why is
    VA doing so poorly?
        Answer. The collection plan is set prior to the beginning of the
    fiscal year, based on estimates contained in the President's budget.
    Many variables are considered in developing the plan and the values are
    determined by trending historical information and projecting forward,
    including anticipated workload and utilization. If collections continue
    at the current rate, the end-of-year projection for the MCCF fund is
    estimated at $579.6 million, or approximately 91 percent of the fiscal
    year 1999 President's Budget estimate of $637.5 million.
        VA is continuing to improve on collections. Average daily
    collections for the month of March reached $2.3 million per day,
    bringing the fiscal year-to-date collections to $275.6 million. This
    represents a 7.5 percent increase over the same period for fiscal year
    1998.
        Historically, much of the MCCF goal is met during the final months
    of the fiscal year. Performance goals and key process measures have
    been set for each Network and are monitored on a monthly basis.
    Progress toward the MCCF goal is measured as a part of each VISN
    Director's quarterly performance review. The signal has been clearly
    given to the VISN Directors that collections are a vital part of the
    Medical Care budget.
        It is estimated that MCCF funds carried over from fiscal year 1998
    and applied to medical care operations would offset any shortfall that
    may materialize in fiscal year 1999 MCCF collections. Given everything,
    it's disappointing to hear that VA's performance is characterized as
    poor. Last year, VA hit 94 percent of its target. By any other grading
    system that would be an ``A'', or excellent.
        Question. According to a 1997 Coopers & Lybrand report of VA's cost
    recovery program, the private sector collects $3.1 million per FTE,
    while VA collects $151,000. Last year VA told us it was evaluating
    which functions could be effectively done by a contractor. What are the
    results of that evaluation? Given VA's performance in this area,
    doesn't it make sense to contract out?
        Answer. VHA is currently using the services of a contractor, Trans
    World, for some collection activities. Trans World performs aggressive
    follow-up functions with insurance carriers for any VA medical center
    that needs assistance with follow-up collection activities. This
    contract has been made available to all facilities. At this time 68
    facilities are using this contract.
        The results of the Coopers & Lybrand study found that the issue of
    contracting out field-based revenue billing and collection functions is
    complex, and not easily addressed. There are many issues that need to
    be addressed prior to any additional contracting for this function,
    including the cost-effectiveness of:
      --Contracting ``back-end'' functions only, (i.e., billing and
            collections) or entire revenue cycle (i.e., identification of
            insurance, coding, utilization review, and billing and
            collections).
      --Contracting only third-party claims or 1st party debts, also (i.e.,
            veterans' co-pays and per diems).
      --Contracting by Network and holding the Network Director
            accountable, or contracting on a larger scale with national
            accountability.
      --Whether to use VistA software or contractor provided software; if
            the latter, there are connectivity issues that must be
            addressed.
      --Establishing measurable performance standards/parameters for data
            quality and coding and other front-end processing.
      --Cost of contracting will be taken from collections and could be as
            much as 20 percent.
        VHA has recently hired several contractors to perform audits and
    reviews of billing and collection functions, specifically targeting the
    comparison of medical record documentation with claims submitted to
    insurers. Results from these external reviews indicated that the
    medical record documentation and coding were less than optimal. VA's
    plan remains to contract for billing and collections. However, problems
    with documentation and coding of medical records must first be fixed.
    Actions being taken to address the issues of documentation and coding
    problems include the key elements of staff education and data
    validation. All medical centers are required to provide training on
    coding and documentation to clinical and coding staff, enabling VA to
    code both inpatient and outpatient records to meet Medicare standards.
    Medical Centers are being required to examine the encounter forms
    process, and establish a full-time compliance officer at each medical
    center. Each VISN Director is to establish a strong internal compliance
    program with internal audits to hold VISN and Medical Center management
    staff accountable for the data that is entered into the system.
        Question. VA has cost recovery programs in each of its 172
    hospitals, each employing its own methods with greatly varying degrees
    of success. If VA isn't going to contract out, doesn't it make sense to
    at least centralize functions to a few high performing hospitals? What
    are VA's plans to do so?
        Answer. Each Network Director is responsible for the billing and
    collecting of third-party insurance and first-party copayments within
    the Network's medical centers. Some Directors have consolidated the
    billing and collection activities associated with third-party insurance
    to a consolidated collection site within their VISN. This was based
    upon VISN/medical center decisions in locations that had demonstrated
    best practice procedures for these functions. All medical centers
    electronically transmit the first party copayment information to the
    Consolidated Copayment Processing Center (CCPC) at the Austin
    Automation Center. Copayment statements are mass-produced and mailed
    from the CCPC to take advantage of high-speed printers and bulk mailing
    rates. In addition to the above consolidations, a national solution is
    being developed for electronic billing of health care payers using ANSI
    X12 and other national standards as mandated in the Health Insurance
    Portability and Accountability Act of 1996 (HIPAA). Electronic Data
    Interchange (EDI) will automate submission and receipt of billing,
    payment, and related information through computer software modules to
    VA Integrated Billing and Accounts Receivables software packages.
                         access to specialized services
        Question. In August 1998, GAO reported that in the two networks it
    reviewed (Bronx and Pittsburgh), overall access to VA care had improved
    but access to certain specific services decreased, such as spinal cord
    injury care and post-traumatic stress disorder. According to the
    veterans' Independent Budget, several specialized outpatient PTSD
    programs have been closed recently. Is access to specialized (and more
    expensive) care declining nationally as networks work to tighten their
    belts? What is being done to ensure that these critical programs are
    appropriately supported? What does VA do nationally to monitor the
    provision of these critical programs which are so important to
    veterans?
        Answer. Although there may be localized reductions in access to
    some programs, access at the national level is improving in all
    programs, except for a slight increase in waiting time for admission to
    the Blind Rehabilitation program. Further, these improvements in access
    have been achieved despite increases in the number of patients being
    treated in these programs.
        Regarding appropriate support for these programs, the Network
    Directors are aware of VA's expectations regarding the special
    disability programs, and they participate in the special monitoring and
    reporting requirements, as described below. In addition, we continue to
    maintain special national funding for prosthetics items across the
    system, and this is supplemented by additional local funding as needed.
        VA monitors the provision of these programs by sending to VISN
    offices the mid-year and full-year workload and dollar expenditures for
    each program at each VA facility. VISNs are asked to validate these
    statistics and to explain any reductions from the 1996 levels, which
    are congressionally-mandated to be (at least) maintained. Since April
    1997, VA has issued a congressionally-mandated report detailing the
    results of its efforts to maintain capacity in these special disability
    programs.
        Question. Are there performance measures for network directors to
    meet which directly address the need to protect specialized programs?
    If not, why not?
        Answer. Yes, there are individual performance monitors established
    for the specialized programs listed in Public Law 104-262, Section 104.
    These specialized programs are spinal cord injury and disorder,
    blindness, amputations, serious mental illness, traumatic brain injury
    and post traumatic stress disorder. These monitors are included in the
    annual Report to Congress on Maintaining Capacity to Provide for the
    Specialized Treatment and Rehabilitative Needs of Disabled Veterans.
                                 long term care
        Question. According to the veterans' Independent Budget, on any
    given day 587,165 veterans are in need of long-term care services. VA
    provides only 10 percent of the estimated need. The number of veterans
    needing long-term care services is expected to grow by 13 percent over
    the next five years. What is VA's long-term care policy, and what are
    VA's plans to address this critical need?
        Answer. VA has drafted a document, ``A Strategic Plan for Long Term
    Care Provided by the Veterans Health Administration,'' which contains
    essential policy elements and action plans to address the long-term
    care needs of veterans. This draft VHA document is based on the
    recommendations of the Federal Advisory Committee on the Future of VA
    Long Term Care. The Draft Strategic Plan, which is attached, is
    circulating for stakeholders' comments.

      A Strategic Plan for Long Term Care Provided by the Veterans Health
                                 Administration

                                  introduction
        In serving America's veteran population, the Veterans Health
    Administration (VHA) is now confronted with a ``demographic
    imperative'' that the rest of American society will confront in another
    15 to 20 years (i.e., a burgeoning population of elderly persons
    needing both acute and long-term healthcare services). Decisions that
    will eventually have to be made for the larger American public need to
    be made now for veterans.
        The imminent need to provide a coherent and comprehensive approach
    to long-term care for veterans will severely strain the VA healthcare
    system and will require significant increased funding. In confronting
    this challenge it is important to remember that addressing this need is
    important both in its own right, and because it will provide critically
    important experience and knowledge that will be instructive in
    addressing the long-term care needs of the even larger number of
    elderly Americans who will need such services in the not too distant
    future.
        In fashioning a solution to the unmet long-term care needs of
    veterans it is important to understand that long-term care should no
    longer be viewed as something ``extra'' or an extravagant adjunct to
    acute healthcare. Instead, like acute care, long-term care should be
    viewed as a requisite part of the continuum of care that VHA provides.
        Today, acute care and long-term care are both essential components
    of healthcare; they are merely different places along the continuum of
    care that should be available. This continuum of care has health
    promotion and disease prevention on one end and palliative or end-of-
    life care on the other end. And just as the services provided in
    hospitals have changed dramatically in the last decade, so has the role
    of the traditional nursing home in providing long-term care. Today, a
    comprehensive approach to long-term care certainly needs to include
    nursing home care, but also should include home care, assisted living,
    adult day healthcare, respite care, and other noninstitutional options.
    Indeed, the many different forms of both acute care and long-term care
    potentially available today create myriad venues of service delivery
    along the continuum of care.
        The essentiality of providing both acute care and long-term care is
    recognized by the healthcare profession, families and patients. It is
    now time for health plans and for Congress to affirm and support this
    as well.
        In November 1998, the Federal Advisory Committee on the Future of
    VA Long-Term Care, an expert group convened by the Under Secretary for
    Health, released its report entitled VA Long-Term Care at the
    Crossroads (Appendix A). The Committee, chaired by Dr. John Rowe,
    President and CEO of the Mt. Sinai-New York University Medical Center,
    recommended 24 measures to enhance VA's services to veterans in need of
    long-term care. Its overall conclusion was that long-term care must
    remain an integral part of the veterans healthcare system. The Veterans
    Health Administration concurs with this recommendation.
        The Committee's report was widely reviewed and commented on by VHA
    stakeholders. Based on a review of those comments, the Report and VHA
    expert opinion, the following strategic action plan was prepared. This
    plan outlines specific actions necessary to implement the Crossroads
    recommendations. Taken together, this plan and the Report provide a
    comprehensive yet incremental approach to meeting the challenges of
    providing long-term care for the growing numbers of older, chronically
    ill veterans.
        Important to note is that in this plan the term ``long-term care''
    is defined by patient needs and not by programs. ``Long-term care'' as
    used in this plan refers to the sustained care needs of older,
    chronically ill and disabled patients. The ``long-term care patient''
    has on-going need for services; however, the intensity and the nature
    of specific services that are required will wax and wane over time. The
    continuing need for services in these patients is in contrast to the
    patient who requires such care episodically or for brief periods of
    time. The particular focus of this strategic plan, therefore, is on the
    ``long-term care patient'' whose functional abilities necessitate
    varying but ongoing care.
        Each Strategic Action Plan detailed below contains 3 parts: (1) The
    Federal Advisory Committee's Recommendation; (2) Stakeholders Comments,
    if any; and (3) the VHA recommended Action Plan to implement or
    otherwise actualize the recommendations.
                               strategic actions
                            defining long-term care
    Strategic Action I
        1. Report Recommendation.--VA should maximize network flexibility
    in developing and restructuring its long-term care services within
    broad national policies.
        2. Stakeholders Comments.--None.
        3. Action Plan
        A. Long-term care will be defined in VHA by the continuing care
    needs of the person, as determined by their functional status. A VHA
    work group will develop the criteria for use of this definition by
    August 1999.
        B. Existing VHA policies will be reviewed, revised, rescinded, and/
    or replaced as necessary to support the objectives outlined in the
    Crossroads Report. New policies will be developed when necessary.
        C. Each network will be responsible for providing long-term care
    services which are appropriate to the individual needs of each enrolled
    veteran and which are defined in the basic benefit package. Separate
    policies will address the provision of nursing home care.
        D. Each network will specifically address long-term care in its
    annual strategic plan.
                              performance measures
    Strategic Action II
        1. Report Recommendation.--VA must create a series of financial
    incentives and performance measures to ensure that adequate access to
    long-term care services is provided to veterans.
        2. Stakeholders Comments.--None.
        3. Action Plan
        A. VHA will incorporate measurement of the provision and quality of
    long-term care services into its performance measurement system. New
    performance measures that include non-VA and VA-provided long-term care
    will be implemented in fiscal year 2000.
        B. The Geriatrics and Extended Care Strategic Healthcare Group
    (GEC/SHG) and the Performance Measures Work Group have been tasked with
    developing these performance measures.
                            long-term care planning
    Strategic Action III
        1. Report Recommendation.--Long-Term Care Planning Model offers an
    objective measure of service needs. The Department should continue to
    refine this population-based Planning Model, using the latest available
    data.
        2. Stakeholders Comments.--Comments indicated general support for
    the use of the Long-Term Care Planning Model. Some reviewers suggested
    that the model was not sensitive to ethnic and social differences,
    which could affect utilization.
        3. Action Plan.--A. The GEC/SHG and the Office of Policy and
    Planning will provide the networks with annual long-term care need
    projections (for both institutional and home- and community-based care)
    using the recently developed Long-Term Care Planning Model. The model
    will be run with the latest available utilization and demographic
    information from the National Medical Expenditure Survey. The next
    Long-Term Care Planning Model report will be provided by June 1999.
    Strategic Action IV
        1. Report Recommendation.--To meet the needs of veterans who are
    eligible for and use VA for their healthcare needs, planning for long-
    term care should be based on Category A veterans.
        2. Stakeholders Comments.--Comments show agreement that long-term
    care planning should be based on the Category A veteran population.
    There was interest in also running the Long-Term Care Planning Model
    using the total veteran population. This was in order to be prepared
    and anticipate veteran interest in accessing VHA long-term care since
    enrollment categories may change from year to year.
        3. Action Plan
        A. The GEC/SHG and VHA's Office of Policy and Planning will provide
    the report described in Strategic Action IV for the Category A
    (Priority Groups 1-6) veteran population.
        B. Additional modeling for Category C (Priority Group 7) veterans
    will include an analysis of co-payments, coinsurance and insurance for
    long-term care. If feasible, such coverage will be initiated.
        C. Networks will use data from the Long-term Care Planning Model
    for strategic planning for its Category A veteran population.
                         home and community based care
    Strategic Action V
        1. Report Recommendation.--VA should retain its core of VA-operated
    long-term care services while improving access and efficiency of
    operations. Most new demands for care should be met through non-
    institutional services, contracting, and, where available, State
    Veterans Homes.
        2. Stakeholders Comments.--Comments indicated general support for
    increased use of non-institutional services, contracting and State
    Veterans Home use to address a planned increase in the demand for long-
    term care services.
        3. Action Plan
        A. The GEC/SHG will continue to maintain its on-line long-term care
    service inventory by network. Each network will assure that the
    inventory is accurate and up-to-date.
        B. Each network will include in its strategic plan the number and
    type of long-term care services directly operated or paid for by VA,
    using uniform measures of utilization. The GEC/SHG will promulgate
    these uniform measures by August 1999.
        C. Each network will form a team of community institutional and
    non-institutional providers, State Directors of Veterans Affairs and/or
    State Veterans Home Directors to advise the network on the provision of
    long-term care services.
        D. The GEC/SHG will produce an annual report for the Under
    Secretary for Health describing changes, if any, in VHA's long-term
    care services.
        E. In order to build capacity to provide the full array of long-
    term care services, VHA will continue working toward resolution of
    multiple payer and coordination of benefits issues. Additionally,
    issues related to investment and program development and expansion will
    be resolved.
    Strategic Action VI
        1. Report Recommendation.--VA should expand options and services
    for home- and community-based care, making these services the preferred
    placement site, when clinically appropriate, for veterans needing long-
    term care. The service mix should be based on the care needs of the
    veteran population and the availability of services in local
    communities.
        2. Stakeholders Comments.--None.
        3. Action Plan.--A. VHA will provide home- and community-based
    services (H&CBC) as defined in the Basic Benefits Package to all
    enrolled veterans as appropriate to their needs. The strategy document
    entitled ``Improving and Expanding Home and Community Based Care''
    (Appendix B) will provide policy guidance for network planning.
    Strategic Action VII
        1. Report Recommendation.--VA should increase its investment in
    home- and community-based care from 2.5 percent to 7.5 percent of VA
    healthcare budget.
        2. Stakeholders Comments.--Comments indicated concern that the
    increase in investment of home- and community-based services could not
    be achieved by simply shifting funds currently available to the
    networks.
        3. Action Plan
        A. VHA proposed a $106 million increase in the fiscal year 2000
    budget for home- and community-based long-term care. Similar increases
    will be proposed for the next 4 years.
        B. VHA will earmark $30 million per year over the next 4 fiscal
    years for new and innovative models that expand H&CBC, with emphasis on
    community provider partnerships.
        C. VHA will develop methodologies for tracking cost and utilization
    of H&CBC services used by long-term care patients.
        D. VHA will track the quality and cost of contract care separately
    from VHA-operated care, for comparative purposes.
        E. VHA will maintain primary care responsibility for patients
    receiving VHA contracted services. Funding to support additional staff,
    as required, will be sought.
    Strategic Action VIII
        1. Report Recommendation.--Within VA long-term care spending, the
    proportion of home- and community-based care and enriched housing
    should double--to 35 percent of total long-term care expenditures.
        2. Stakeholders Comments.--Comments indicated concern that the
    increase in spending for home- and community-based services and
    facilitated residential living could not be achieved by simply shifting
    funds currently available to the networks.
        3. Action Plan
        A. See Strategic Action VII, Action Plan 3.A.
        B. Budget initiatives will be developed for Facilitated Residential
    Living for the fiscal year 2001 budget cycle. Legislative action will
    be necessary to allow for payment for selected facilitated residential
    living programs (See Strategic Action XVI in the legislative sections).
                               nursing home care
    Strategic Action IX
        1. Report Recommendation.--VA needs to maintain its three nursing
    home programs. Home- and community-based services cannot substitute for
    nursing home care for most of the veteran population. VA should use its
    own hospital-based nursing home beds to provide care to post-acute
    patients, patients who cannot be cared for in other nursing home
    programs, and those patients who can be cared for more efficiently in
    VA Nursing Homes (VANHs).
        2. Stakeholders Comments.--Comments indicated support for
    maintaining the three nursing home programs and using the VHA hospital-
    based nursing home beds for post-acute or complex patients, or those
    patients who require skilled nursing care or are difficult to place in
    a community nursing home.
        3.Action Plan
        A. A VHA work group will develop a policy to encourage the use of
    VANH beds for sub-acute and short-term post-acute care for future
    admission of those patients who cannot return home immediately after
    hospitalization. This work will be completed by June 1999.
        B. A major role of State Veterans Homes will be to support the
    long-term care needs of those veterans with sustained care needs beyond
    short-term and post-acute care.
        C. Because of the great need for dementia care for veterans, the
    dementia care programs within VANHs must continue to be supported,
    especially where comparable programs do not exist in the community.
    Strategic Action X
        1. Report Recommendation.--VA should implement and enhance existing
    national policies on Community Nursing Home (CNH) placement. Length of
    CNH placements should be based on patient care needs, not fiscal goals.
        2. Stakeholders Comments.--Comments indicated support for the
    length of CNH placements based on patient care needs. Comments also
    suggested a desire for clear guidance on CNH placements.
        3. Action Plan.--A. A VHA work group will develop a policy on CNH
    placement, based on patient needs rather than a ``one size fits all''
    approach to contract length. This work will build upon existing
    network-based efforts and will be completed by June 1999.
    Strategic Action XI
        1. Report Recommendation.--In fiscal year 1997, 12.3 percent of
    veterans in VANHs had lengths of stay in excess of one year. VA should
    take necessary steps to ensure that VANH patients who no longer require
    hospital-based nursing home care are properly transitioned into home-
    and community-based care programs. Patients who require nursing home
    care, and have received care for more than 1,000 days, and desire to
    remain in the nursing home, should be allowed to remain in the VANH.
        2. Stakeholders Comments.--Comments revealed agreement that there
    is an obligation to patients who have resided in VANHs for long periods
    of time and are still in need of skilled nursing care. Some comments
    suggested the 1,000 day criteria proposed for keeping patients was
    arbitrary or inappropriate and instead the decision should be left up
    to the VAMC or VANH care team.
        3. Action Plan.--A. VHA will promulgate a policy to allow residents
    of VANHs who have continuing care needs and who have had stays
    exceeding 1,000 days to remain as permanent residents if they chose to
    do so. A work group will formulate this policy by July 1999.
    Strategic Action XII
        1. Report Recommendation.--In an era of limited budgetary
    resources, VA should not seek funding for any new nursing home beds,
    except for approved projects that are justified by objective standards
    that include a measure of community capacity and national policy goals.
    Renovation projects that affect the number of beds also should be
    rejustified. Renovation projects that affect patient privacy and life
    safety issues should receive first priority.
        2. Stakeholders Comments.--Comments indicated that a minority of
    reviewers thought additional VHA nursing home beds may be needed to
    accommodate the projected increased demand in long-term care, and this
    recommendation was overly restrictive.
        3. Action Plan
        A. Options for a redesigned State Home construction grant
    prioritization methodology will be advanced by April 1999. This effort
    will seek to maximize investment in new nursing home construction for
    veteran patients with sustained long-term care needs.
        B. Enhanced Use Leasing will be encouraged to support private
    sector nursing home construction that will benefit veteran patients.
        C. Construction of VANHs will be considered only when acceptable
    community or State Home resources are not available or replacement of
    an existing VA facility is justified by the objective standards
    referenced above.
                              coordination of care
    Strategic Action XIII
        1. Report Recommendation.--VA should implement its plans for the
    Resident Assessment Instrument/Minimum Data Set (RAI/MDS) without
    delay.
        2. Stakeholders Comments.--Comments indicated concerns that
    appropriate technology (hardware, software, information linkages) was
    not in place to support this initiative.
        3. Action Plan
        A. VHA will continue its implementation of the computerized version
    of the RAI/MDS, commencing with VANHs in fiscal year 1999 and extending
    the system to long-term care patients in other settings as MDS-based
    instruments become available for home care, post acute care, etc.
        B. VHA will continue its implementation of planned capture of long-
    term care contract workload in VISTA (Veterans Health Information
    Systems and Technology Architecture).
    Strategic Action XIV
        1. Report Recommendation.--VA should establish system-wide care
    coordination processes based on a comprehensive assessment of patients
    requiring long-term care services. A standardized core assessment, upon
    which VISNs or facilities can add criteria to meet individual
    objectives or target improvements, should be the baseline. VA should
    reassign and train existing staff to implement such processes.
        2. Stakeholders Comments.--None.
        3. Action Plan
        A. A VHA work group will define an evidence-based standardized core
    assessment for evaluation of all enrolled patients referred for long-
    term care services by December 1999.
        B. Existing Geriatric Evaluation Management (GEM) teams will
    provide the foundation for implementing such processes.
        C. The RAI/MDS when fully implemented will be used to assess the
    continuing care needs of long-term care patients.
                               legislative action
    Strategic Action XV
        1. Report Recommendation.--VA should seek legislative authority to
    broaden respite care in 38 U.S.C. 1720B, to include its provision in
    all long-term care settings.
        2. Stakeholders Comments.--Comments indicated support for this
    provision but also concerns regarding adequate funding for this
    expansion.
        3. Action Plan.--A. The GEC/SHG will initiate a request for new
    legislative authority for in-home respite care to be submitted in the
    next legislative cycle.
    Strategic Action XVI
        1. Report Recommendation.--VA should seek legislative authority to
    allow for the payment of assisted living/residential care under 38
    U.S.C. 1730.
        2. Stakeholders Comments.--Comments indicated support for this
    provision but also concerns regarding adequate funding for this new
    service.
        3. Action Plan.--A. The GEC/SHG will initiate a request for new
    legislative authority for payment or co-payment of facilitated
    residential living (assisted living) for eligible veterans.
    Strategic Action XVII
        1. Report Recommendation.--VA should seek legislative authority to
    include a limited, 100 days/patient/year nursing home benefit following
    a period of VA hospitalization under 38 U.S.C. 1710 and 1720,
    notwithstanding current nursing home rules and policies.
        2. Stakeholders Comments.--Comments indicated differences of
    opinion regarding this benefit. Although most reviewers agreed that
    nursing home care should be an integral part of the veterans health
    benefits package, many were concerned with the significant increase in
    costs that may be associated with this initiative. Other reviewers were
    concerned that this benefit could be counter-productive in trying to
    shift more long-term care to non-institutional alternatives.
        3. Action Plan
        A. The GEC/SHG will initiate a request for new legislative
    authority to be submitted in the next legislative cycle for this
    limited Medicare-like benefit. The proposal will include increase cost
    estimates associated with implementation of this benefit.
        B. The GEC/SHG, the Office of Policy and Planning and/or the
    Management Decision Resource Center will complete a study to
    investigate implementation of a more expansive nursing home benefit,
    including analysis of rationale, options and cost. The funding options
    will include a separate long-term care ``trust'', insurance payments
    and co-payments. Results of this study will be used in proposed
    legislative initiatives for subsequent legislative cycles.
                                    research
    Strategic Action XVIII
        1. Report Recommendation.--At least 5 percent of VA's research
    appropriation should support health services and other research, such
    as rehabilitation, related to long-term care issues. Priorities for
    this research are:
        Testing the effectiveness of VA long-term care programs and
    services, using cost and clinical outcomes that can be compared to the
    private sector;
        Examining the effectiveness of clinical interventions, using long-
    term care services, in the treatment and management of veterans with
    psychiatric disorders. Non-pharmacological as well as pharmacological
    interventions should be included;
        Comparing the effectiveness of post-acute care provided by VA to
    the private sector; and
        Exploring the effectiveness of providing acute care services in the
    home.
        2. Stakeholders Comments.--None.
        3. Action Plan
        A. The Office of Research and Development (ORD) will continue to
    evaluate the proportion of research devoted to long-term care, in
    coordination with GEC/SHG. ORD will report on its findings annually to
    the Under Secretary for Health.
        B. Requests For Application specific to health services and
    rehabilitation research in long-term care should be developed and
    issued within six months. Priority will be given to long-term care
    issues noted above.
                             educational activities
    Strategic Action XIX
        1. Report Recommendation.--Additional educational efforts and other
    collaborative ventures between long-term care and mental health program
    staffs are strongly encouraged.
        2. Stakeholders Comments.--None.
        3. Action Plan.--A. VHA will develop programs and training that
    encourage coordinated care for patients with both long-term care and
    mental health needs so that such patients receive care appropriate to
    all of their needs (e.g., the collaborative work of the Gero-
    Psychiatric Task Force and the Mental Health/Geriatric/Primary Care
    National Training Program).
    Strategic Action XX
        1. Report Recommendation.--VA should continue its leadership role
    in the training of physicians and associated health professions in
    geriatrics and long-term care. VA also should continue to utilize its
    expertise at GRECC and other VA sites to train VA staff in areas such
    as care coordination for complex patients. VA training should be
    supported by long-term care environments that can adequately prepare
    trainees for future practice.
        2. Stakeholders Comments.--None.
        3. Action Plan
        A. VHA will initiate support for a new geriatric leadership
    training program in Academic Year 2000-2001.
        B. VHA will continue to expand the GRECC program until there is at
    least one GRECC in every network by 2002. The GRECCs will continue to
    provide leadership in clinical care, research and training for care of
    frail elderly veterans.
                             strategic suggestions
    Strategic Idea I. Access to Care
        1. Idea.--VA should adopt a performance measure for Access to Care
    which rewards networks for: Increasing their share of long-term care
    services to the national VA average; or maintaining their share of
    long-term care services, if that share is above the national average.
        2. Stakeholder Comments.--None.
        3. Action Plan
        A. A long-term care access measure will be implemented through
    Strategic Action II (page 4).
        B. Further refinements for measuring access to H&CBC services will
    be made as the capability of VISTA permits.
    Strategic Idea II. Cost/Price
        1. Idea.--VA should adopt a performance measure for Cost/Price
    which rewards networks for lowering the average cost of long-term care
    patients by 5 percent per year. This measure should be used only in
    conjunction with meeting the access measure above.
        2. Stakeholders Comments.--None.
        3. Action Plan
        A. This idea is, in essence, incorporated into already established
    VHA goals (30-20-10 target) for reducing the cost of care. The
    expansion of alternatives to nursing home care will provide more
    opportunities for not only treating veterans in the most appropriate
    long-term care setting but also reducing the total cost per patient
    through careful care coordination.
        B. The GEC/SHG will continue to monitor and report per patient
    costs for long-term care.
    Strategic Idea III. Quality/Functional Status
        1. Idea.--VA should develop a composite Long-Term Care Quality
    Index using evidence-based indicators that are realistic and
    measurable.
        2. Stakeholders Comments.--None.
        3. Action Plan
        A. A Nursing Home Quality Index will be piloted in fiscal year
    1999.
        B. Data from the automated RAI/MDS will be used to monitor nursing
    home quality beginning in fiscal year 2000.
        C. The RAI/MDS, or similar instrument, will be expanded to H&CBC
    services in fiscal year 2001.
    Strategic Idea IV. Patient Satisfaction
        Idea.--VA's National Customer Feedback Center should develop
    reliable patient satisfaction measures for veterans using long-term
    care services, including those in institutional settings. This program
    should be a high priority, and once developed, must be operated on a
    routine basis.
        2. Stakeholders Comments.--None.
        3. Action Plan
        A. The GEC/SHG and the Office of Quality and Performance will
    continue to work with the VA National Customer Feedback Center on the
    technical issues intrinsic to assessing service satisfaction in
    elderly, debilitated and/or cognitively impaired patients.
        B. Proposed patient satisfaction performance measures will be
    referred to the Performance Measures Work Group for approval and
    inclusion in VHA's performance monitoring system.
        [Clerk's note.--The article ``VA Long-Term Care At The
    Crossroads,'' report of the Federal Advisory Committee on the Future of
    VA Long-Term Care, dated June 1998 can be found in the subcommittee's
    files.]

                              VHA Directive 98-022

                national home and community-based care strategy
                                   1. purpose
        This Veterans Health Administration (VHA) Directive articulates
    national VHA policy and establishes a national VHA strategy that will
    provide the context for expanding and developing home and community-
    based care within each Veterans Integrated Service Network (VISN) to
    respond to the healthcare needs of enrolled veterans.
                                 2. background
        a. Home and community-based care is a vital component of an
    integrated healthcare delivery system. Both the healthcare industry, in
    general, and VHA, in particular, are placing greater emphasis on
    outpatient and community-based care rather than traditional inpatient
    care. Between 1988 and 1996 Medicare spending on home care grew from $2
    to $18 billion, and the number of home healthcare agencies increased
    from 5800 to 9000. A recent American Medical Association survey
    reported that for every patient in a nursing home, there are three more
    severely impaired patients cared for in their own homes. An estimated
    20 percent of patients over age 65 have functional impairments with
    related home care needs, and 44 percent of all patients discharged from
    the hospital by primary care physicians require post-hospital medical
    or nursing care that cannot be provided in the home by family or
    friends alone.
        b. In 1996, 173,000 veterans needed non-institutional home and
    community-based care on any given day. The Department of Veterans
    Affairs (VA) estimates that number will increase to 180,000 by 2005. Of
    the 173,000 veterans needing this level of care last year, 75,000 were
    Category ``A'' veterans. In 1996, VA met the home and community-based
    care needs of 8,300 Category ``A'' veterans daily, or 11 percent of
    those in need of care. The aging and disabled veteran population, with
    its prevalence of complex chronic illness, is creating a new balance
    between acute care needs and chronic, long-term healthcare care needs.
    New eligibility rules make it possible and necessary for VA to respond
    to the increasing demand for home and community-based services. The
    shift from episodic treatment of illness to managing the healthcare
    needs of an enrolled population of veterans will require innovative
    approaches to care. Home and community-based services must be
    integrated with primary, secondary and tertiary care in such a way that
    reliable, comprehensive healthcare is provided to veterans in an
    individualized, seamless, coordinated manner across settings and among
    providers.
        c. The VHA can build on its unique experience and expertise in
    providing interdisciplinary, long-term home-based care to seriously
    chronically ill veterans as it expands home and community-based care.
    VA Home-Based Primary Care (HBPC) can provide a strong base for
    developing and coordinating an array of services for both long-term
    chronically ill veterans and those needing short term home care
    services. The VA can provide national leadership in this critical area
    of healthcare by developing an innovative, flexible approach to home
    and community-based care that is fully integrated into the healthcare
    system and uses resources efficiently and effectively to meet the needs
    of an aging and chronically ill population.
                                   3. policy
        a. Objectives.--The specific objectives of this policy are to:
        (1) Provide the most appropriate care to veterans in the most
    appropriate setting to achieve optimal health outcomes and quality of
    life.
        (2) Assure that a comprehensive array of high quality healthcare
    services are available in the community to facilitate early discharge
    from acute care settings, prevent avoidable hospitalizations and reduce
    unscheduled emergency care visits.
        (3) Provide services that improve and maintain functional capacity
    so that the veteran may continue community-based living.
        (4) Ensure that access to care is appropriate and timely.
        (5) Provide for continuity of care over time and across settings by
    appropriately integrating an array of home and community-based services
    into the coordinated continuum of care provided by each VISN.
        (6) Promote innovation in developing new models and approaches to
    home and community-based care, incorporating evaluation and research as
    integral components of program change.
        (7) Assure accessibility, reliability and quality of all services,
    whether provided directly by VA or through arrangements with community
    providers.
        (8) Provide compassionate, humane care that includes the patient
    and family in making informed decisions regarding the use of home and
    community-based services.
        b. Policy Elements.--This policy addresses:
        (1) The array of services included in a comprehensive home and
    community-based care strategy.
        (2) Programs that deliver these services, including VA programs,
    non-VA programs, and new models of care.
        (3) Organizational structures and processes necessary for providing
    coordinated, integrated and efficient home and community-based care.
        (4) The strategic planning process.
        c. Array of Services.--The flexible use of an array of coordinated
    services is necessary to assure that veterans receive the most
    appropriate care in the most appropriate setting to achieve optimal
    health outcomes and quality of life. A comprehensive home and
    community-based care strategy should include access to the following
    services:
        (1) In-home care, including all of the following services:
        (a) Short-term, post-acute, and rehabilitation services.
        (b) Long-term chronic care.
        (c) Palliative and end-of-life care.
        (d) High-tech care, including infusion therapy.
        (e) Respiratory therapy and ventilator maintenance.
        (f) Mental health and psychiatric care.
        (g) Personal care and homemaker services.
        (h) Prosthetic services.
        (2) Respite care services.
        (3) Adult day healthcare services.
        (4) Other community-based services (e.g., transportation, home
    delivered meals, telephone support, senior center programs, friendly
    visitors, assisted living, etc.).
        d. Programs That Deliver These Services.--Services may be delivered
    directly by VA or through arrangements with non-VA community providers.
    The coordination and integration of a ``package'' of locally available
    services is often essential to assure timely, equitable access to the
    array of services necessary to successfully manage the care of veterans
    in the community. The following list of programs reflects both existing
    programs and new models that are being developed; it is not intended to
    be an all-inclusive list of mandated programs (see App. A for
    definitions).
        (1) In-home Programs
        (a) VA Home-Based Primary Care (HBPC);
        (b) VA Spinal Cord Injury (SCI) HBPC;
        (c) Medicare-Certified Home Health Agencies;
        (e) Fee-Basis Home Care;
        (f) Hospice (VA Hospice, Medicare-Certified Hospice, Community
    Volunteer Hospice);
        (g) VA Homemaker/Home Health Aid Program (H/HHA); and
        (h) Other community programs (e.g., those provided through
    Department of Rehabilitation Services, County Health Departments, Area
    Agencies on Aging, Department of Health and Human Services).
        (2) Respite Care
        (a) VA Respite Program,
        (b) Hospice Respite Care, and
        (c) Community Respite Care Programs.
        (3) Adult Day Healthcare
        (a) VA Adult Day Healthcare Programs,
        (b) Contracted Adult Day Healthcare, and
        (c) State Veterans Home Adult Day Healthcare.
        (4) Innovative Models, Demonstrations and Pilots
        (a) Program of All-inclusive Care for the Elderly (PACE).
        (b) MediCaring.
        (c) In-home respite.
        (d) Disease management models.
        (e) Enriched housing, assisted living, and community residential
    care.
        (f) Social health maintenance organizations.
        (g) Disability management models.
        (h) Prevention of secondary complication models.
        (i) Specialty primary care models.
        (j) Rural disabilities projects (Montana and Arkansas).
        (k) Telemedicine initiatives.
        (l) VA initiated innovations and demonstrations such as: Care and
    Assistance for Rural Elders (CARE) in VISN 7, and Patient Access to
    Community Health (PATCH) in VISN 15, Teleheart CHF Management Program
    in VISN 8, and Vets Helping Vets in VISN 8.
        e. Organizational Structures and Processes.--In order to provide
    reliability and continuity of care for eligible veterans over time and
    across settings, a sound infrastructure is essential. Organizational
    structures and processes must be put in place that promote the
    philosophy and practice of individualized, comprehensive, integrated
    home and community-based care. Necessary organizational processes
    include the following:
        (1) Assessment and Referral
        (a) A coordinated referral process based on standardized assessment
    of patient needs, including functional status;
        (b) A coordinated referral process that is linked to discharge
    planning and continuity of care planning;
        (c) Defined criteria for access to available services and programs;
    and
        (d) A process that assures timeliness of referrals.
        (2) Care Coordination
        (a) Care management within the context of primary care teams and
    specialty care teams that also deliver primary care.
        (b) Care management and/or coordination across settings and
    programs.
        (c) Twenty-four hour, 7-day-a-week access to services and
    coordination of care.
        (d) Patient and family participation in healthcare decisions.
        (e) Streamlined care management that avoids duplication of care
    management functions.
        (3) Evaluation and Accountability
        (a) A process for determining the responsible provider and defining
    accountability when the patient is receiving services from more than
    one provider or program.
        (b) Ongoing monitoring of functional status, quality of life, and
    other patient outcomes using standardized measures.
        (c) Ongoing monitoring of customer satisfaction using standardized
    measures.
        (d) Standards for and/or evaluation of services provided by non-VA
    providers.
        (e) System-wide, state-of-the-art home care outcome measures.
        (f) Performance standards (e.g., same-day service for durable
    medical equipment).
        (g) Ongoing, real-time measures for continuous quality improvement
    of programs and services.
        (h) Comparison of VA care with that provided by non-VA programs in
    the community.
        (4) Research
        (a) Support for demonstration projects for new and innovative
    projects and strategies, including an evaluation component;
        (b) Identification of best practices, through literature reviews,
    case examples, existing data, primary data collection; and
        (c) Identification of state-of-the art assessment and outcome
    measurement tools
        (5) Information Systems
        (a) Identification of which patients receive which services;
        (b) Monitoring utilization of services across the entire continuum
    of care;
        (c) Providing process and structure information (e.g. staff mix,
    patient acuity, components of service provision);
        (d) Monitoring outcomes;
        (e) Providing cost data; and
        (f) Providing access to patient care data across sites of care.
        f. Strategic Planning Process.--System-wide strategic planning for
    home and community-based care is essential at all levels. The strategic
    planning process should include:
        (1) Identifying the strengths and weaknesses of existing programs
    relative to needs of the veteran population through a population-based
    planning model.
        (2) Identifying the need for program expansion, development of new
    programs, modification of existing programs, and the potential for
    piloting innovative models.
        (3) Identifying the strengths and weaknesses of relationships with
    community providers and developing a strategy for partnerships,
    sharing, and coordination of services with non-VA providers.
        (4) Considering local and regional home care service contracts and
    purchase agreements.
        (5) Achieving more efficient utilization of resources (e.g.,
    through flexible scheduling, using state-of-the-art technology,
    telemedicine applications, adequate clerical support and communications
    equipment).
        (6) Including representatives of VA home and community-based care
    programs, as well as experts from other areas and external stake-
    holders, in the strategic planning process (e.g., developing network
    based home and community-based care work and advisory groups).
        (7) Fully integrating home and community-based services with
    inpatient, outpatient and ambulatory care programs and services within
    the context of primary care.
        (8) Promoting access to and coordination with ancillary services
    such as laboratory, radiology, pharmacy and durable medical equipment.
        (9) Collecting cost and utilization data across settings to begin
    to be able to compare aggregate costs for patients receiving different
    kinds of care and services.
                                   4. action
        a. VISNs will develop, implement and regularly review strategic and
    tactical plans for expanding home and community-based services,
    including the allocation of adequate personnel, equipment and other
    resources.
        b. The Geriatrics and Extended Care Strategic Healthcare Group will
    provide guidance, consultation and dissemination of information.
        c. The Geriatrics and Extended Care Strategic Healthcare Group will
    support VISN and local leadership in all aspects of improving the
    provision of home and community-based care.
        d. Health Services Research and Development, through the Chief
    Research and Development Officer, will support the evaluation of
    outcomes and cost-effectiveness of new models of providing home and
    community-based care.
        f. The Office of the Chief Information Officer (19) will ensure
    that national data systems support home and community-based services.
                                 5. references
        None.
                          6. follow-up responsibility
        The Office of Extended care (114) is responsible for the contents
    of this Directive.
                                 7. rescission
        This VHA Directive expires on April 1, 2003.

                                  Attachment A

                                  definitions
        1. Home-Based Primary Care (HBPC).--A designated HBPC is a program
    providing primary healthcare, delivered by an interdisciplinary team of
    VA staff, to functionally dependent, homebound patients. Services
    include medical care, nursing care and education, rehabilitation,
    nutritional counseling, and social work.
        a. HBPC manages: long-term care patients with multiple, complex
    medical problems requiring prolonged intervention to maintain status
    and retard decline; terminally ill patients, and as resources permit,
    certain patients with relatively short-term problems who need skilled,
    high-tech health services, home training or home adaptation.
        b. Medications, supplies, medical equipment, and assistance with
    home improvements and structural alterations are provided. Caregiver
    support and training are provided. Bereavement care is offered to
    survivors of deceased patients for up to 6 months. At affiliated
    medical centers, HBPC provides comprehensive training in primary care
    of long-term patients to medical residents, geriatric fellows and
    allied health professionals.
        2. Medicare-certified Home Health Agencies.--Medicare pays for
    intermittent skilled nursing care, home health aide services, physical
    therapy, occupational therapy, speech therapy, medical social work
    services and durable medical equipment (with a 20 percent co-payment).
    Services must be provided by a Medicare-certified agency. To qualify
    for home care under Medicare, a patient must have at least one skilled
    need. Without the continuing presence of a skilled need, supportive
    services such as home health aide visits cease. Most Medicare home care
    is for relatively short-term post-acute care. However, some chronically
    ill recipients can receive care for long periods, i.e., those with
    indwelling catheters, blind diabetics, psychiatric patients requiring
    intramuscular medications.
        3. Fee Basis Home Care.--The Veterans Health Administration (VHA)
    authorizes payment for medically necessary, skilled home care services
    for eligible beneficiaries on a fee for service basis. Nursing,
    physical therapy, occupational therapy, speech therapy, and social work
    are examples of allowable services. Fee Basis, except for patients in
    need of bowel and bladder care, does not pay for home health aide
    visits. The Department of veterans Affairs (VA) Clinic of Jurisdiction
    pays a per visit rate to the community home health agency providing
    care. It is possible to establish a preferred provider or negotiated
    rate with a community agency. The total cost of Fee Basis care for any
    patient cannot exceed the cost that would have been incurred if the
    veteran were treated in a contract nursing home during one month.
        4. Homemaker/Home Health Aide (H/HHA) Program.--The program
    provides homemaker/home health aide visits to eligible beneficiaries
    using Contract Nursing Home funds. Expenditures for a veteran may not
    exceed 65 percent of the average nursing home per diem rate. Veterans
    enrolled in this program must be in receipt of primary healthcare from
    VA and will meet program criteria including the need for nursing home
    care.
        5. Hospice.--Medicare, many state Medicaid programs, and some
    private insurance plans offer a hospice benefit to their beneficiaries.
    Beneficiaries waive curative treatment options in favor of palliative
    services: comfort care, counseling, and supportive home care visits for
    terminally ill individuals and their families. The patient's physician
    certifies an expected life expectancy of less than 6 months. Hospice
    provides skilled nursing, home health aide, social work, and chaplain
    visits. Medications for the terminal condition, durable medical
    equipment, and supplies are furnished. Bereavement counseling is
    provided to survivors of deceased patients.
        6. Adult Day Healthcare Program (ADHC).--ADHC is a therapeutically
    oriented outpatient day program that provides health maintenance and
    rehabilitative services to frail elderly persons in a congregate
    setting. ADHC is provided in a protective setting during part of a day
    but less than 24-hour care. Individualized programs of care are
    delivered by health professionals and support staff, with an emphasis
    on helping participants and their caregivers to develop the knowledge
    and skills necessary to manage care requirements in the home. Its
    predominant focus is a therapeutic one, directed at persons with
    disabling conditions and medical disorders, thus distinguishing ADHC
    from social day care.
        7. Respite Care.--Respite care is a program which provides veterans
    with hospital or nursing home care on a short-term basis to give the
    caregiver a period of relief or respite from the physical and emotional
    burdens associated with furnishing daily care to chronically ill and
    disabled persons. Respite care is planned in advance for the benefit of
    the caregiver rather than being incidental to the provision of
    necessary medical care of the patient. Respite care enables the
    caregiver to continue in the caregiving capacity and permits the
    veteran to continue to live at home.
        Question. Does VA have sufficient long-term capacity?
        Answer. Every indicator of supply and demand for long-term care
    shows that VA will have sufficient capacity to meet the needs of
    veterans who use the VA health care system. This scenario assumes that
    VA will expand home- and community-based care services, contract for
    long-term care services, and increase the use of State Veterans Homes,
    where available.
        Question. The recent report on long-term care, commissioned by Dr.
    Kizer, found that new demand for long-term care should be met primarily
    through non-institutional services and contracts. VA's budget proposes
    an increase of $106 million for extended care program enhancements. Is
    this adequate to meet the recommendations contained in the long-term
    care commission's report? What is being done specifically to implement
    the recommendations of the commission?
        Answer. The budget reflects a first year investment toward the
    recommendation of the Federal Advisory Committee on the Future of VA
    Long-Term Care on tripling the investment in home- and community-based
    care over a 5-year period.
        The recommendations in the Committee's report, VA Long-Term Care at
    the Crossroads, have been studied by VA long-term care staff and the
    senior leadership of VHA. Comments on the Crossroads Report have been
    sought from VHA stakeholders and integrated into a VHA plan. Currently,
    the draft Strategic Plan is circulating for review and comment. This
    Plan will implement the Committee's recommendations. As noted above, a
    copy of the draft Strategic Plan is attached.
        Question. What will VA do to make more equitable access to long-
    term care services?
        Answer. VA will improve access to long-term care by providing
    incentives to networks to provide more long-term care services. VA will
    also enhance its admission and discharge policies for VA and Community
    Nursing Home Care. These changes will improve access and fairness.
        In the draft Strategic Plan, improved access is discussed on pages
    3, 7 through 9, and 14. Pages 3 and 14 outline the action plan for
    performance measures on access to long-term care services. Pages 7
    through 9 discuss improvements in the admission and discharge planning
    processes in nursing home care.
        Question. What measures are being taken to ensure quality of care
    in VHA long-term care programs, especially for those referred to
    community facilities and programs?
        Answer. VHA staff monitors the quality of care received for all
    long-term care patients, regardless of setting. For care provided off-
    campus, by non-VA staff, the best developed measures of quality care
    are found in the Community Nursing Home Program (CNH). In CNH, VA
    relies on a three-pronged approach to care monitoring. First, VHA staff
    visits the veterans in CNHs on a monthly basis. This presence sends
    important, positive messages to the nursing home staff and the
    veterans, regarding VHA's approach to caring and watching. Second, VHA
    uses on-line data from the Health Care Financing Administration (HCFA)
    to assess the quality of the nursing homes under contract. These data
    allow VHA staff to compare one nursing home to another over a period of
    time. Third, VHA staff reviews every re-hospitalization from CNHs. This
    review focuses on poor quality care as the reason for the patient's
    return to the hospital.
        This approach to monitoring veterans' care highlights VA's
    commitment to quality long-term care. It is timely, patient-focused and
    incorporates information from a variety of sources.
                 veterans equitable resource allocation (vera)
        Question. In a recent report, GAO found that the two networks it
    reviewed had no specific criteria for allocating their resources within
    the network to ensure equity. GAO's testimony today says ``VA has
    neither provided criteria for equitable allocation of resources within
    networks, adequately reviewed the equity of allocations, nor measured
    improvements in equity of veterans' access to care.'' Why? How would
    you assess the success of VERA in achieving real equity of access?
        Answer. The VA philosophy concerning network allocations to
    facilities is to continue balancing oversight with flexibility. VA does
    not want to dictate how each network should fulfill its
    responsibilities, and we believe that this philosophy has been
    effective in network implementation. Nevertheless, in fiscal year 1999,
    VA added a criterion in the ``network allocation principles directive''
    that stated the equity of resource allocations to facilities should be
    achieved, but the directive does not prescribe how this should be done.
    That is, VA continues to allow networks the flexibility they need to
    meet local needs. Although the GAO report states that headquarters did
    not review the network allocations methodologies and equity of
    allocations in the past, VA has in fact completed these reviews. VA
    will continue to review the network allocation plans and methodologies
    to assure equitable resource allocation within networks.
        VERA equitably allocates funds across networks and was created to
    support VA's goals of:
      --Treating the greatest number of veterans having the highest
            priority for health care.
      --Allocating funds fairly according to the number of veterans having
            the highest priority for health care.
      --Recognizing the special health care needs of veterans.
      --Creating an understandable funding allocation system that results
            in having a reasonably predictable budget.
      --Aligning resource allocation policies to the best practices in
            health care.
      --Improving the accountability in expenditures for research and
            education support.
      --Complying with the congressional mandate.
        VERA achieves these objectives and, at the same time, strikes a
    balance between simplifying resource allocation and recognizing the
    complexities of the veterans' health care system. VERA equitably
    distributes funds across networks according to the number of veterans
    actually served by VA and promotes efficiency gains through the use of
    national prices. The VERA system was developed in response to a
    congressional mandate in Public Law 104-204. Independent reviews by the
    General Accounting Office and Price Waterhouse Coopers, LLP have
    validated the model as meeting the intent of Congress. Price Waterhouse
    Coopers, LLP found that VERA equitably distributes funds across
    networks and that VERA focuses funding on the highest priority veterans
    using the VA health care system. VA achieves equity of access because
    funding is based on high priority veterans through the VERA Basic Care
    workload measure, which includes Category A veterans only, and the
    Complex Care workload, which provides significantly higher resources
    for patients with special or long-term needs.
        Question. GAO also raised concerns as to whether VA headquarters
    had adequate, timely data to ensure effective oversight.
        Answer. Collecting timely, accurate, and meaningful data from VHA's
    national databases is critical to the decision making process. The
    availability of this information directly supports the performance
    measurement, outcome assessment, and oversight activities of VHA. In
    addition, data quality is integral to VHA's efforts to provide
    excellence in health care and figures prominently in Dr. Kizer's
    Journey for Change and related documents.
        In order to improve the timeliness and availability of information,
    VHA issued Change 2 to Directive 96-079 (Closeout of the Veterans
    Health Administration Corporate Data Files) on March 5, 1999. This
    directive changed the file closeout dates of all patient treatment
    information to provide more timely data for the Veterans Equitable
    Resource Allocation (VERA) system, health care planning and statistical
    purposes, and for the Secretary of Veterans Affairs' Annual Report to
    Congress.
        A comprehensive overview of key VHA data quality issues was
    instituted in early fiscal year 1999. As part of this effort, a VHA
    steering committee conducted a Data Quality Summit in December 1998.
    The summit participants recommended six initiatives to address data
    quality in VHA. They are:
      --Form a Data Quality Council to Provide Leadership
      --Define a Standards Process
      --Define and Implement Local Accountability for Data
      --Establish On-going Employee Education, Training, and Communication
      --Programs for VHA Data Users
      --Provide Patients with Access to their Data
        Workgroups have been formed to address each initiative, and all
    workgroups have met to determine priority items on which to focus.
    These efforts provide a foundation for VHA's continuing process to
    improve the quality, availability, and accuracy of information that
    supports the decision process.
        In order to provide a VISN-level management tool, the VHA Decision
    Support System (DSS) Steering Committee has just completed a test of
    four national measures. Based on the outcome of these tests,
    recommendations regarding standardization and data quality will be
    forwarded to the National Leadership Board for its consideration on May
    18, 1999.
        Question. What oversight functions does VHA currently conduct, and
    what is VA doing to improve its oversight of the field, and in
    particular improve its data collection systems so that VA can monitor
    changes in access to care?
        Answer. Public Law 104-262 required, among other things, that VA
    maintain its capacity to treat certain classes of specially-disabled
    veterans. VA produces an annual Capacity Report, for which numerous
    access measures were developed and are reported on. The Capacity Report
    calls specific attention to changes in access to care.
        Currently, VHA assesses waiting times for primary care clinic
    appointments in annual patient feedback surveys, and the results are
    shared with the field. Plans are underway to expand monitoring to
    include the length of time it takes to obtain a specialty clinic
    appointment. Interest in such a measure is driven by concerns that the
    increase in access due to additional community-based clinics, along
    with the increased efficiencies of primary care, will raise the demand
    for specialty clinic care. If the demand for specialty clinic care,
    indeed, does increase, one would expect to see increases in the time it
    takes to obtain an appointment. VHA is currently developing requisite
    software capability that will capture data on specialty clinic waiting
    time.
        As indicated earlier, the file closeout dates were changed for all
    patient treatment information to provide more timely data. In addition,
    data quality is likely to improve in response to the initiatives
    undertaken in response to the Data Quality Summit described previously.
        Question. Why doesn't VA have a performance measure for network
    directors that directly addresses the need to improve equity of access?
        Answer. Equity of access means different things to different
    people-patients and stakeholders alike; there needs to be a better
    understanding of what this term entails and what are the expectations.
    For example, some view equity of access as meaning that all health care
    services should be available at all VA facilities. Others feel that all
    care should be available to patients via VA or contract services, and
    still others believe that equity translates to geographic distance or
    time involved in accessing care. Fundamentally, however, VHA's
    reorganization into VISNs was part of an effort to empower local
    management (i.e., VISN Directors) to determine the extent of services
    required and requested by patients as well as the amount of resources
    allocated to these services. Each VISN has improved that by virtue of
    establishing CBOCs. Each of the 22 VISNs has established at least three
    CBOCs and the total number of CBOCs approved between March 1995 and
    January 1999 is 272; these actions affirm VHA's commitment to improving
    equity of access, as defined by geographic points of availability.
                               quality management
        Question. Concerns also have been raised about the lack of
    guidelines put out to the field in the area of quality management. The
    IG has recommended a national set of QM guidelines as there is a great
    deal of variation in individual hospitals in their approach to quality
    management. Will VA follow these recommendations? If so, when?
        Answer. We concurred with the IG recommendation regarding
    establishing quality management guidance for use at all VHA operating
    levels. The Office of Performance and Quality will establish a process
    that will include a work group of senior Headquarters and field quality
    management specialists to recommend the specific scope of content that
    should be included in the guidance and to suggest the most effective
    ways to expedite field access to the guidance. Following approval of
    the work group's recommendations, a detailed action plan for
    development and implementation of a field reference tool, including
    completion timelines, will be initiated. The process will be underway
    in this fiscal year.
                             academic affiliations
        Question. VA plays a critical role in the education of medical
    students. Since 1946 VA has had affiliations with medical schools, and
    currently supports about 9,000 residency positions through affiliations
    with 107 medical schools. VA has eliminated 560 subspecialty medical
    resident positions in the last two years, consistent with
    recommendation of a residency review realignment commission. What has
    been VA's strategy with respect to deciding where (e.g. which
    particular hospitals) to eliminate these positions, and what effect
    have these reductions had on VA's relationship with its affiliates?
        Answer. VISN targets for residency realignment were developed based
    on the Residency Realignment Review Committee's (RRRC) recommendations.
    Goals were based on the historical allocation of resident positions
    among facilities and projected RRRC Categories I-IV rates applied to
    each VISN. In September 1996, each VISN was notified of its realignment
    goals for medical resident positions for Academic Year 1997-1998 and
    beyond. Each VISN was asked to develop a plan for medical resident
    allocations that took into account the goals and objectives for VHA's
    realignment of graduate medical education set forth by the RRRC.
    Networks were asked to make their plans based upon a review of the
    respective VISN health care delivery plans, the historical allocation
    among facilities and relationships with academic affiliates, and the
    specific goals for distribution between generalists and specialists
    positions.
        Each Network Director convened a Network Education Committee made
    up of representatives of VHA and academic affiliates that advised the
    Network Director on residency allocations within the VISN. These
    discussions led to the creation of new generalist residency positions
    where they best served VHA and affiliates training programs and a
    pruning process for the most vulnerable residency programs.
        VHA's change strategy has emphasized alignment of excellent patient
    care with training of future health professionals. In this regard, VHA
    has provided important leadership for its academic partners during
    these times of great change that affects all of health care. The future
    health care environment will be very different from today's. In
    implementing the additional 50 percent reduction in specialty positions
    this year, the challenge was to downsize specialty programs while
    concomitantly developing additional primary care training
    opportunities. We view this challenge as an opportunity to both improve
    the health care of veterans and the education of future physicians.
        Not surprisingly, changes in VHA's training strategies have
    produced understandable anxiety and resistance from some of our
    affiliates. The response of individual medical centers has been
    heterogeneous. In the aggregate, though, I believe that VHA has been
    sensitive to the effect of its changes, and that we have appropriately
    tried to engage stakeholders in the academic, accrediting, and broader
    health care community. Indeed, given the implications of the wide
    ranging changes in the nation's health care enterprise, we are
    committed to seeking and exploring advice from all willing and credible
    sources as this process goes forward.
        Question. VA has less than 11,000 acute care beds in operation
    today compared to 35,000 ten years ago. How can VA continue to support
    residency programs in 125 hospitals with a third as many beds?
        Answer. Across the U.S. health care system, major changes have
    occurred in the last decade that have resulted in substantial portions
    of patient care shifting from inpatient hospital settings to care
    delivered in an outpatient environment. Likewise, VA has made great
    strides in these same directions through a number of re-engineering
    efforts that have resulted in decreasing the total number of acute care
    beds, decreasing the bed-days of care per 1,000 patients, and
    increasing the percentage of surgeries performed in outpatient
    settings.
        Concomitant with the shifts VA has made to the ambulatory care
    treatment environment, VA has increased the total number of patients
    receiving care, increased the number of ambulatory visits, and
    instituted systems to measure improvements in the quality of care
    veteran patients receive. VA has implemented a universal system of
    primary care for VA patients and opened over 200 new community-based
    outpatient clinics to improve access to care. VA's reengineering
    efforts have resulted in a more efficient health care delivery system
    that is able to provide quality care to a larger group of patients.
        Medical schools are posed with the challenge of training students
    and residents for the workplace reality of their future professional
    lives. Consequently, academic affiliates and VA are working together to
    develop effective methods for care and teaching in the ambulatory
    setting. Examples of VA's leadership include the Primary Specialist
    Program where over 60 percent of all medical specialty and psychiatry
    residents who receive training in VA participate. This new training
    strategy emphasizes access, continuity, and comprehensive care for
    their seriously ill patients with emphasis on ambulatory care. In
    another initiative, VA recently received a grant of $985,000 from the
    Robert Wood Johnson foundation to develop new curricula for internal
    medicine residents who care for patients near the end of life. This
    project emphasizes training in the ambulatory setting, including VA
    clinics, hospice and the home. This project will provide leadership in
    30 of our academically affiliated settings, thus having an impact on
    fully one quarter of the nation's medical schools. A third example is
    the VA Quality Scholars Program which will develop criteria for
    physicians training in the important area of quality improvement in
    health care.
        Question. How many acute care beds are needed in a hospital for a
    strong residency program?
        Answer. There is no minimum number of beds required for a strong
    residency program.
                                 va/dod sharing
        Question. The recent report of the Congressional Commission on
    Servicemembers and Veterans Transition Assistance recommends a much
    greater level of sharing of health care resources between VA and DOD.
    The budget estimates that a total of just $73 million will be shared.
    Aren't there greater opportunities to share services with the DOD, and
    make better use of resources in doing so, such as joint purchasing of
    supplies and pharmaceuticals?
        Answer. The $73 million sharing figure significantly understates
    the actual amount of sharing going on between VA and DOD health care
    facilities. Much VA-DOD sharing is done on a barter or exchange basis
    with little or no money changing hands. One reason for this is that,
    unlike VA facilities, DOD medical treatment facilities (MTFs) do not
    retain sharing revenues. It is therefore in their interest to receive
    services in kind as payment. Similarly, savings generated from joint
    purchasing are not reflected in sharing estimates. VA is actively
    pursuing all opportunities to share services with DOD facilities and
    their TRICARE contractors, as well as facilitate savings in the
    procurement of pharmaceuticals and medical surgical supplies.
    Currently, over 120 VA medical centers have agreements to treat TRICARE
    beneficiaries through agreements with DOD's TRICARE contractors.
        Question. What barriers do you face in increasing the level of
    sharing?
        Answer. The VA-DOD sharing law (38 U.S.C., section 8111) is a model
    of flexibility. It permits sharing between VA and DOD facilities of any
    health care resource provided that the primary beneficiaries of the
    facility providing the care are not adversely affected. No changes to
    that authority are required, although we are proposing that, in the
    future, sharing revenues be deposited in the Medical Care Collection
    Fund. The ability to retain the proceeds from sharing earned in prior
    years will promote efficiency and increased use of this authority.
        DOD's migration to TRICARE has caused VA some difficulty in
    adapting to an unfamiliar billing and collecting system. VA's
    conversion to ``reasonable charges'' for third-party billing should
    promote greater consistency and, ultimately, with training, more
    efficient TRICARE billing in VA. There is currently and issue with DOD
    facilities concerning whether recent TRICARE contracts, which include
    active duty personnel, somehow limit the use of traditional VA-DOD
    sharing arrangements (between MTFs and VA health care facilities). We
    hope this will soon be resolved, and that beneficial sharing
    arrangements directly between VA and DOD health care facilities can be
    preserved and expanded.
        Question. What specifically will be done to implement the
    commission's recommendations in this area?
        Answer. The commission's recommendations are sweeping and remain
    under review. While VA's implementation plans are not yet complete, we
    are proceeding, along with DOD, to implement a number of initiatives
    that correspond to commission proposals. For example, DOD and VA have
    agreed on policy to consolidate the DOD separation physical exam with
    VA's disability evaluation physical; are working together to achieve
    seamless care for repatriated POWs; and, are jointly surveying veterans
    and military populations to better meet beneficiary needs and
    expectations in the delivery of health care. The VA Under Secretary for
    Health and DOD's Assistant Secretary for Health Affairs meet regularly
    with their top advisors to facilitate increased sharing of specialized
    treatment services; promote more effective and efficient procurement of
    pharmaceuticals, supplies, and equipment; develop a standard computer
    based patient record; and integrate clinical practice guidelines for
    disease treatment.
      congressional commission on servicemembers and veterans transition
                                   assistance
        Question. What is the Department's position on the recommendations
    on Montgomery GI Bill enhancements and each of the major
    recommendations contained in the Commission's report? Will the
    Administration propose legislation to implement some or all of the
    recommendations?
        Answer. The Department is currently in the process of finalizing
    its comments on the Commission's report. When that is done, we will
    provide the Subcommittee with a complete copy of our response.
        We would anticipate that in areas where the Administration agrees
    with the Commission and that legislation is required for implementation
    of the recommendation, that a legislative proposal would be
    forthcoming. It should be noted that not all of the Commission's
    recommendations were directed toward VA. Some of the recommendations
    were directed to the Department of Defense or the Department of Labor.
                       community based outpatient clinics
        Question. VA has been given approval for hundreds of outpatient
    clinics in the past few years to improve access to care. How many CBOCs
    have been activated and how many more will open in fiscal year 1999 and
    fiscal year 2000?
        Answer. Between March 1995 and January 1999, 272 CBOCs have been
    approved, of which 183 are currently operational (treating patients).
    Recent information suggests that approximately another 77 CBOCs will
    open by the end of fiscal year 1999. All but one or two of the
    remaining 12 are expected to open by the end of fiscal year 2000. Those
    one or two were part of a strategic business plan which documented a
    sequential opening of clinics; therefore, they are on schedule for
    their openings. Additionally, there are a number of additional CBOCs
    that have been proposed for the remainder of fiscal year 1999 and into
    fiscal year 2000.
        Question. What is the total amount of funding being devoted to
    CBOCs in fiscal year 1999 and fiscal year 2000? Are they sufficiently
    funded?
        Answer. Of the 272 CBOCs approved between March 1995 and January
    1999, 183 are currently operational, with all but a couple of the
    remaining 89 projected to be open during fiscal year 2000. The combined
    actual and projected annual recurring budget for these 272 CBOCs is
    approximately $174 million. Additional proposals for CBOCs continue to
    be submitted; therefore, additional dollars will be devoted to CBOCs in
    fiscal year 2000. Again, no additional resources can be requested to
    support the establishment of CBOCs; the resources are to come from
    within the VISN. To date, there is no indication that the CBOCs are not
    receiving appropriate and adequate funding from their VISNs.
        Question. Are any CBOCs oversubscribed, and if so, what is being
    done to address the problem?
        Answer. To date, there have been no reports of VISNs not being able
    to accommodate any patients presenting themselves to a CBOC for care.
        Question. Is the opening of any CBOCs being delayed owing to budget
    difficulties?
        Answer. There have been some delayed openings due to issues such as
    contract problems, recruitment problems, and location of appropriate
    space. There is no indication that budget issues have or will cause
    significant delays in CBOCs becoming operational in fiscal year 1999.
    The establishment of CBOCs is dependent upon veteran medical needs and
    resource decisions made at the VISN level.
        Question. What quality of care indicators or monitors have been
    established for CBOCs?
        Answer. A key element of the CBOC proposals is that evaluation/
    monitoring mechanisms be in place for the parent facility and VISN to
    assure that the clinic is meeting its goals and objectives. In
    addition, VHA top management has requested a VHA Health Services
    Research & Development (HSR&D) study to evaluate the performance of
    those CBOCs that are operational and to recommend some standard
    national criteria that could be used to evaluate all CBOCs. This study
    is well underway and should be completed, with recommendations from VHA
    on national evaluation criteria, by the end of fiscal year 1999. The
    development of national criteria will not preclude VISNs and parent
    facilities from continuing to monitor certain things that are important
    to them and specific to their clinics.
                        veterans benefits administration
        Question. VA's efforts to improve the timeliness of claims
    processing have deteriorated in the last year, and are not projected to
    improve significantly in the near term. It took an average of 168 days
    to process an original compensation claim in 1998, compared to 133 days
    the year before. Currently it is taking about 193 days. VA's own survey
    found that only 60 percent of veterans were satisfied with the way
    their claims were handled. When can we expect to see significant
    improvements in timeliness, quality, and customer service?
        Answer. We recognize that the challenge to improve claims
    processing timeliness has increased. Some of the performance drivers
    which have impacted claims processing timeliness are discussed in the
    following paragraphs.
    Workload Management
        We have adopted a balanced scorecard approach emphasizing accuracy,
    customer satisfaction, employee development, processing timeliness, and
    unit cost. The balanced scorecard will focus the entire organization
    upon its vision and the results it needs to achieve to be successful.
        We have shifted our emphasis from processing timeliness to
    accuracy. Improvement in technical accuracy is the number one priority
    for the Compensation and Pension Program. This priority is reflected on
    the VBA Balanced Scorecard with accuracy weighted the heaviest of the
    five measured performance categories.
        Because of concerns about our high error rate, we have asked our
    employees to do a closer review of their award documents. We have also
    asked them to write better decisions which are understandable to our
    claimants and which can be sustained through the appellate process.
        We have shifted our focus from working newer cases and have asked
    our employees to process the older claims to ensure that they continue
    to move through the system.
    Increased Difficulty and Complexity of the Workload
        Our decision makers have been faced with significant changes in the
    body of law governing the compensation and pension programs. Decision
    makers who now rate cases must do so increasingly by case law rather
    than a static body of regulations--a more difficult and time consuming
    process. The process of evaluating claims using a combination of
    regulations and precedent decisions is much more complex, and requires
    additional research time.
        The impact of adjudicating Gulf War veterans' compensation claims
    has exacerbated our already significant backlog. Decisions for these
    claims are labor intensive and are completed at the expense of other
    claims. We have struggled with the issue of service connection for
    undiagnosed illness because this is contrary to the way we
    traditionally adjudicate service connection. VBA has dedicated
    resources to several efforts to ensure that Gulf War veterans are
    properly evaluated.
    Changed Organizational Structure
        The transition into the first phase of our reengineered environment
    has required stations to undertake a major cultural and organizational
    shift as they blend Adjudication and Veterans Service Divisions into
    Veterans Service Centers.
        This reengineered environment requires extensive cross-training of
    personnel. As employees have been pulled away from claims processing
    and customer service activities to undergo training, there has been a
    degradation in service to our veterans.
    Data Integrity
        VBA has asked its managers to review operating practices, workflow,
    data entry methods, and management reports to ensure that all
    management reports are accurate. We have also asked them to promote a
    culture and an atmosphere where data integrity is of the highest degree
    possible.
        Effective data management requires decision makers to spend more
    time on entering data and reviewing it for accuracy.
        Although claims processing timeliness will continue to be a major
    challenge for us, we are beginning to achieve significant improvements
    in other areas. The following paragraphs highlight achievements thus
    far in fiscal year 1999.
        Technical Accuracy.--In 1998, the Compensation and Pension baseline
    technical accuracy levels were 64 percent for Core Rating Work and 70
    percent for Authorization Work. Based upon Statistical Technical
    Accuracy Reviews (STAR) conducted so far during fiscal year 1999,
    preliminary results show a 73 percent rate for Core Rating Work and 74
    percent for Authorization Work.
        Blocked Call Rate.--At the end of fiscal year 1998, our blocked
    call rate was 52 percent. Through March, the fiscal year 1999 blocked
    call rate is 39 percent. The March 1998 blocked call rate was 57
    percent compared to 17 percent for March 1999. Several ongoing
    initiatives in the area of telecommunications will also contribute to
    further improvements in the blocked call rate. We expect to be below
    our balanced scorecard fiscal year 1999 target of 30 percent by
    September 1999.
        Pending Workload.--We have reduced the pending appellate workload.
    In fiscal year 1998, we had 102,834 appeals pending to be worked, and
    as of March 31, 1999 that number has been reduced to 101,184. We have
    also made progress in reducing the number of old remands (pending prior
    to 1996) from about 10,000 in fiscal year 1998, to 1,108 in fiscal year
    1999.
        Question. VA's budget indicates it will take 99 days to processing
    rating-related actions in fiscal year 1999. Is this estimate still
    accurate? If not, what is the 1999 estimate and 2000 estimate? When
    will VA meet its objective of 74 days, while also improving the quality
    of adjudication?
        Answer. We are currently processing rating-related actions in an
    average of 161 days. We do not anticipate achieving 99 days as shown in
    the budget for this year. We are in the process of working with Service
    Delivery Networks (SDNs) to project where we will end this fiscal year
    for rating related actions. Once we update our fiscal year 1999
    timeliness projection, we will be in a better position to establish a
    revised fiscal year 2000 target. As indicated above, we are already
    beginning to see some improvement in claims processing accuracy. Claims
    processing timeliness will continue to be a major challenge for us. The
    earliest we foresee attaining our 74-day timeliness objective in
    rating-related actions is fiscal year 2005.
        Question. VA projects there will be 410,000 pending claims at the
    end of fiscal year 1999. The number of pending claims is not expected
    to change in fiscal year 2000. What do you believe is an acceptable
    level of pending claims and when will you reach that?
        Answer. While ``pending workload'' is not one of our primary
    organizational measures on the Balanced Scorecard, it is a significant
    indicator of timeliness trends. Timeliness of processing clearly needs
    to improve and as one component of that improvement we will strive to
    reduce the pending workload to 350,000 claims by March of 2000.
        Question. In 1998, VBA's accuracy rate for core rating work was
    only 64 percent. VBA projects to get to 81 percent by 2000. Do you
    believe today VBA can meet this goal? When will VBA meet its objective
    of accurately adjudicating claims 96 percent of the time.
        Answer. In 1998, the Compensation and Pension baseline technical
    accuracy level for core-rating work was 64 percent. Improvement in
    technical accuracy is the number one priority for the Compensation and
    Pension Program. This priority is reflected on the VBA Balanced
    Scorecard with accuracy weighted the heaviest of the five measured
    performance categories. We are beginning to achieve improvement in this
    area. Based upon Statistical Technical Accuracy Reviews (STAR)
    conducted so far during fiscal year 1999, preliminary results show a 73
    percent rate. We are encouraged by the preliminary results and expect
    to attain our 75 and 81 percent targets for fiscal year 1999 and 2000
    respectively. We expect to reach our 96 percent goal by the end of
    fiscal year 2004.
                           construction--murfreesboro
        Question. GAO has raised questions about whether VA could pursue
    the $12.7 million patient privacy project requested in the budget for
    Murfreesboro, TN. Given GAO's concerns, does VA continue to support
    this project for fiscal year 2000?
        Answer. Although the payback period for the expected savings has
    not been quantified, VHA analysis of workload and mission for the
    Murfreesboro facility fully supports the beds included in the proposed
    project. Murfreesboro is the Network referral center for long-term
    mental health care and it receives patients from Nashville and Memphis.
    The facility currently has an authorized mental health bed level of
    229, and the project proposes renovation of 120 beds. The project will
    enhance the proposed integration of Murfreesboro and Nashville.
    Integration planning has identified the Murfreesboro campus as the
    focal point for psychiatric services for the integration. The acute
    psychiatric care currently at Nashville is planned to be shifted to the
    Murfreesboro campus as part of the proposed integration.
        Since, the percentage of veterans over age 65 will increase to an
    estimated 69 percent by 2008, this high percentage of elderly veterans
    will sustain bed utilization due to an increasing utilization of mental
    health services that comes with aging and loss of income at retirement.
    Murfreesboro VAMC currently has a mental health penetration rate of
    0.53 percent, which is less than half of the national utilization rate
    for these services (1.68 percent). Provisions for patient privacy and
    handicapped accessibility will allow the facility to improve access, in
    line with the national utilization rates.
        The Murfreesboro project is consistent with VA's mission to provide
    care to veterans with identified special needs and with the assigned
    mission of the Murfreesboro VAMC. The primary goals and objectives of
    the project are to eliminate serious access and quality of care
    deficiencies, as reflected in accreditation and life/safety
    evaluations. In addressing these goals, VA has taken a conservative
    approach to bed projections and if these estimates are unexpectedly
    overstated, contingency plans have been established to use the beds for
    gero-psychiatric patients.
                             colorectal screenings
        Question. The Center for Disease Control and Prevention (CDC) has
    determined that colorectal cancer is the second leading cause of
    cancer-related death in the United States. Federal policy and
    guidelines call for the regular screening of all average-risk adults
    after 50 and older. The guidelines call for screenings that include
    yearly fecal occult blood tests (FOBT), and flexible sigmoidoscopy
    every five years for average risk patients. Federal policy and
    guidelines call for more intensive surveillance of the entire colon
    with colonscopy for those at high risk.
        What is the VA doing to ensure that the aging population of
    veterans are appropriately screened for colorectal cancer?
        Answer. The United States Preventive Services Task Force Guide to
    Clinical Preventive Services (2nd Edition 1996) (USPSTF) calls for
    regular screening of average-risk adults age 50 and older for colon
    cancer using annual fecal occult blood testing (FOBT) or sigmoidoscopy.
    Since 1996, VHA has recommended that all average-risk veterans aged 50
    years and older receive annual fecal occult blood testing (VHA 1108.1)
    This recommendation has been updated recently (draft update currently
    in VHA concurrence process, VHA 1120.2) stating that all average risk
    veterans aged 50 years and older should receive annual fecal occult
    blood testing or undergo sigmoidoscopy examination every 5 years.
        Question. Is the VA following existing Federal policy and
    guidelines to ensure that those veterans of average or high risk are
    receiving the requisite colorectal screenings?
        Answer. Yes. VA Policy matches existing USPSTF and the Agency for
    Health Care Policy and Research (AHCPR Publication No. 98-0033, May
    1998) recommendations. In addition, VHA evaluates colorectal cancer
    screening rates among the veteran population in two ways: (a) Screening
    for colorectal cancer is a component of the VHA Office of Performance
    and Quality Prevention Index. This index tracks delivery of preventive
    services to veterans, and (b) VHA also surveys veterans to establish
    receipt of colorectal cancer screening via the Veterans Health Survey
    of the VHA National Center for Health Promotion and Disease Prevention.
    Furthermore, VA identifies veterans of average or high risk for
    colorectal cancer through assignment to a primary-care provider. The
    primary-care provider should ensure that all relevant preventive care
    strategies are available to the veteran including annual FOBT or
    periodic sigmoidoscopy for colorectal cancer. Veterans at high risk for
    colon cancer are referred to a gastroenterologist for regular
    endoscopic screening, diagnosis and management.
        Question. Is the VA currently identifying veterans of average or
    high risk for colorectal cancer? By what process?
        Answer. Yes, the VA is aggressively promoting colorectal cancer
    screening. Since September 11, 1991, VA policy requires screening
    veterans age 50 and older with annual FOBT. Since May 16, 1996, VA has
    required screening with either annual FOBT or flexible sigmoidoscopic
    examination.
        Question. What is your estimate of the benefits to the veteran
    population to be derived from appropriate colorectal screenings (i.e.,
    reduction in premature death, reductions in medical costs, increase in
    prevention and quality of care)?
        Answer. The USPSTF and the AHCPR estimate the benefit of screening
    to be a 31-57 percent reduction in colorectal cancer mortality for the
    general population. Veterans can expect to enjoy similar benefits. To
    clarify this expectation, VHA is currently funding research--a cost-
    utility analysis--into colorectal cancer in veterans.
        Question. What are the possible benefits to the U.S. population as
    a whole?
        Answer. Veterans in the over 50 age group represent a significant
    portion of the U.S. population over age 50. VHA research and best
    practice models have the potential to benefit the population as a
    whole.
                                  hepatitis c
        Question. Given the increase in funding you are requesting in
    fiscal year 2000 for Hepatitis C screenings and treatment for veterans,
    what plans do you have for longitudinal studies to analyze the clinical
    course of Hepatitis C and identify the factors resulting in the
    progression from Hepatitis C to cirrhosis and liver cancer?
        Answer. A three-part longitudinal study is under development. The
    first part will be a thorough study of the prevalence of HCV infection
    among veterans. The second part of the study will be an assessment of
    risk factors for HCV infection. This study will determine the
    importance of both traditional and non-traditional risk factors for
    infection in the veteran population. The third part of the study will
    explore the natural course of the progression of HCV infection to
    clinically important liver disease among veterans.
        Question. With growing evidence of the relationship between HCV and
    the rising incidence of hepatocellular carcinoma, aren't longitudinal
    studies as a follow-up to HCV screenings and treatment essential in
    order to improve our understanding of the relationship between
    Hepatitis C and liver cancer?
        Answer. Yes, longitudinal studies as a follow-up to HCV screenings
    are essential in order to improve our understanding of the relationship
    between Hepatitis C and liver disease, including cancer. This is why VA
    has developed the three-part effort just described.
        Question. What portion of the requested increase for Hepatitis C
    screenings and treatment is dedicated to longitudinal studies of
    outcomes?
        Answer. None of the earmarked budgeted dollars for HCV screening
    and treatment from Medical Care is dedicated to longitudinal studies of
    outcomes. VA Research plans to use appropriated Research funding, which
    is independent of the Medical Care request, for the proposed
    longitudinal study.
        Question. Won't these longitudinal studies provide data useful in
    treating Hepatitis C and preventing liver cancer not only for veterans,
    but for the population as a whole?
        Answer. Yes, the longitudinal studies should provide data useful in
    treating Hepatitis C and preventing associated liver cancer not only
    for veterans but also for the population as a whole.
            acid reflux as a risk factor for cancer of the esophagus
        Question. According to a recent New England Journal of Medicine
    article (N-Engl J Med 1999; 340: 825-832), there is a strong and
    probable causal relationship between gastroesophageal reflux and
    esophageal adenocarcinoma. The study found ``The risk of esophageal
    adenocarcinoma was almost eight times as high among persons in whom
    heartburn, regurgitation, or both occurred at least once a week as
    among persons without these symptoms.''
        In fiscal year 1998 and fiscal year 1999, how much of the VA
    Medical Research budget was dedicated to studying the relationship
    between acid reflux and cancer of the esophagus? How much is requested
    for fiscal year 2000?
        Answer. Gastroenterology represents a significant portion of VA's
    research portfolio. In fiscal year 1998, $23 million was expended on
    176 research projects related to diseases of the digestive tract. In
    that year VA funded one investigator-initiated project relevant to acid
    reflux and esophageal cancer for $93,348. We would expect a similar
    level of investigator initiated research in fiscal year 1999 and fiscal
    year 2000.
        Question. Given the growing evidence of the causal relationship
    between acid reflux and cancer of the esophagus, to what extent will VA
    Medical Research make this area of study more of a priority?
        Answer. Cancer represents an area of high priority for the VA
    research. In fiscal year 1998 $22 million, representing 8.1 percent of
    the VA's Research appropriation, was expended on cancer. Acid reflux
    induced esophageal cancer is a subset of this research effort and will
    benefit from the broader effort. VA will continue to fund
    scientifically meritorious proposals submitted by VA investigators
    studying cancer and esophageal reflux.
        More importantly, perhaps, is research that eliminates or
    diminishes the occurrence or severity of acid reflux. As noted in the
    quoted New England Journal of Medicine article, `` * * * the more
    frequent, more severe, and long lasting the symptoms of reflux, the
    greater the risk [of cancer].'' VA research efforts are focused on
    successful treatment of reflux to reduce the frequency or severity of
    the problem. This strategy would result in the prevention of esophageal
    cancer or a dramatic reduction in risk for our veteran patients.
        Accordingly, the VA completed the first ever randomized controlled
    trial comparing medical treatment with surgical treatment for severe
    gastoesophageal reflux disease (GERD) in 1989 ($1.7 million). Results
    showed that in men with complicated GERD, surgery is significantly more
    effective than symptomatic medical therapy or intensive medical therapy
    in relieving the symptoms and endoscopic signs of esophagitis for up to
    two years. While medical therapy is also effective, it is only to a
    lesser degree. Nearing completion in fiscal year 1999 is a multi-site
    clinical trial following up the earlier study ($150,000). This study
    would establish the percentage of patients in the surgical group who
    still have effective control of their GERD symptoms, thus documenting
    the durability of the surgical intervention and the reduction of risk
    related to cancer.
        Additionally, VA has recently approved another multi-site trial,
    entitled ``A Double-blind, Randomized, Placebo-controlled Trial to
    Evaluate the Cost-effectiveness of Alternative Management Strategies in
    Patients with Dyspepsia.'' The goal of the study is to test whether
    giving antibiotic in combination with heartburn medication (Prilosec--
    an acid blocker) is better than giving heartburn medication alone. This
    study will involve 826 veteran patients from 15 VA medical centers over
    a 30-month period of time ($7.4 million). Final disposition of this
    study is awaiting the availability of funds.
                                     ______

                      Questions Submitted by Senator Burns

                              hepatitis c program
        Question. I am pleased that the VA budget request includes a
    substantial expenditure ($135 million) for evaluation and treatment of
    veterans with the Hepatitis C virus. It is my understanding that a very
    substantial portion of the veterans' population may be infected with
    Hepatitis C. This is likely to be a challenge for many years. Can you
    please explain the VA's plan for testing and treating these patients
    and making available all promising approved treatments?
        Answer. VA has emerged as the Nation's leader in the recognition,
    testing, and treatment of the Hepatitis C virus. VA's public health
    response to this emerging epidemic fully recognizes that treatment and
    containment of this virus is a long-term commitment. VA has already
    developed a systematic management approach that addresses current
    requirements and will respond to future developments. VA already has
    put in place treatment guidelines and protocols. In addition, VA has
    dedicated two ``Centers of Excellence'' and advanced a number of
    partnerships with private industry that will ensure that veterans
    receive the benefit of the most up to date and state-of-the-art
    research, service, and treatment.
        Question. It is my understanding that there are several approved
    Hepatitis C treatments, each of which has complications and limited
    response rates, but some of which may be particularly appropriate for
    certain portions of the VA patient population. Can you assure me that
    the VA will make all FDA-licensed treatments available for VA Medical
    Centers so that doctors will be able to choose the most appropriate and
    cost effective therapy for each patient?
        Answer. VA's treatment protocol is evidence-based. It will be
    adjusted by the outcome of clinical trials and when FDA has approved
    any new drugs.
                                     ______

                     Questions Submitted by Senator Shelby

                               medical care needs
        Question. Secretary West, veterans in Alabama note that the VA is
    attempting to downsize and streamline its operations. However there is
    a concern that the medical care needs of our veterans, especially those
    of World War II (WW II), are not being met.
        Does the President's budget deal realistically with the medical
    care needs of our veterans?
        Answer. Yes. The underlying premise for this budget and others is,
    no matter the budget level, we will ensure quality first for our
    patients. We ensure this by carefully monitoring through a
    comprehensive performance management system. For example, despite flat
    budgets in the past (in terms of purchasing power), we were able to
    increase the number of patients treated and outpatient visits while
    simultaneously improving our quality of care performance and customer
    satisfaction. We know that fiscal year 2000 poses challenges that are
    steep, but if past accomplishments are an indicator for future success,
    our track record has been outstanding.
        Question. How is the VA dealing with the increased medical care
    needs of the WW II veterans?
        Answer. Every indicator of supply and demand for long-term care
    shows that VA will have sufficient capacity to meet the needs of World
    War II veterans who use the VA health care system. This scenario
    assumes that VA will expand home- and community-based care services,
    contract for long-term care services, and increase the use of State
    Veterans Homes, where available. The proposed $106 million increase in
    home- and community-based care is not viewed as a one-time investment.
    Rather, the budget reflects the recommendation of the Federal Advisory
    Committee on the Future of VA Long-Term Care on tripling the investment
    in home- and community-based care over a 5-year period. VA will improve
    access to long-term care by providing incentives to networks to provide
    more long-term care services. VA will also enhance its admission and
    discharge policies for VA and Community Nursing Home Care. These
    changes will improve access and fairness. VHA staff monitors the
    quality of care received for all long-term care patients, regardless of
    setting.
        Question. Secretary West, as you know there has been a process of
    integration and consolidation of services at Alabama's Tuskegee and
    Montgomery Veterans' Hospitals. I am concerned that the consolidation
    may have created travel hardships for veterans seeking outpatient
    treatment at the facilities. I am told that veterans travel to one of
    the facilities and many times must be transported to the other facility
    for their treatment.
        Answer. The consolidation into the Central Alabama Veterans Health
    Care System (CAVHCS) was intended to improve the accessibility,
    quality, and efficiency of care delivered to veterans in south central
    Alabama and southwestern Georgia which have been traditionally served
    by the Tuskegee and Montgomery VA medical centers. Most CAVHCS
    outpatient care can be delivered by primary care physicians who are
    located at the East Campus (Tuskegee), the West Campus (Montgomery),
    the Columbus, Georgia Community Based Outpatient Clinic (CBOC), and
    most recently the Dothan, Alabama CBOC. Some specialty outpatient care
    is available at the East Campus and the West Campus, however, tertiary
    level specialty care is referred for the most part to the Birmingham VA
    medical center which serves as a referral point state-wide for
    veterans. Outpatient surgery is available only at the West campus
    because the veteran population in the CAVHCS service area will only
    support the critical mass needed for one program in order to maintain
    the necessary quality.
        Question. Is it possible to have more comprehensive outpatient
    services at each facility so as to limit the travel hardship for our
    aging veterans?
        Answer. The provision of more comprehensive outpatient services is
    dependent upon several factors such as:
      --The availability of specialists and the costs of hiring those
            specialists as VA employees in sparsely populated areas.
      --The availability of specialists in the community that may be
            willing to work part-time for the VA.
      --The eligibility of veterans and the costs of fee basis care.
      --The critical mass of veterans needing specialty care in sparsely
            populated areas.
      --The availability of resources to duplicate scarce specialty
            services at several sites.
        The needs of veterans living in rural areas of Alabama and Georgia
    mirror the needs of all citizens living in similar areas nationwide who
    must travel in order to access specialty medical care.
        Question. In consolidation cases such as this, how does VA
    equitably allocate outpatient services between hospital facilities?
        Answer. In the case of CAVHCS, the intent was to improve access to
    primary outpatient care, such as through the opening of the Dothan,
    Alabama CBOC, to build on the traditional strengths of the existing
    facilities, and consolidate at one location those services that could
    not, or should not, be maintained at multiple locations. The
    traditional strengths of the East Campus have been in the delivery of
    long-term, rehabilitative, and mental health care. Traditionally, the
    strengths of the West Campus have been the delivery of acute medical
    and surgical care. Because the critical mass (volume of patients) of
    surgical care needed was not sufficient to maintain quality in two
    locations, both inpatient and outpatient surgery were consolidated at
    the West Campus, which contained much better facilities, a more
    concentrated veteran population, and access to more surgeons.
        Question. Secretary West, there is a concern among Alabama veterans
    about the ability of retired veterans and their spouses to utilize
    active duty military facilities for their medical care. Is there a
    policy within DOD and the VA regarding this issue?
        Answer. Retirees and their beneficiaries under age 65 may enroll in
    TRICARE Prime (DOD's managed care HMO option) and receive care through
    a DOD health care facility. Retirees are also veterans, and may enroll
    under current eligibility guidelines, to receive care from VA.
        At those VA facilities that also serve as TRICARE providers, dual-
    eligible individuals (retirees under age 65) may be treated either as
    veterans or as TRICARE beneficiaries, depending on which option is to
    the retirees' advantage. For those veterans in priority levels (1)
    through (6), it is to their advantage to receive care as a veteran. For
    those in level (7), the decision must be made on an individual basis.
    VA cannot treat non-veteran family members except as TRICARE
    beneficiaries through sharing agreements with DOD's TRICARE managed
    care support contractors. In Alabama, only the Birmingham VAMC is a
    TRICARE provider.
                                     ______

                      Questions Submitted by Senator Craig

                               boise va hospital
        Question. Your department has claimed that the fiscal year 2000
    budget is feasible, relying largely on creating new ``efficiencies.''
    The Boise VA Hospital is about as lean as it can get. Where are these
    efficiencies going to come from?
        Answer. Additional efficiencies can and are being achieved at the
    Boise VA Medical Center and within VISN 20. These planned efficiency
    actions include further standardization of medical and prosthetic
    supplies with consolidated contracting for these supplies,
    consolidation of laboratory services, implementation of Medicare rates
    for purchased medical services and continued improvements in the
    delivery of medical services. It is the view of the Boise VA Medical
    Center and VISN 20 that these planned efficiencies will not cover the
    expected shortfall in the President's fiscal year 2000 budget. As a
    result, VISN 20 has chosen to address this issue through the adoption
    of a medical service area (MSA) concept. In this model, the Northern
    Alliance of VISN 20 (comprised of VA Medical Centers in Anchorage,
    Boise, Puget Sound, Spokane and Walla Walla) will serve as an
    integrated medical unit. Veterans in this area will obtain all their
    services within the MSA, with the exception of a few highly specialized
    procedures such as liver transplants. This may mean that veterans need
    to travel within the MSA for some tertiary services so that other
    services like primary care can be retained and provided on a more
    timely basis at the local level.
        Following the release of the President's budget, the VHA networks
    were asked to develop plans addressing the management improvements
    necessary to achieve the significant savings required to operate within
    the proposed fiscal year 2000 budget. Those plans are currently being
    reviewed. Several headquarters and field-based review teams are
    examining the network plans, including VISN 20's, and we will have a
    more complete national plan by the end of June.
                            boise va medical center
        Question. I would also like to submit for the record a copy of a
    news article from the Idaho Statesman. The article highlights the
    nearly 600 Idaho veterans who are awaiting care at the VA Medical
    Center in Boise. I think it is pretty clear that our obligation to our
    veterans to provide adequate medical care is not being met in Idaho.
        I would like your comments on what you can do to help resolve this
    problem so that these 600 veterans do not have to wait any longer. I
    would also ask that you look into the situation in Boise, and report
    back to me in a prompt manner.
        Answer. I will work with the leadership in VISN 20 to ensure ``best
    practices'' are in place in Boise and other facilities in VISN 20. This
    will insure that current resources are being utilized to an optimal
    capacity. VISN 20 has implemented new measures including an infusion of
    funds to reduce the waiting list at Boise and other VISN 20 facilities.
    In the meantime, we should point out that veterans on the waiting list
    in Boise and in other VISN 20 facilities may receive urgent or emergent
    care from the VA whenever they have a need for such services.
                                     ______

                    Questions Submitted by Senator Hutchison

                             kerrville va hospital
        Question. Many veterans in South Texas are concerned about the
    Veterans Hospital in Kerrville, and I sent a letter to Dr. Kizer on
    February 11th about the Kerrville facility, yet have not received an
    answer. I would like to know what the specific long-term plans are for
    the South Texas Veterans Health Care System and the VA Kerrville
    Hospital?
        Answer. There are currently no plans to close the Kerrville
    Division of the South Texas Veterans Health Care System. Current
    services provided at the Kerrville Division include 154 Extended Care
    Beds, 20 General Medicine and five Medical Intensive Care Beds, an
    active primary care program, and several outpatient specialty clinics.
    An earlier proposal to close the 20 General Medicine and five Medical
    Intensive Care Beds and replace them with ten Observation Beds has been
    placed on hold pending the fiscal year 2000 budget requirements.
                              integration of visns
        Question. Texas is broken up into three Veterans Integrated Service
    Networks (VISN), with two of the centers controlling these areas from
    outside of the state, like Jackson, MS and Phoenix, AZ; which many
    veterans have complained have difficulty dealing with one another to
    provide service. How are we going to improve the integration of these
    systems, or as many feel, would it not work better if a state with a
    large veterans population like Texas fell under one network?
        Answer. The 22 Veterans Integrated Service Networks were configured
    around historical VA patient referral patterns rather than State
    boundaries. Geography, travel distances, patient preferences and the
    availability of specialty referral services are major factors in VA's
    patient referral patterns. The facilities in West Texas (Amarillo, Big
    Spring and El Paso) have a predominant referral relationship with
    Albuquerque. Last year, 93 percent of patient referrals from these West
    Texas facilities were to facilities in VISN 18. Similarly, Houston has
    a significant referral relationship with several facilities in VISN 16.
    It provides many specialty services to VISN 16 veterans who are not
    from Texas.
        Although the Texas facilities are in different VISNs, referrals are
    made as needed regardless of the VISN boundaries. The three VISNs that
    include Texas facilities have received very few complaints about
    referral issues or the configuration of the facilities by VISN.
                     transfer of land for national cemetery
        Question. With the majority of our WWII and Korean War veterans now
    in their 60s and older, there has been an increased interest in the
    space availability at the limited number of national cemeteries. In
    Texas there is no national cemetery in the Central Texas area, Waco,
    Temple, Killeen, and Austin. The closest cemeteries, which serve the
    needs of this increasingly large veterans population, are in Dallas and
    San Antonio. The U.S. Army at Fort Hood has stated that they would be
    willing to transfer land to the VA on the Fort Hood military
    installation for a national cemetery. Given the opportunity to acquire
    government land, the historical significance of the military base at
    Fort Hood, and the lack of a national cemetery within 100-150 miles of
    the Central Texas area, what plans are you making to utilize the offer
    made by Fort Hood and to service this community.
        Answer. For the last decade, VA's basis for determining where to
    establish new national cemeteries has been the findings in two reports
    to Congress. One Report was completed in 1987 and a second in 1994. The
    reports identified areas in the country most in need of new national
    cemeteries based on concentrations of veteran population. The Central
    Texas area was not identified in either of these reports.
        The VA is currently constructing four new national cemeteries in
    geographic areas that were identified in the 1987 and 1994 reports to
    Congress. These new cemeteries will be located in the Albany, New York;
    Chicago, Illinois; Dallas/Ft. Worth, Texas; and Cleveland, Ohio
    vicinities. This volume of construction is unprecedented in the history
    of the National Cemetery Administration (NCA) since its inception
    during the Civil War. After these four new cemeteries open later this
    year, VA will evaluate the potential establishment of additional new
    national cemeteries in the remaining geographic areas identified in the
    two reports. These remaining areas include, in alphabetical order:
    Atlanta, Georgia; Detroit, Michigan; Miami, Florida; Oklahoma City,
    Oklahoma; Pittsburgh, Pennsylvania; Sacramento, California; and St.
    Louis, Missouri.
        The focus of our planning will be in those areas with the largest
    concentrations of veterans identified above. We recognize the burial
    needs of veterans in Central Texas. If land at Ft. Hood becomes
    available for a veterans' cemetery, it could be transferred to the
    State of Texas for the establishment of a state veterans cemetery.
    State veterans' cemeteries are a complement to our national cemeteries
    and are usually located by states in areas where there are not current
    plans for NCA to operate and maintain a national cemetery. The State
    Veterans Cemetery Grant Program funds one hundred percent of the cost
    of construction and for the cost of initial equipment when the cemetery
    is established. The States remain responsible for providing the land
    and for paying all costs related to operation and maintenance.
                     construction of future veterans' homes
        Question. Many of the veterans in Texas are concerned about the
    availability of Veterans Homes in the future. The Texas Land
    Commissioner has said that the state is ready to provide land and state
    funding for the projects, if federal VA dollars come through. Will the
    VA be proposing any additional funding for the construction of future
    veterans homes?
        Answer. Each budget cycle, there is a separate line item in VA's
    proposed appropriations package that includes ``Construction Grants for
    State Extended Care Facilities.'' The State of Texas has submitted a
    total of 11 construction grant applications, each for a 160-bed nursing
    home facility in different regions of the State. The first two grants
    will be awarded shortly (in Temple and Floresville), with fiscal year
    1999 funding set aside for two additional grants (in Bonham and Big
    Springs).
                                     ______

                       Questions Submitted by Senator Kyl

                                  hepatitis c
        Question. I understand that because the VA budget is so tight, you
    plan to fund Hepatitis C activities with yet-to-be-identified
    efficiencies in other programs. So, clearly cost is an issue here. I
    understand that prices vary for different approved therapies. For
    example, one year of an interferon may cost from $5,300 to $8,800,
    whereas a combination therapy may cost from $15,600 to $17,200. How
    much does drug therapy cost for one Hepatitis C patient over a year?
        Answer. The estimate for the drug therapy per month is $1,100 or
    approximately $13,200 per year (which excludes the cost of testing).
        Question. Is that the cost that VA used in preparing your budget
    submission?
        Answer. Yes.
        Question. I understand there are significant clinical and economic
    differences among currently approved Hepatitis C treatments. The least
    expensive treatment has fewer side effects and is approved for treating
    patients who do not respond to initial therapy. What consideration did
    you give these factors in developing your budget submission and
    treatment plans?
        Answer. Evidence-based treatment protocol recommends dual therapy
    as the standard of care; however, provision has been made in the
    protocol for those patients who either cannot tolerate dual therapy or
    are not clinically appropriate for dual therapy. Our veteran patients
    are provided the most up to date therapy possible and the treatment
    protocol is reviewed and updated on a regular basis as the science
    indicates the need. Our decision-making is based on the appropriate
    clinical indications.
                                     ______

                    Questions Submitted by Senator Mikulski

                          albuquerque regional office
        Question. Senator Bingaman investigated complaints by veterans and
    veterans organizations about the problems regarding claims processing
    being experienced at the Albuquerque regional VA office. I understand
    that you met with Senator Bingaman to discuss these problems and see
    what could be done to fix them. Could you outline for me what steps you
    have taken thus far, what initiatives or changes have been implemented,
    and what action items you may be planning for the future?
        Answer. The following steps have been taken to improve claims
    processing timeliness at VARO Albuquerque:
        The vacant Service Center Manager position has been recently
    filled. The new manager is scheduled to report to VARO Albuquerque May
    10, 1999. The new manager has recently made a visit to the regional
    office and assessed the situation. Under his direction the
    implementation and execution of a Work in Progress review plan has been
    accomplished. The new plan is designed to provide better workload
    control.
        Since February of this year the Albuquerque Regional Office has
    received assistance with the processing of over 450 cases from other
    regional offices. An additional 150 cases are currently being prepared
    to be sent out next week. Recently VBA installed video conferencing
    equipment at Albuquerque Regional Office to improve the office's
    ability to conduct video hearings with the Board of Veterans Appeals
    (BVA). This will provide better service to the New Mexico veterans by
    resulting in more timely hearings with BVA.
        The following action items are planned:
        The pursuit of a person to fill the Congressional Liaison position
    is continuing. The filling of this position will provide a direct point
    of contact for New Mexico's Congressional offices, as well as improving
    the timeliness, coordination and resolution of all congressional
    inquiries.
        Recruitment of two additional service center employees will
    commence shortly. Authorization from VBA headquarters has been granted
    for these hires.
        Albuquerque's Service Delivery Network leadership will be meeting
    the week of May 3, 1999. On the table for discussion will be the
    formulation of a help team to be detailed to the Albuquerque Regional
    Office.
                           board of veterans' appeals
        Question. It takes an average of almost two years nationwide for an
    appeal to make it through the Board of Veterans' Appeals. Are there
    things that you could do or legislative assistance that you need to
    accelerate that process so that ALL veterans could obtain a more timely
    resolution to their claims?
        Answer. VA is committed to reducing the time it takes for a veteran
    to receive a final decision on his or her appeal. Continuous
    improvement in appellate decision quality and timeliness has been the
    focus of much of BVA's budgetary and strategic planning in recent
    years. With the support received from the Administration, Congress and
    the veterans service organizations, BVA has markedly reduced the
    appeals backlog and improved its decision-making timeliness in fiscal
    years 1995 through 1998. BVA's traditional measure of timeliness is
    average response time. Average response time is an estimate of the time
    that it will take to decide all cases certified as ready for BVA
    review. BVA succeeded in reducing average response time from a fiscal
    year 1994 high of 781 days to 197 days by the end of fiscal year 1998.
        The fiscal year 2000 budget reflects an important change in the way
    we view timeliness with respect to the VA appeals process. For the
    first time, BVA and VBA have adopted a timeliness performance measure
    that cuts across the two organizations' boundaries. This new timeliness
    measure, Appeals Resolution Time, measures the average length of time
    it takes the Department to process an appeal from the date a claimant
    files a Notice of Disagreement until that case is resolved, either
    through resolution at a VA field facility or by a final decision by the
    Board. Previously, most VA timeliness measures for claims and appeals
    processing focused on measuring various segments of time, based upon
    which organization was responsible for the various components of the
    overall processing cycle. These measures fail in the sense that they do
    not reflect the length of the process from an appellant's perspective,
    that is, from the day an appellant registers his or her dissatisfaction
    with a decision on a claim until the matter is finally decided. Not
    surprising, appellants are less interested in how long individual
    stages in the process take as they are about the length of the entire
    process. Appeals Resolution Time will provide appellants, elected
    officials, Departmental leadership, VBA and BVA management, and other
    interested parties a much more comprehensive and accurate answer to the
    question, ``How long does the appeal process take?'' Appeals Resolution
    Time is described in the Department Performance Plan component of the
    fiscal year 2000 Budget Submission as one of VA's key goals and
    performance measures.
        VA's goal for fiscal year 2000 is to reduce Appeals Resolution Time
    to 545 days--a 20 percent reduction from the fiscal year 1998 level of
    686 days. Our long-term strategic goal is to reduce Appeals Resolution
    Time to 365 days. The key to success in achieving these goals is for
    VBA and BVA to work closely together, looking beyond immediate
    organizational boundaries to seek more innovative, Departmental
    solutions to the problems associated with resolving appeals in the most
    timely manner.
              contract services and outreach clinics in new mexico
        Question. What impact do you foresee that the President's budget
    request will have on contract services and outreach clinics in New
    Mexico and nationwide?
        Answer. Following the release of the President's budget, the VHA
    networks were asked to develop plans addressing the management
    improvements necessary to achieve the significant savings required to
    operate within the proposed fiscal year 2000 budget. Those plans are
    currently being reviewed. Several headquarters and field-based review
    teams are examining the network plans, including VISN 18's, and we will
    have a more complete national plan by the end of June.
                              va's dc field office
        Question. A recent VA internal review, made public by a Washington
    Post article, found serious backlogs and a state of chaos at the DC
    field office. Although there is a backlog of almost 10,000 cases, the
    DC field office has only 158 staff, down from almost 250 five years
    ago. VA has plans to distribute the outstanding claims to other field
    offices in the region to speed their processing.
        Is the Washington Post article accurate?
        Answer. The Washington Post article accurately described the
    workload situation. The office currently has 158 full time employees,
    down from 210 employees in October 1994.
        Question. If so, why do these conditions exist in the DC field
    office?
        Answer. The workload problems at the Washington Regional Office
    (WRO) have been escalating over the past few years due to a number of
    complex factors. The office had taken a very aggressive approach to
    merging the Adjudication and Veterans Services Divisions, in line with
    our Business Processing Reengineering vision for compensation and
    pension claims processing. Many hours were devoted to cross training
    employees, which reduced the time available to process claims and
    increased workload backlogs. WRO elected to participate in the Decision
    Review Officer Pilot, which focused resources on the appeals workload,
    but reduced the number of rating specialists available to process
    claims. The office prematurely moved to a team environment where teams
    were given responsibility for workload management without providing
    them with the proper training or ensuring that adequate controls and
    management systems remained in place. A large number of staff losses
    further degraded the office's ability to manage its workload and timely
    process claims.
        WRO has a history of recurring difficulties similar to the current
    situation, although never quite as critical as the workload problems it
    now faces. It has always been difficult for WRO to work in the
    headquarters city and attract and retain top employees when the grade
    structures and opportunities for promotion are so much greater in VACO
    and other Federal agencies.
        Question. What is your plan for handling the backlog of claims in
    the DC field office?
        Answer. Our primary concern is obviously for the veterans who are
    awaiting decisions on their claims. Our immediate actions have focused
    on organizing the pending claims, associating all documentary evidence
    with those claims, and establishing the appropriate workload controls
    so that we can process these claims as expeditiously as possible. We
    brought in a highly skilled management team from the Oakland Regional
    Office to assist in this process. This team also provided some critical
    interim training support to the employees of the Washington Regional
    Office. A new Service Center Manager has now been appointed for the
    office, and we are recruiting to fill additional positions in order to
    further strengthen the management structure and increase the technical
    capabilities of the staff.
        Some of the pending claims have already been transferred to other
    regional offices to be worked. We are developing a plan for further
    redistributing a significant portion of the pending workload to other
    regional offices for both development and rating action. Throughout the
    summer we will be bringing in ``help teams'' from across the country to
    screen and process claims. We will continue to call on the assistance
    of other regional offices until we have brought the pending workload
    down to a level which can be timely managed by the Washington Regional
    Office.
        Question. Who will be in charge of correcting this problem?
        Answer. The Office of Field Operations is the organizational
    element within the Veterans Benefits Administration responsible for the
    operations of the regional office field structure. That office is
    closely monitoring the Washington Regional Office situation and working
    directly with local management to implement the short term actions that
    will bring the workload back under control and to design the long term
    solution for the office that will best serve veterans.
        The Washington Regional Office is part of Service Delivery Network
    3, which also includes the Baltimore, Huntington, Roanoke, and
    Louisville Regional Offices. The Network shares in the responsibility
    for managing the workload at WRO and was instrumental in assessing the
    extent of the problems and laying out an initial course of action. The
    network will continue to provide assistance and support to WRO until
    the situation is resolved.
        Question. What is your timetable for a solution?
        Answer. The goal for WRO is to be in a position to maintain its
    workload without extraordinary assistance within 12-18 months.
        Question. When can veterans who were, or are, served by the DC
    field office expect to see positive results?
        Answer. With the actions we have already undertaken and the planned
    redistribution of many of the pending claims to other offices, veterans
    can expect to see positive results within a three to six month period.
    This is not to say, however, that all claims will be finalized during
    this period. Depending on the type of claim and the extent of
    evidentiary development required, the decision-making process could
    extend beyond the six month period.
        In addition to increased attention to managing the claims process,
    we plan to implement the National Automated Response System at WRO in
    the near term. This system will assist in reducing the telephone
    waiting times that veterans experience when calling regarding the
    status of their claims.
        Question. If the VA plan includes distributing these outstanding
    claims to other field offices, will this result in slower processing
    for other offices?
        Answer. The work will be transferred to a sufficient number of
    offices so that the impact on the receiving stations will not be
    dramatic. The regional offices selected to assist will be those that
    can best handle the additional work with the least disruption to their
    own workloads.
        Question. How long will this transfer of work last?
        Answer. The WRO pending workload is being continuously monitored.
    As indicated in response to a previous question, we will continue to
    call on the assistance of other regional offices until we have brought
    the pending workload down to a level which can be timely managed by the
    Washington Regional Office.
        Question. Is it possible that this will be a permanent shift of
    responsibility?
        Answer. We have made no decisions on the long term solution for the
    Washington Regional Office. Our goal is to establish an effective
    organizational structure, implement the appropriate management systems
    and develop comprehensive training programs that will enable all
    employees to perform at their highest level of competence and ensure
    veterans' claims are properly developed and decisions timely made.
        Question. How will this affect veterans who were, or are, served by
    the DC field office?
        Answer. The transfer of a significant portion of the pending work
    to other offices is the most expeditious way of resolving the claims
    and bringing the workload at WRO back under control. We will be careful
    to notify all veterans whose claims are transferred and we will
    coordinate our actions to minimize the impact on claimants and their
    representatives. Any medical examinations required in order to process
    the claims will be scheduled in the local area.
                        va's disposal of capital assets
        Question. What is VA's plan to dispose of excess capital assets?
        Answer. VA is proposing a pilot program to significantly improve
    its management of capital resources by encouraging and streamlining the
    process of disposing of surplus government property. This proposal
    would allow VA to dispose of excess and underutilized property
    (including land, structures or any equipment associated with the
    property) by sale, transfer, or exchange, and use the proceeds to fund
    further disposal activities and other non-recurring capital needs. The
    pilot would be restricted to thirty dispositions over its life.
        Proposed legislative changes include:
        Establishing the Capital Asset Fund (CAF). Proceeds that VA retains
    (90 percent) from disposals, after deductions, will be deposited into
    the CAF to be used to fund additional disposal activities and other
    non-recurring capital needs. Allowable deductions would include all
    costs (administrative, demolition, etc.) of disposing of the asset.
    This fund will have a cap of $50 million, with excess proceeds to be
    transferred to the minor construction program.
        Raising the threshold of reporting disposals in an annual budget
    document from $50,000 to an amount equal to or greater than the cost of
    a major medical facility project (currently $4 million). VA would
    notify GSA of all approved disposals and this information would be
    entered into GSA's internal database. Property with an estimated value
    less that the value of the Major Medical Facility Project threshold
    (currently $4 million) could be disposed of after notifying GSA, no
    other Federal agency has expressed an interest in paying fair market
    value for the property within 30 days of the notice, and then a Notice
    of Intent is placed in the real estate section of local newspapers.
    Properties valued in excess of the Major Medical Facility Project
    threshold would be described in the Congressional budget document for
    that fiscal year. In addition, GSA would offer the property to other
    Federal agencies. If after 30 calendar days, no other Federal agency
    expressed an interest in paying fair market value for the property, VA
    would be authorized to proceed with the disposal provided: (1) a public
    hearing is held in the local community where the disposal would occur;
    (2) the Secretary's intention to dispose of the property is published
    in the Federal Register; and, (3) the Committees on Veterans' Affairs
    are notified and 60 calendar days have elapsed. The Secretary would
    report in the yearly budget submitted to Congress on the disposals to
    be undertaken in that fiscal year that are valued in excess of the
    Major Medical Facility Project threshold, and also report on all
    completed disposals. For disposals in excess of this threshold, General
    Services Administration (GSA) would be notified, a notice of intent
    would be published in the Federal Register and the Committees on
    Veterans' Affairs would also be notified. For disposals under this
    threshold, GSA would be notified and a notice of intent would be
    provided to the local community.
        Requiring 10 percent of the proceeds to be transferred to the
    Department of Housing and Urban Development's (HUD) Homeless Assistance
    Grants Housing account.
        Question. What process will be followed regarding the disposal of
    these assets?
        Answer. VA Proposed Asset Disposal Pilot-Procedures and Process:
        Offices with responsibility for real property assets (VHA, VBA,
    NCA) would perform surveys to determine excess or underutilized real
    property, and report proposals for disposal to the VA Capital
    Investment Board (VACIB).
        VACIB will review proposals and forward its recommendations to the
    Secretary for approval.
        For disposals less than $4 million, GSA would be notified and no
    other Federal agency has expressed an interest in paying fair market
    value for the property within 30 days of the notice and a notice of
    intent would be placed in local papers.
        For properties valued at greater than $4 million:
        1. GSA would be notified and if not other Federal agency has
    expressed an interest in paying fair market value for the property, VA
    would be authorized to proceed with the disposal.
        2. The proposed disposal would be described in the Congressional
    Budget for the fiscal year.
        3. A notice of the Secretary's intent will be placed in the Federal
    Register and local hearings would take place.
        4. Congressional committees would be notified 60 calendar days
    prior to any disposal.
        VA would notify GSA of all approved proposed disposals and would be
    authorized to perform disposal activities utilizing GSA's technical
    assistance when desired.
        Ninety percent of the net proceeds of any sale, transfer or
    exchange would be deposited into CAF to fund future disposal activity,
    other non-recurring capital projects and augment funding for VA's
    homeless program. Ten percent of the net proceeds would be transferred
    to HUD's Homeless Assistance Grant Account.
        Question. How will local communities who might be impacted by the
    disposal of these assets be involved in the process?
        Answer. For disposals less than $4 million, a notice of intent
    would be placed in local papers. For properties valued at greater than
    $4 million, the proposed disposal would also be described in the
    Congressional budget, the Secretary's intention would be published in
    the Federal Register, and a public hearing would be conducted in the
    local community where the disposal would take place.
        Question. What are VA's goals regarding capital asset disposal?
        Answer. The goal of the disposal pilot is to improve the management
    of the VA's capital assets by providing incentives for the disposal of
    unneeded or underutilized VA real property. The pilot will also promote
    efficiencies, cost savings and generate income to supplement VA's
    capital programs. Currently little incentive exists for VA to dispose
    of its excess or underutilized property as it must first be offered
    (sometimes at little or no cost) to public and private organizations
    that do not directly benefit the veteran population. In addition, any
    proceeds that are retained by VA can only be used to construct nursing
    homes--not currently a high priority need.
        The pilot promotes efficiency by enabling VA to redirect funds
    currently spent on maintenance and operating costs for underutilized
    property and instead use these funds to provide improved quality and
    access to services for veterans.
        Another goal of the pilot is to generate income that will be
    utilized to supplement VA's capital programs in order to improve the
    VA's infrastructure, increase its information technology capabilities
    and provide better accommodations and services to the veteran.
        Question. What is VA's timeline for the disposal of capital assets?
        Answer. VA anticipates that the proposed process will represent a
    streamlining of the current one. However, the time frame required for
    completion of a disposal is heavily dependent on a number of factors
    including: the size and potential future uses of the property to be
    disposed of; the complexity of environmental study and/or restoration
    required prior to disposal; and the volatility of the real estate
    market in the surrounding community. While simpler asset disposal
    proposals may be completed within 12 months after they receive approval
    from the Secretary or are submitted to Congress, based on GSA and DOD
    experience, VA believes it may take 24 to 36 months to dispose of an
    asset under the most difficult conditions. The proposed pilot program
    is limited to 30 transactions over its five-year life.
        Question. What criteria will be used to determine which capital
    assets should be disposed of?
        Answer. VA anticipates a strategic planning process aimed at
    realigning imbalances or inequities between VA capital assets and
    veterans needs. While overall guidance and direction for this program
    is given at the headquarters level, much of this process will be
    undertaken at the regional level through each Veterans Integrated
    Service Network (VISN). The process provides for the creation of a
    Capital Assets Realignment for Enhanced Services (CARES) Steering
    Committees at each VISN whose responsibility is to undertake and
    complete a report which will be linked to that VISN's business plan.
    This report would include the following elements:
      --A review of historical, current and projected service utilization
            and demand for veteran healthcare services throughout the VISN
            and its constituent medical facilities.
      --A review of current VISN capital assets in terms of their
            ownership, location, services provided, physical condition,
            convenience of access, repair requirements and similar
            characteristics.
      --A review of the congruence between current capital assets and the
            VISN's current and future projected demand for services.
      --Consideration of alternatives to current service delivery modes
            that may enhance services to veterans.
        VBA and NCA will follow similar internal processes, prior to
    reporting proposed disposals to the VA Capital Investment Board. In the
    context of capital asset planning, VA closely follows the principles in
    the OMB Capital Asset Programming Guide for any proposed capital
    investment of disposal in terms of analyzing each proposal in light of
    other alternatives.
        Question. How will VA incorporate local flexibility with national
    standards regarding the disposal of capital assets?
        Answer. As previously stated, while overall guidance and direction
    for this program is given at the headquarters level, much of this
    process will be undertaken at the regional level through each VISN. The
    process provides for the creation of Capital Assets Realignment for
    Enhanced Services (CARES) Steering Committees at each VISN whose
    responsibility is to undertake and complete a report which shall be
    linked to that VISN's business plan. These committees will include
    members representing veterans.
                                  hepatitis c
        Question. We understand that the VA plans to only use combination
    therapy to treat hepatitis C, but combination therapy is not approved
    for patients who have not responded to initial therapy. Another
    interferon therapy is FDA approved for treating all patients with
    Hepatitis C including those who do not respond to initial therapy. What
    therapy do you plan to offer veterans who are HCV positive and do not
    respond to initial treatment?
        Answer. VA does not plan to use only dual therapy for hepatitis C
    infection (HCV). While combined interferon (IFN)-ribavirin treatment is
    associated with higher response rates, and is generally considered the
    most appropriate ``standard'' treatment, it may not be suitable for all
    patients as initial therapy. For example, ribavirin may cause a
    hemolytic anemia severe enough to require its discontinuation; this
    could make a patient with blood or heart disease a poor candidate for
    combination treatment. In addition, it is teratogenic and requires
    additional caution when considered for females of childbearing age.
    Moreover, side effects and treatment dropout rates are greater with
    dual versus single drug treatment. Thus, some HCV patients may be
    offered only interferon as initial therapy. However, combination
    therapy has not been used only as initial treatment; Davis et al. (NEJM
    1998;339(21):1493-1499) demonstrated that IFN-ribavirin was superior to
    IFN re-treatment for patients who had relapsed after initial IFN
    treatment. IFN alone is appropriate for use in patients who relapse
    following an adequate course of combined drugs.
        The treatment guidelines address all of these concerns. We are
    aware that not everyone is suitable for dual therapy and our treatment
    protocol specifically addresses this. There is a special warning
    section on individuals of child-bearing age.
        The development of the treatment protocol was done with the leading
    hepatologists in the Veterans Health Administration and based on the
    best clinically current information. According to the literature no
    single drug therapy has been demonstrated to meet or exceed dual
    therapy. There are some differences in response to various types of
    interferon. Each patient will be individually evaluated by his or her
    physician and appropriate therapy will be provided.
        Question. Based on warnings in the label, HCV positive individuals
    who have cardiac, pulmonary, or renal related illnesses may not be good
    candidates for combination therapy, and women of childbearing age and
    their partners taking combination therapy must also take strict
    precautions to avoid the risk of pregnancy. What therapy will be made
    available to HCV positive veterans who may not be good candidates for
    combination therapy due to these risk factors?
        Answer. Monotherapy with interferon (IFN) alone is appropriate
    treatment in those patients; it is covered in the treatment protocol.
    The Pharmacy Benefits Group decides which interferon products are
    placed on the national formulary. The clinicians review the literature
    and clinical trials to determine which drugs provide the best clinical
    benefit. This information is also gathered and reviewed by the Pharmacy
    Benefits Group to decide which drugs to place on the national
    formulary.
        Question. I understand that the VA's projected HCV treatment costs
    are based on the cost of combination therapy. However, there is another
    approved interferon therapy that costs 50 percent less than combination
    therapy and may be more effective and/or safer in some patient
    populations. Have you considered how clinically appropriate use of
    interferon monotherapy will reduce the cost of your HCV treatment
    program?
        Answer. We have not developed predictions of cost differences
    between dual (IFN-ribavirin) and montherapy (IFN alone). Such
    projections would require knowledge, or estimates, of the proportion of
    HCV patients who had specific contraindications to the addition of
    ribavirin to IFN in treatment of their disease, or who would be likely
    to drop out of, or specifically defer dual drug therapy. We have no
    such reliable data available which would permit such assumptions nor
    does any exist for other populations. Moreover, if the higher response
    rates reported for dual therapy are substantiated in VA patients, the
    more costly initial therapy could be more than compensated by savings
    due to lower rates of relapse and progression of liver disease. The
    evidence-based treatment protocol currently recommends dual therapy as
    the standard of care, however, provision has been made in the protocol
    for those patients who either cannot tolerate dual therapy or are not
    clinically appropriate for dual therapy. Our veteran patients are
    provided the most up to date therapy possible, and the treatment
    protocol is reviewed and updated on a regular basis as the science
    indicates the need, and our decision-making is based on the appropriate
    clinical indications.
                                     ______

                     Questions Submitted by Senator Harkin

                                  hepatitis c
        Question. I am pleased that the VA budget request includes a
    substantial expenditure for evaluation and treatment of veterans with
    the Hepatitis C virus. It is my understanding that a very large portion
    of the veterans' population may be infected with this disease. This is
    likely to be a serious health challenge for many years. Can you explain
    the VA's plan for testing and treating these patients and making
    available all promising treatments?
        Answer. VA has emerged as the Nation's leader in the recognition,
    testing, and treatment of the Hepatitis C virus. VA's public health
    response to this emerging epidemic fully recognizes that treatment and
    containment of this virus is a long-term commitment. VA has already
    developed a systematic management approach that addresses current
    requirements and will respond to future developments. VA already has
    put in place treatment guidelines and protocols. In addition, VA has
    dedicated two ``Centers of Excellence'' and advanced a number of
    partnerships with private industry that will ensure that veterans
    receive the benefit of the most up to date and state-of-the-art
    research, service, and treatment.
        Question. It is my understanding that there are several approved
    Hepatitis C treatments, each of which has complications and limited
    response rates, but some of which may be particularly appropriate for
    certain portions of the VA patient population. Can you assure me that
    the VA will make all FDA-licensed treatments available for VA Medical
    Centers so that doctors will be available to choose the most
    appropriate therapy for each patient?
        Answer. VA's treatment protocol is evidence-based. It will be
    adjusted by the outcome of clinical trials and when FDA has approved
    any new drugs.
                                     ______

                      Questions Submitted by Senator Leahy

     department of veterans affairs and department of defense-computerized
                             medical record systems
        Question. In recent years I have pushed the Department of Defense
    to adopt new software tools that automate data capture and clinical
    guidance for servicemembers. These products promise to save funds by
    identifying servicemember medical problems and solutions continuously,
    while creating standardized patient data to better analyze how
    resources are being used. If systems incorporating these
    characteristics had been in place during Desert Storm, many of the
    medical problems experienced by veterans after that war would have been
    definitively traced to their causes.
        I know you are working closely with the Department of Defense in
    developing a computerized medical record that will enhance the care of
    tomorrow's veterans and servicemen. I would like to make sure that your
    efforts are taking advantage of the progress that DOD has made
    recently.
        Will you have someone brief me on the cooperative efforts between
    the two departments?
        Answer. VA continues to work closely with the Department of Defense
    (DOD) on computerized medical record systems. Certainly, the most
    visible collaborative activity relates to the Government Computer-based
    Patient Record (GCPR) initiative, which derived, in large part, based
    on the data standardization problems that you referred to and that were
    identified since the Gulf War. This interagency project is focused on
    developing and implementing a framework to electronically move patient
    medical records between the VA, DOD, and the Indian Health Service
    (IHS). Members of the GCPR Project Management Team or the GCPR
    Executive Committee are prepared to brief you on this cooperative
    effort at your convenience.
                                  hepatitis c
        Question. I am pleased that the VA budget request includes a
    substantial expenditure ($135 million) for evaluation and treatment of
    veterans with the Hepatitis C virus. It is my understanding that a very
    substantial portion of the veterans' population may be infected with
    Hepatitis C.
        Can you please explain the VA's plan for testing and treating these
    patients?
        Answer. VA has emerged as the Nation's leader in the recognition,
    testing, and treatment of the Hepatitis C virus. VA's public health
    response to this emerging epidemic fully recognizes that treatment and
    containment of this virus is a long-term commitment. VA has already
    developed a systematic management approach that addresses current
    requirements and will respond to future developments. VA already has
    put in place treatment guidelines and protocols. In addition, VA has
    dedicated two ``Centers of Excellence'' and advanced a number of
    partnerships with private industry that will ensure that veterans
    receive the benefit of the most up to date and state-of-the-art
    research, service, and treatment.
        Question. Can you assure me that the VA will make all FDA-licensed
    treatments available so that doctors will be able to choose the most
    appropriate and cost effective therapy for each patient?
        Answer. VA's treatment protocol is evidence-based. It will be
    adjusted by the outcome of clinical trials and when FDA has approved
    any new drugs.

                              subcommittee recess

        Senator Bond. Mr. Secretary, gentlemen, it looks like a
    challenging year ahead. We appreciate the testimony and the
    discussions today. There will be more questions. And we look
    forward to continuing to work with you and thank you for your
    attendance.
        Meeting is recessed.
        [Whereupon, at 11:34 a.m., Thursday, April 15, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

     DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2000

                                  ----------

                            THURSDAY, APRIL 22, 1999

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:30 a.m., in room SD-138, the
    Dirksen Senate Office Building, Hon. Christopher S. Bond
    (chairman) presiding.
        Present: Senators Bond, Craig, Stevens, Mikulski, Leahy,
    Lautenberg, and Harkin.

                  DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

    STATEMENT OF ANDREW CUOMO, SECRETARY
    ACCOMPANIED BY:
            SAUL RAMIREZ, DEPUTY SECRETARY
            JON COWAN, CHIEF OF STAFF
            GAIL LASTER, GENERAL COUNSEL
            JACQUIE LAWING, DEPUTY CHIEF OF STAFF FOR POLICY AND PROGRAMS
            RHODA GLICKMAN, DEPUTY CHIEF OF STAFF
            HAL DeCELL, ASSISTANT SECRETARY FOR CONGRESSIONAL AND
                INTERGOVERNMENTAL RELATIONS
            CARDELL COOPER, ASSISTANT SECRETARY FOR COMMUNITY PLANNING AND
                DEVELOPMENT
            HAROLD LUCAS, ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING
            JACKIE JOHNSON, DEPUTY ASSISTANT SECRETARY FOR NATIVE AMERICAN
                PROGRAMS
            WILLIAM P. APGAR, ASSISTANT SECRETARY FOR HOUSING--FEDERAL
                HOUSING COMMISSIONERS
            IRA PEPPERCORN, DIRECTOR, OFFICE OF MULTIFAMILY HOUSING
                ASSISTANCE RESTRUCTURING
            GEORGE ANDERSON, EXECUTIVE VICE PRESIDENT, GOVERNMENT NATIONAL
                MORTGAGE ASSOCIATION
            XAVIER BRIGGS, DEPUTY ASSISTANT SECRETARY FOR RESEARCH,
                EVALUATION AND MONITORING
            EVA PLAZA, ASSISTANT SECRETARY FOR FAIR HOUSING AND EQUAL
                OPPORTUNITY
            DAVID GIBBONS, ACTING CHIEF FINANCIAL OFFICER
            EDWARD KRAUS, DIRECTOR, ENFORCEMENT CENTER
            DONALD J. LA VOY, DIRECTOR, REAL ESTATE ASSESSMENT CENTER
            JOE SMITH, ACTING ASSISTANT SECRETARY FOR ADMINISTRATION
            DAVID JACOBS, DIRECTOR, OFFICE OF LEAD HAZARD CONTROL
            SUSAN GAFFNEY, INSPECTOR GENERAL

                    OPENING STATEMENT OF CHRISTOPHER S. BOND

        Senator Bond. The Senate VA, HUD, and Independent Agencies
    Appropriations Subcommittee will come to order. Senator
    Mikulski is meeting with the ambassador from Poland this
    morning and asked that we go ahead and I will do so and ask her
    to make her opening statement when she concludes that very
    important meeting.
        It is a pleasure to welcome Secretary Cuomo and our other
    guests from the Department of Housing and Urban Development who
    have joined us here today to testify on the President's fiscal
    year 2000 budget request for the Department of Housing and
    Urban Development. The President's budget request for HUD
    proposes $28 billion for fiscal year 2000, which is an increase
    of some $2.5 billion over the fiscal year 1999 appropriation of
    $25.5 billion.
        I must say at the outset, as I have had to say at each of
    the hearings we have had to date in this subcommittee, that
    this again will be a very difficult year in attempting to meet
    the funding requirements and the programs within the
    jurisdiction of this subcommittee.
        The caps on domestic discretionary spending will compel
    domestic programs to absorb some $23 billion in reductions, and
    the VA, HUD Appropriations Subcommittee, as one of the largest
    subcommittees within the Appropriations Committee, will have to
    absorb its fair share of domestic cuts. We hope that we will
    only have to absorb our fair share and not more.
        As is often the case, the President's budget request for
    fiscal year 2000 has created unrealistic expectations by
    increasing spending by almost $25 billion above the budget caps
    through a series of puts and takes that simply do not work or
    exist. In effect, he has proposed spending dollars that are not
    there.
        When these phantom funds are squeezed out it will mean real
    and difficult cuts; therefore, much of the Subcommittee's work
    this year, including the budget review and funding of HUD
    programs, will have to be to prioritize our funding decisions
    to ensure that the principal programs within the subcommittee
    work effectively and efficiently.

                    renewal of expiring section 8 contracts

        While there are many HUD issues that merit comprehensive
    discussion, I begin by touching on several specific issues that
    are important to me. First, Congress has made a commitment to
    fund fully all expiring section 8 contracts. Now, this is not
    glamorous, it is not sexy, it is not politically high profile,
    but it is a vitally important commitment.
        It means that we are not going to abandon the low-income
    families, the elderly, and the disabled who depend on Federal
    housing assistance for decent, safe, and sanitary housing.
        Within the next 10 years the financial reality is that by
    fully funding the expiring section 8 contracts on an annual
    basis the Congress will need to appropriate some $20 billion
    per year to renew all existing expiring section 8 contracts
    without any new incremental section 8 assistance.
        Without that funding current residents will lose their
    section 8 assistance and the ability to afford their homes. So
    keeping low-income families with their children, keeping the
    elderly, and keeping the disabled in their homes will remain
    our top priority.
        It is against this bleak financial setting that the request
    for additional incremental section 8 units must be viewed.
        The VA-HUD fiscal year 1999 appropriations bill, at the
    insistence of the Administration, included 50,000 incremental
    section 8 vouchers at the cost of $283 million in fiscal year
    1999. This $238 million cost will become an annual cost as
    these section 8 contracts expire. Again, this year, the HUD
    budget calls for an additional 100,000 incremental section 8
    vouchers to meet low-income housing needs.
        These 100,000 incremental vouchers will cost some $578
    million, which again will become a recurring annual cost if we
    continue to meet our commitment to fund fully all expiring
    section 8 contracts.
        Let us put a human face on this. We have thousands of
    families and elderly individuals who face the potential loss of
    their homes if we do not provide sufficient resources to extend
    expiring section 8 contracts. We cannot kick these people out
    the back door because we are so eager to fund a new family
    coming in the front door.
        That is what my priority is and will remain, taking care of
    the current residents of public and assisted housing, and only
    after this is done will we look to provide new commitments.

                        section 8 incremental assistance

        Mr. Secretary, I must also remind you of a discussion that
    we had last year during the VA-HUD fiscal year 1999
    appropriations conference concerning the funding of section 8
    incremental assistance.
        During the meeting with Senator Mikulski, Congressman
    Lewis, Congressman Stokes, and me, you promised to find
    adequate funds to cover the full cost in fiscal year 2000 for
    the 50,000 incremental vouchers which we included in the fiscal
    year 1999 VA-HUD appropriations bill.
        You said that you would cut programs if necessary, but that
    you would find adequate funding to cover the costs of new
    incremental section 8 assistance. This was a promise you made
    to me and to other members of the VA-HUD appropriations
    conference personally, and I am concerned that the President's
    fiscal year 2000 budget request for HUD does not live up to
    this promise.
        I want to be clear on this, because I believe the
    President's fiscal year 2000 budget fails to provide the needed
    funding for the existing expiring section 8 contract, and
    instead it relies on an advanced appropriation of $4.2 billion
    to be appropriated in fiscal year 2001. This would create an
    immediate shortfall of $4.2 billion in fiscal year 2001 within
    the HUD budget, which this subcommittee will have to make up.
        This policy essentially says to our elderly and other low-
    income tenants that HUD is promising a 1-year lease, but is
    only willing to provide the funds for a few months, and then
    hope that the rest of the rent money is available later. That
    just does not work, and essentially bankrupts the system.
        Even more unsettling is the fact that the Administration
    assumes flat funding for section 8 contract renewals over the
    next 9 years. If you have not looked at it, and I would ask
    those who are here who are interested in this to look at the
    multi-year projections.
        The projections of OMB, reflecting the President's budget,
    assume only $11.5 billion for expiring section 8 contracts for
    each fiscal year from 2001 through 2009. This means the
    Administration is not committed to funding all expiring section
    8 contracts and begs the question as to what this means for the
    thousands of current residents who would be forced out of their
    homes.
        In essence, we have two sets of books, one that looks good,
    but when you look at the real spending plan there is not the
    money there, and I am very worried about what that means. I
    believe in living up to our commitments, and if the budget
    cannot sustain additional incremental section 8 vouchers, then
    we ought to say that and prioritize our funding to preserve the
    housing assistance we currently have.

                                    opt-outs

        Second, HUD is facing a housing crisis with the opt-out of
    a number of section 8 project-based multifamily housing
    developments. For example, according to the National Housing
    Trust, during 1998, 219 properties, with some 25,000 section 8
    units, opted out of receiving Federal rent subsidies under the
    section 8 project-based market program. These were projects
    with expiring section 8 contracts with rents below the market
    rate. In these cases, HUD has refused to review the section 8
    contracts at market.
        In other words, the owners believed that they could get
    more rent for their properties if they did not have to rely on
    the existing section 8 rents for their housing stock.
        Now, the Administration has a stated policy of opposing
    section 8 project-based assistance in favor of vouchers.
    Nevertheless, many of these projects are home to the elderly,
    or a scarce housing resource in an area in which there is
    little available, low-income, affordable housing.
        It is just not acceptable to say we will give you a
    voucher. This often means that low-income families will not be
    able to afford the housing in their community, or there is no
    available housing in their community, or elderly people will
    need to venture out with their walkers, or, even more
    troubling, in their wheelchairs, to look for housing where none
    may exist. We, in Congress, I believe, have been clear that we
    need to preserve low-income elderly housing as well as low-
    income family housing in areas with low-vacancy rates.
        I think we owe it to the communities, we owe it to our low-
    income families, we owe it to our elderly, and we owe it to our
    disabled citizens. While I believe HUD has the authority and
    resources to address this problem, HUD must make the commitment
    now to save this housing.

                      procurement and contracting reforms

        On the right side, however, Mr. Secretary, I do want to
    compliment you on HUD's substantial progress in reforming the
    procurement and contracting procedures as reported by the
    National Academy of Public Administration [NAPA]. This is an
    area where we can jointly take pride in a significant
    accomplishment.
        This reform grew out of Congressional concerns over HUD
    contracting and procurement procedures as the Department
    downsized, and as you know, it was the House and Senate
    Appropriations Committees that initially asked GAO and the HUD
    Inspector General to review and audit HUD's procedures for
    contracting, and then subsequently funded NAPA to complete the
    review and work with HUD on procurement reform.
        Therefore, I am very pleased that HUD has taken our
    procurement concerns seriously and worked with NAPA to achieve
    what appears to be solid results. I congratulate you and the
    people of HUD on this significant step forward.
        I hope HUD will continue to follow through on additional
    NAPA recommendations. HUD's implementation of NAPA's
    contracting and procurement recommendations are still only
    beginning steps in the context of HUD's larger problems, but I
    do believe these reforms are needed.
        I am hopeful that HUD's efforts and procurement reform
    represent a larger commitment to a more comprehensive overhaul
    of how HUD does its business.

                                 audit findings

        Also, I congratulate you on the first clean audit that HUD
    has received, but there is much work to be done. I remain
    disappointed that HUD again was designated in 1999 as a high-
    risk area by GAO, as it was in 1995 and 1997, the only agency
    ever designated as high risk on an agency-wide basis.
        Further, the bad news is that the most recent audit of
    HUD's financial statements revealed 6 material weaknesses and
    11 reportable conditions. This is one more material weakness
    and one more reportable condition than identified in last
    year's audit.
        That is unacceptable, it undermines the confidence of the
    American people in the ability of the Federal Government to
    make a meaningful contribution to housing and community
    development policy.
        Mr. Secretary, I know you are working hard to address HUD's
    problems; nevertheless, as long as the Department remains high
    risk I do not want to hear how you saved the Department from
    being dismantled. Frankly, this claim reminds me of claims
    about how certain financial institutions were too big to fail
    during the savings and loan fiasco. In HUD's case it may be
    both, too big to fail as well as too complex to be devolved.
    Nevertheless, as we move forward, I will be directing my staff
    to look at ways to enhance how HUD does its business, including
    the possibility of spinning off FHA as a separate institution,
    as a separate corporation, or as a government-sponsored
    enterprise.

                        hud 2020 management reform plan

        I also continue to have concerns regarding a number of HUD
    program and management issues. In the first place, I remain
    concerned over HUD's implementation of the HUD 20-20 management
    reform plan, which is designed to rebuild the public trust in
    the Department through management and program reform in
    conjunction with the downsizing of the Department from 13,000
    staff in 1992 to 9,300 currently.
        We have discussed the need to maintain adequate staffing to
    ensure there is quality delivery of HUD program services, and I
    know you share my concerns that the success of each program
    must remain the primary goal of the Department.
        Nevertheless, I am not convinced that the Department has
    achieved this goal. I have heard concerns about HUD's ability
    on processing applications and providing consistent program
    information to prospective clients. Where that is not done on a
    timely basis, as we have discussed, unreasonable delays can
    cost money and deals can collapse. While a number of these
    concerns are anecdotal, they are very real.
        I am also concerned with the Community Builders program,
    which I initially understood to be a limited program to
    encourage a new generation of young professionals to invest
    their time and energy in housing and community development
    issues at the local level while helping to facilitate local
    decisionmaking on local housing and community development
    issues.
        Instead I hear the program has ballooned to staffing of
    some 600 to 800 Community Builders out of a total HUD staff of
    9,300 persons, or some 8 percent of all HUD staff. Moreover, I
    have heard reports that there is confusion over the role and
    authority of Community Builders in decision making as well as
    significant questions as to their qualifications and knowledge
    of HUD programs. This could really be a big problem if HUD's
    other staff are undermined while performing their jobs.
        In addition, HUD's budget includes, according to GAO, some
    19 new programs and initiatives, with funding of some $731
    million. As we have discussed, HUD needs to focus its efforts
    on its core programs rather than redirecting HUD staffing and
    expertise to new boutique programs and activities, especially
    since many of these programs and activities can be achieved at
    the discretion of state and localities under the existing
    authority of programs such as CDBG and HOME.
        Because of recent downsizing and restructuring, HUD is
    vulnerable to poor management decisions, structural weaknesses,
    and deficiencies in its primary housing and community
    development programs. An overload of new activities and
    programs could substantially weaken the Department.
        Thus, I believe we have to continue to consolidate HUD
    programs and activities to ensure that HUD's primary core
    programs, such as public housing, section 8, CBDG, HOME,
    homeless assistance, FHA mortgage insurance, and the disabled
    and elderly programs meet the needs of our citizens, especially
    those who are low and very low income.
        I do not need to remind you that HUD, as a high risk area,
    is considered vulnerable to fraud, waste, abuse, and
    mismanagement, and the GAO, the HUD Inspector General, and the
    National Academy of Public Administrators have at various times
    identified substantial concerns with HUD's ability to
    administer its programs and meet its statutory requirements.
        Moreover, many of these concerns still must be resolved, as
    we have discussed in the past, as a matter of fiscal
    responsibility. HUD is one of the nation's largest financial
    institutions, with sizeable commitments and obligations,
    managing more than $400 billion worth of insured mortgages,
    $485 billion in outstanding mortgage-backed securities, and
    $180 billion in prior year's budget authority.

                                  gao reviews

        Now, the GAO and HUD IG were responsible for identifying
    the need for procurement reform; therefore, it was of great
    concern when it was reported to me that HUD has refused to
    allow GAO to review HUD programs, collect data, and talk to
    staff. I think that is unacceptable.
        GAO is the eyes and the ears of Congress, and our ability
    to develop a meaningful HUD budget depends on GAO's ability to
    keep us fully informed on HUD programs and funding issues. I
    expect the Department to open its doors to GAO immediately, to
    extend to GAO every courtesy needed for its program and budget
    reviews.
        To be blunt, Mr. Secretary, we have a mutual interest in
    making sure that HUD's housing and community development
    programs both work well and are financially responsible, and
    can only do this with your cooperation and with the cooperation
    of our agency and the GAO.

                          state/local decision-making

        Finally, I emphasize the continued need for the Department
    to redirect the responsibility of HUD programs and activities
    from the Federal Government to state and local decision-making.
    It is critical, because HUD does not have the staff, the
    expertise, or the resources to manage on a micromangement basis
    every program.
        The success of housing and community development programs
    and initiatives reside at the state and local level, where
    other state, local, private, and non-profit resources can be
    leveraged to expand the availability of affordable housing and
    to create new economic initiatives. Most importantly, state and
    local housing and community development needs are best
    addressed through state and local decision-making.
        We look forward to hearing your comments, but Mr.
    Secretary, first let me turn to the Members who are with me
    now. I turn first to Senator Leahy.

                           STATEMENT OF PATRICK LEAHY

        Senator Leahy. Thank you, Mr. Chairman.
        The Chairman and I have been friends for many, many years
    and agree on far more things than we disagree on, but I would
    note that I see that the glass is more full than empty in this.
        Mr. Secretary, I am delighted to have you here before us,
    and I too have some of the NATO and Kosovo things going on and
    will have to leave after this, but will leave questions for the
    record.
        When you appeared before this committee as Secretary, I
    offered you congratulations and condolences at the same time,
    and you have told me on different occasions you were not quite
    sure which was more in keeping, but I felt then as I do now
    that you have brought more personal experience and more
    commitment to the Federal Homeless Assistance Programs than so
    many of your predecessors.
        I also knew you were taking over the helm of a very large
    ship, sort of a super tanker, and everybody knew the ship was
    taking on water long before you were put at the helm from years
    of mishandling and needed to be turned around. Big ships do not
    make tight turns. No matter how much you turn the wheel to
    change course it might not be enough.
        I knew you had the experience, I knew you had the ideas to
    take charge and implement the reform plan for the agency, I
    knew it takes some time for the tanker to follow your lead.
        You have put together what I believe is another strong
    budget for fiscal year 2000. I appreciate your efforts to
    address the affordable housing crisis by requesting 100,000 new
    vouchers for rental assistance. I am encouraged to see your
    continued commitment to the Home and CDBG programs. I believe
    they are two of the most effective programs available for
    financing housing and economic initiatives at the local level.
        I also want to commend you for conducting the first ever
    physical inspection of all federally subsidized properties.
    That is over 4.5 million properties. It is about time that we
    took stock of our investment in affordable housing, it should
    have been done long before you came, and I commend you for
    taking the initiative when others said not to do that. That
    demonstrates that HUD does care. I hope this will promote a new
    attitude about Federal housing programs.
        The Real Estate Assessment Center that you established
    demonstrates a fresh long-term commitment to the Federal
    investment in housing. Gone will be the days when projects were
    built and then just forgotten. I believe what you are doing is
    making sure the housing units remain affordable, but also
    remain liveable, two things that do not always occur together.
        So many Secretaries before you touted how many thousands of
    units of housing are all over the country. You are probably
    going to be the first Secretary to say that you know the
    condition of those units, who are the good and bad landlords,
    and what repairs and enforcement are required, and that is
    very, very good. To paraphrase a person who lived many years in
    Vermont, Robert Frost, you have miles to go before you sleep.
        We talked about the GAO watch list. HUD was on that watch
    list for several years before you became Secretary. It remains
    there, but I am encouraged by the steps you have taken to
    address the problems raised by GAO, and I think we should note
    that 2 days ago, the National Academy of Public Administration
    released a report that actually commended HUD for making
    substantial progress in the area of procurement reform,
    something that should be welcome news, but also reflects
    improvements made.
        I have seen your personal commitment and knowledge of these
    programs on occasions when you have been in Vermont, and to a
    little state like ours, taking the time when you come there,
    you have given great, great encouragement to people who have
    not had much to encourage them before in life.
        Even this past week, when I was there, I ran into a couple
    of people in downtown Burlington who told me how much their
    life had been affected by your words, your presence, and your
    programs there in Vermont.
        A lot of work lies ahead for you and your staff, and I
    wanted to thank you for those efforts of yours and your
    leadership. There will be bumps in the road in the future,
    anybody coming to HUD knows that will happen. I am confident
    you are doing your best to ensure that HUD will turn the corner
    and enter the 21st Century in far better condition than it was
    in the past.
        Mr. Chairman, as always, I will work with you on these
    programs, because I know you are very concerned about them. I
    will have questions for the record, and I apologize for having
    to leave.
        Senator Bond. Thank you very much for being with us,
    Senator Leahy. We will add your questions, and as always we
    will keep the record open for both statements and questions by
    all members of the committee.
        And, Mr. Secretary, we hope that you will take those into
    account and respond promptly to them.
        Let me turn to Senator Craig.

                        statement of Senator Larry Craig

        Senator Craig. Mr. Chairman, thank you very much. I will be
    brief. I came in late.
        Mr. Secretary, welcome.
        As we all know, in 1988 Congress passed and President
    Reagan signed into law amendments to the Fair Housing Act that
    included disability and family status. Now, these Fair Housing
    laws are important. We all recognize that, and I do not dispute
    the value of the Fair Housing Act to prevent housing
    discrimination. This is never a valid reason for discrimination
    against anyone.
        When Congress passed the laws the intent was to increase
    the inventory of accessible housing for disabled citizens. I
    still support and believe in that goal, so I want to
    congratulate you this morning Mr. Secretary for HUD's recent
    decision to uphold those goals. I think that is extremely
    valuable.
        I decided to rescind proposed rules that would have
    prevented the public housing authorities from receiving Federal
    funds. The funding was to have been cut off because of the
    unsubstantiated claims against the agencies. I am glad that you
    realized that this would be an extremely punitive measure that
    would have harmed local low-income communities, while at the
    same time penalizing the agencies without proof of wrongdoing.
        So there are questions to be asked this morning, there are
    other concerns, but I did want to recognize that, Mr.
    Secretary, and thank you for that.
        Mr. Chairman, I would ask that the bulk of my statement be
    made a part of the record----
        Senator Bond. Without objection.
        Senator Craig [continuing]. So we can turn to other
    colleagues and get to the questions. Thank you.
        Senator Bond. Thank you very much.
        Senator Lautenberg.

                     statement of Senator Frank Lautenberg

        Senator Lautenberg. Thank you, Mr. Chairman. I first
    commend you for trying to stretch the inadequate resources that
    you have, but we do face a crisis in housing for the needy and
    for the poor in the years ahead.
        Unfortunately, I can only stay here briefly, because of a
    conflict with a budget committee hearing, but I do want to
    speak for just a couple of minutes on two important subjects.
        First, I want to thank Secretary Cuomo for taking on such a
    difficult task and doing it as well as you have. Bringing HUD's
    management and finances into the 21st Century is a job that
    many people have shied away from, but I am pleased that
    Secretary Cuomo had the courage to tackle HUD's problems, and I
    want to commend him and his staff for their hard work and
    congratulate him on the progress made so far.
        Second, I want to take a couple of minutes to express my
    concern about the funding levels available in the fiscal year
    2000 appropriations for critical programs like affordable
    housing and community development. The budget resolution that
    just passed would mandate an 11 percent budget cut for most
    discretionary programs in the year 2000, and that is what
    happens when you are pledged to budget caps while defense
    funding is increased and protecting some other programs, while
    other critical programs take unacceptable hits.
        These budget cuts will get worse in ensuing years and
    require close to a 30 percent cut, 30 percent, in programs by
    the year 2004. I believe that budget cuts of this size are
    extreme, unsustainable, and crippling, and that is why I so
    strongly oppose the year 2000 budget resolution.
        The Senate version of the majority's budget resolution
    recommended the elimination of the community development block
    grant program. The numbers in the conference report appear to
    confirm the elimination of CDBG as well, and that would be a
    devastating blow particularly to our cities.
        We already have 2 million low-income Americans on waiting
    lists for housing assistance and over 5 million low-income
    Americans pay more than half of their income in rent or live in
    substandard housing. This problem will just get worse if we
    cannot fund HUD programs at the level requested by the
    President.
        Our cities are struggling to survive while traffic
    congestion and gridlock increasingly eat away at the quality of
    life in our suburbs. We cannot just leave these cities and
    forget about them. We have to face these tough economic and
    social problems head on.
        The budget does not help with these problems. It hurts
    them, and we do not provide the resources to save our cities;
    instead we give enormous and I think unneeded tax cuts to the
    wealthiest Americans.
        The budget resolution does not give us much detail about
    where these massive budget cuts are going to come from. We will
    learn the answers to this question during the appropriations
    process over the next few months, and I hope that we will not
    damage our cities and cut programs which benefit working
    Americans to satisfy our desire to give tax breaks.
        I know the Chairman and the ranking member of the
    subcommittee care deeply about these programs. It has been
    evident with their hard work in the past. They will do their
    best under the difficult circumstances we face this year, and I
    look forward to working with Chairman Bond, Senator Mikulski,
    and my other colleagues to find the resources necessary to
    continue to fund the key programs within this subcommittee.
        I thank you, Mr. Chairman.
        Senator Bond. Thank you very much, Senator Lautenberg.
        Now, Mr. Secretary, we will give you an opportunity to have
    your say.

                           statement of andrew cuomo

        Secretary Cuomo. Thank you very much, Mr. Chairman, and
    thank you for having us here today.
        With the Chairman's permission let me quickly introduce the
    HUD team who is here. We have the full team here, Mr. Chairman,
    so we could answer any questions that the committee might have.
    Let me also send my regards to Senator Lautenberg before he
    leaves, and Senator Leahy, and Senator Craig, good to see you,
    sir.

                           introduction of hud staff

        With me at the table, Mr. Chairman, to my right is Dave
    Gibbons, who is the acting Chief Financial Officer of the
    Department. To my left is Saul Ramirez, Deputy Secretary of the
    Department, and Bill Apgar, who is the FHA Commissioner.
        With us is--and I would ask them to stand as I call their
    name--Gail Laster, who is the General Counsel of the
    Department; Jacquie Lawing, who is the Deputy Chief of Staff
    for Policy Programs; Rhoda Glickman, who is Deputy Chief of
    Staff; Hal DeCell, Assistant Secretary for Congressional
    Affairs; Cardell Cooper, Assistant Secretary Community Planning
    and Development; Harold Lucas, Assistant Secretary Public
    Housing; Jackie Johnson, Deputy Assistant Secretary for Native
    American Programs, the first Native American to ever hold that
    position; Ira Peppercorn, of OMHAR, Director of OMHAR; George
    Anderson, who is the Acting President of Ginnie Mae; Xavier
    Briggs, who is the Deputy Assistant Secretary Policy
    Development and Research; Eva Plaza who is the Assistant
    Secretary for Fair Housing; Susan Gaffney, who is the Inspector
    General; Edward Kraus, who is the Director of Enforcement
    Center; D.J. LaVoy, who is the Director of the Real Estate
    Assessment Center; Joseph Smith, Acting Assistant Secretary for
    Administration; Dave Jacobs, Director of the Office of Lead-
    Hazard Control; and Mark Kinsey, who is the head of OFHEO.
        Senator Bond. We welcome all of our friends from HUD. How
    many people from HUD were not introduced, if you would hold up
    your hands? Is there anybody else?
        Okay. We are delighted to welcome all of you, and thank you
    for coming.
        Secretary Cuomo. Mr. Chairman, I am very excited by the
    possibilities for this year, because we believe that we can
    build on the progress and success of last year. Last year was a
    great year for the Department of Housing and Urban Development.
    It was the best budget we have had in a decade.
        We actually passed a public housing reform bill, which
    showed the ability to proceed and put one foot in front of the
    other, which had not happened for some time. We got past the
    politics, we got past the stereotypes, and we actually got
    something done. With that as precedent, we hope to go forward
    this year.
        Senator Leahy mentioned the glass full, glass empty
    analogy, and whether I should get congratulations or
    condolences for my position, and I take that with a grain of
    salt, obviously. At HUD, there is no doubt that we have very
    real challenges, as do most Federal departments, and there is
    no doubt that HUD has its share of critics for various reasons.
    Some people just do not want to see HUD doing what HUD is meant
    to do, and I do not think they will ever be satisfied, but
    there are also issues that HUD has to address, but I take
    heart, Mr. Chairman, in your opening statement.
        I do not recall another opening statement that you have
    made that had a flip side, that had a right side, and was
    actually congratulating the Department for the good things that
    we have done.
        Senator Bond. I have been waiting a long time to get that
    opportunity, Mr. Secretary. I am delighted we got there.
        Secretary Cuomo. Well, I am glad we finally got there, Mr.
    Chairman, and I knew it would happen, and we got there
    together, and we want to build on that positivism, and I also
    point to the NAPA procurement and the clean audit as indicators
    of the overall success and progress we have made.

                          need for affordable housing

        There are two basic points I would like to address quickly,
    and then we will get on with your questions, Mr. Chairman. For
    me, the bottom line of this hearing, and the Department, and
    this budget is, is there a need that we need to address in this
    Nation, and can HUD address that need? As you pointed out quite
    accurately, there is a very great need when it comes to housing
    in this Nation.
        Actually, the cruel irony is, the need for affordable
    housing is at its highest point in history as we sit here this
    morning. It is almost counter-intuitive, the economy is so
    good, all the news is good, you almost have to take a break, at
    least I did, to understand that the need for affordable housing
    is at its highest point in history, $5.3 million.
        Actually, the strong economy is one of the reasons. The
    economy is so strong it is driving up the rents. Those who are
    on fixed income cannot reach the higher rents. One of the other
    reasons why we have such a need for affordable housing is we
    went out of the affordable housing business when we went to
    zero funding for section 8 vouchers.
        I believe we are now paying for that hiatus, because when
    we stopped producing, we built up a backlog, and the backlog is
    now cresting, and as the Chairman pointed out, we have an
    impending crisis on the op-outs, the buildings that are now
    reaching the expiration of the contract, the landlord has no
    further legal obligation to us, and the landlord can say, ``I
    am taking my building and going to the private market.''
        You put those three factors together, strongest economy,
    the hiatus on the production of affordable housing, no new
    section 8 vouchers, opt-outs, and you have a housing crisis in
    this Nation.

                               section 8 renewals

        I hear you, Mr. Chairman, when you say you are committed to
    renewing the vouchers and renewing public housing, and that you
    do not want to let someone in the back door only to have
    someone leave by the front door.
        My point would be, Mr. Chairman, and I think the point of
    departure is, I believe we have to do both. We have to renew
    all the existing, but we also have to have more production. The
    waiting lists in this country are going crazy, literally.
        The waiting time for public housing authorities has gone
    from 2 years to 3 years on the largest public housing
    authorities just in the past couple of years. The waiting time
    for section 8 has gone up to three-and-a-half years from 2
    years. So this pent-up demand is having a real impact on real
    Americans.
        Senator Mikulski's hometown city of Baltimore, the waiting
    time for public housing is up to 3 years. The waiting time for
    section 8 is up to 2 years. Kansas City, the same thing,
    waiting times for public housing is up to 3 years. For section
    8, it is up to 7 years that people will wait for a section 8
    certificate.
        This is true all across the country. So I do not think we
    have a choice of continuing renewing or 100,000 new, I think we
    have to do both, and Mr. Chairman, I understand the constraints
    of the overall budget, but I think when it comes to this field,
    we just do not have that choice.
        By the way, Mr. Chairman, 100,000 new vouchers is a drop in
    the bucket on the need, and all that does, in my opinion, is
    keep some of the pressure off the system, but if we go to zero
    vouchers again, we will increase the demand, increase the
    backlog, and make a bad situation worse.
        We also have a need for economic development. One out of
    five cities has an unemployment rate which is higher than 50
    percent of the national average. One out of five cities is
    shrinking and losing population since 1980. Cities all across
    the nation, especially medium-size cities, are crying out for
    help to keep jobs and keep their economic base, and they are
    looking for HUD to do that. So the need, Mr. Chairman, is
    undeniable.

                               management reforms

        The second question becomes: Can HUD meet the need? Is HUD
    part of the solution? While I have told the Chairman that I
    would not suggest by any stretch of the imagination that HUD
    has done all it needs to do in management. I would also say,
    Mr. Chairman, that we have made significant progress and we are
    part of the solution as opposed to part of the problem, and the
    chorus of objective, unbiased validators of that success is
    growing and growing.
        Booze-Allen will attest to it. Price Waterhouse will attest
    to it. David Osbourne, the so-called ``guru'' of reinvention,
    will attest to it.
        GAO kept us on the high-risk list, which is curious, Mr.
    Chairman. The House has asked the GAO for their definition of
    high risk that is a quantifiable formula. How do you determine
    high risk that cites HUD, but not Defense, not HHS? What
    quantifiable formula did they use? They have yet to produce the
    formula. They did say that whatever it is, we could not get off
    the list in 2 years, which is also peculiar to me. They said it
    was virtually impossible to have gotten off the high-risk list
    in 2 years.
        Before we understand that significance of the term, I would
    like to know the definition of it, and I am waiting for that
    report, but GAO also went on to say, and I quote, ``HUD is
    making significant changes and has made credible progress.''
    That is from GAO.
        NAPA, as you pointed out, said that the procurement
    process, which was long pointed to by critics of the Department
    as an Achilles heel, is significantly reformed, and we had the
    clean audit for the first time's in the Department's history,
    Mr. Chairman, and if I am not wrong, less than half of the
    Federal departments actually get a clean audit. So that is a
    real significant improvement.
        I see the light. If I could have the Chairman's indulgence
    for just 2 more minutes.
        Before we get caught up in the details of the HUD budget,
    and at HUD sometimes I believe the details become deceptive and
    we tend to lose the forest for the trees, not only has HUD's
    progress been organizational, as attested to by objective
    sources, but we have made real progress on the ground.

                             accomplishments at hud

        The bottom line is this, Mr. Chairman, when you want to
    know what HUD has done, FHA last year did one million
    mortgages, which was close to a record, and returned $1.5
    billion to the treasury, more money than ever before. FHA is
    making money. FHA is making loans. FHA is making progress.
        In fair housing, we are working to double the number of
    enforcement actions. We have brought an energy to fair housing
    that has resonated across the Nation.
        In community planning and development, Mr. Chairman, your
    interest in economic development, we have done $3.5 billion in
    economic development loans, and listen to this, not a single
    dollar taken from Uncle Sam's pocket for any default, $3.5
    billion and not a dollar taken from Uncle Sam's pocket for any
    default, about a 7 percent default rate, creating about 300,000
    jobs.
        In public housing, we've created first rating system ever.
    By the end of this year, we will have inspected all of HUD's
    properties for the first time, Mr. Chairman. We have a system
    where if public housing is not going to work, we can actually
    do something about it. So not only are we making great
    organizational changes, but they are having a real impact.

                                new initiatives

        In our budget this year, we have minimized the number of
    new initiatives. We can argue whether there are three, as we
    suggest. GAO has a different way of counting; they count 19.
    But in my opinion, they require a minimum amount of manpower
    and time, and they are necessitated by the needs of the client,
    because if we are not doing what Kansas City says they need
    from us or Baltimore says they need from us, then we are not
    doing our job, and these are the minimum to do that.
        I agree with the Chairman, I want to focus on the poor
    programs; that is where our investments are. We focused on the
    senior housing, which is the message we got from you last year,
    and to the extent we have ``new initiatives,'' they focus on
    the economic development side primarily, with the President's
    plan for APIC, and a regional approach, which I believe are the
    bare minimum that we need to be responsive to the clientele.
        In sum, Mr. Chairman, the Department has made progress.
    There is a different attitude and atmosphere about HUD. The
    Community Builders, which are only about 380 new employees on a
    work force of about 9,000; 380 were directly responsive to what
    I have heard from this committee, and everyone who I have
    talked to where they said get us some people at HUD who we can
    talk to.
        We have a new attitude about waste, fraud, and abuse,
    because when the FBI came to HUD, with all due respect to all
    the other agencies that worked for all those years after
    scandals were going on, when the FBI teamed up with HUD, people
    understood it was a different day at HUD.
        I am looking forward to building on the progress, building
    on last year, meeting the needs, and going forward together.
        Thank you, and I look forward to the discussions, Mr.
    Chairman.
        [The statement follows:]

                       Prepared Statement of Andrew Cuomo

        Chairman Bond, Ranking Member Mikulski, Members of the
    Subcommittee. Thank you for inviting me here today to discuss HUD's
    fiscal year 2000 Budget. If it pleases the Committee, I would like to
    enter my testimony for the record.
        Mr. Chairman, last year when I presented HUD's budget to you, I
    told you that it represented the second step in a process that we had
    initiated to restore HUD's ability to fulfill our mission of empowering
    communities across America. Step One was to restore competence through
    reform, reinvention and renewal. Step Two was to expand opportunity, by
    creating jobs and new housing opportunities for low- and moderate
    income families.
        Since then, working together with this Committee, we have made a
    great deal of progress in both of these areas. The fiscal year 2000
    budget continues our efforts to restore the public's trust in this
    Department, and to open new doors of opportunity for people who are not
    yet benefiting from the current wave of national prosperity. I am
    convinced that HUD has the most important mission of any agency in the
    federal government--empowering communities to aid those most in need,
    to assist those who do not yet enjoy the full fruits of what this great
    country has to offer.
        This year, HUD's budget request is $28 billion. That represents a
    $2.5 billion increase over the fiscal year 1999 level. It offers
    opportunity and security for millions of Americans. It builds on the
    strong foundation that we have built at the Department over the past
    two years--both on the budget side and the management side.
        This budget builds on last year's strong bipartisan budget. Last
    year was truly a milestone for HUD: the first incremental vouchers in
    five years, expanded FHA loan limits, increases in virtually every
    major HUD program, and a historic public housing bill.
        We could not have passed that budget without this Committee's
    support and commitment, Mr.Chairman. You were instrumental in making
    this happen, and we look forward to continued cooperation this year.
        As both the last budget of this century and the first budget of the
    next century, this is an important budget for our nation's cities and
    rural communities. It represents a renewed vote of confidence by the
    President that HUD is on the right track, and that HUD is better
    positioned than ever to help communities take on the new challenges of
    the 21st century.
                       the foundation--management reform
        Mr. Chairman, a budget is about more than dollars and cents. It's
    about the agency's ability to manage its funds. And on that front HUD
    has made extraordinary progress.
        This budget is a direct result of the management reforms we have
    put in place over the past two years--restoring competence at HUD. As a
    result of Management 2020, begun two years ago, HUD is in a stronger
    position than ever to manage and implement this budget.
        While the job is not yet done, HUD is increasingly recognized as a
    new model for government in the 21st century: a government that does
    more with less, a government that empowers communities through less
    regulation, fewer mandates, and better customer service.
        We have now hired and trained our first two classes of more than
    400 Community Builders. That means that our Public Trust Officers are
    now freed up to focus on ensuring that HUD funds are used effectively
    and in compliance with federal laws and regulations.
        Some 335 properties have been referred to our new, independent
    Enforcement Center, under Ed Kraus, who came to us from the FBI. We
    have five satellite Enforcement Center offices that are now open and
    fully operational.
        The new Real Estate Assessment Center, run by D.J. Lavoy, has
    completed over 13,500 inspections, averaging 150 a day. We're on track
    towards meeting our goal of inspecting all 45,000 apartment complexes
    in HUD's inventory by the end of the year 2000.
        Through our Super Notice of Funds Availability (SuperNOFA), we have
    consolidated 40 separate competitive grant applications into one
    application--two months ahead of schedule. This is a first in HUD's
    history.
        We have opened the first two HUD storefront offices--here in
    Washington and in Albuquerque, New Mexico--with another nine
    storefronts slated to open this fiscal year. The most visible evidence
    of management reform, the storefronts are easily accessible consumer-
    friendly service centers in downtown business districts, where people
    can walk in to get information about HUD programs and activities.
        We opened HUD's new Section 8 Financial Management Center in Kansas
    City. The new Center consolidates the management of the Department's
    largest program--Section 8 rental assistance program. Previously, this
    function had been dispersed among dozens of field offices.
        There is clearly more work to do. It will take time to fully
    implement all of our reforms, to turn around all of the problems that
    built up over time. But there is growing, independent evidence that
    these management reforms are making a difference.
        Even the recent (January, 1999) General Accounting Office Report
    supports the work we are doing to reform the Department. While we were
    of course disappointed by GAO's continued finding of high risk, the GAO
    found that ``HUD is making significant changes and has made credible
    progress since 1997 in laying the framework for improving the way the
    Department is managed. HUD's Secretary and leadership team have given
    top priority to addressing the Department's management deficiencies.''
        That is a vote of confidence in our efforts to reform HUD. Even
    more of an endorsement is the clean, or unqualified, audit that we just
    received from HUD's Office of the Inspector General--the first in HUD's
    history. The Inspector General stated that ``the unqualified opinion
    represents a considerable achievement for HUD, and it further reflects
    continuing improvements in HUD's commitment and ability to properly
    account for funds entrusted to the department''.
        Since audited financial statements were first required by the 1990
    Chief Financial Officers Act, HUD had received no opinion or, more
    recently, only qualified opinions. While we still have work to do, this
    new opinion is a validation of the work that has been done so far.
        Another important measure of progress is our Y2K preparedness. In
    January, the House Committee on Government Oversight and Reform gave
    HUD an A-minus on this front--ahead of 18 other Federal agencies. I am
    also encouraged by this week's new report from the National Academy for
    Public Administration that concluded that HUD has substantially
    improved its contracting and procurement operations. And just yesterday
    we announced the results of the first comprehensive physical
    inspections of public housing around the nation.
        Management 2020 is on track. A December, 1998 report from Price
    Waterhouse Coopers LLC found that ``implementation of the Community
    builders, Enforcement Center, Procurement reform, Real Estate
    Assessment Center, Storefronts and Troubled Agency Recovery Center is
    well under way. Each project met all or substantially all of the
    critical milestones that HUD established for completion as of September
    1.''
                  our programs are achieving tangible results
        HUD's management reforms are being translated into real, tangible
    benefits for the American people. Look at some of the results we're
    achieving in some of our key programs:
        CDBG.--Each year, Community Development Block Grant funds go to 847
    cities, 137 counties and another 3,000 small cities and counties. An
    Urban Institute Study found that CDBG is one of the largest sources of
    non-tax Federal assistance for the construction or rehabilitation of
    privately owned housing. The largest single use of CDBG money (30
    percent) is housing rehabilitation, leveraging $2.31 for every CDBG
    dollar. In our latest Report to Congress, we reported that for the
    three-year period 1994-1996, 641,000 housing units were developed or
    rehabilitated through CDBG.
        During the same period three-year, CDBG economic development funds
    created approximately 445,000 jobs. We have also boosted the economic
    development impact of CDBG through the Section 108 Loan guarantee
    program--with some $3.5 billion in commitments to 652 projects over the
    past six years, creating thousands of additional jobs. Most CDBG
    economic development goes to small businesses--more than half of all
    businesses assisted employ five or fewer persons. And jobs created with
    CDBG assistance meet basic tests of job quality: 89 percent of the jobs
    remain after four years; 96 percent are full-time jobs; 90 percent pay
    more than the minimum wage. And 32 percent are held by local residents.
        HOPE VI.--HOPE VI is the most visible of our efforts to transform
    public housing, replacing obsolete high rises or outdated projects with
    new, livable communities. Over the seven-year history of the HOPE VI
    program, we have distributed a total of $3.1 billion--$540 million each
    year--for 104 projects in 28 states plus the District of Columbia and
    Puerto Rico. These funds have leveraged $3.4 billion in additional
    funds.
        But more than the overall numbers, we are making more effective use
    of these funds. In 1993, the average cost per unit was $94,345. That
    dropped in 1998 to only $74,700 per unit. The number of non-HOPE VI
    dollars leveraged has increased--from only 32 cents for every HOPE VI
    dollar in 1993 to $2.28 per HOPE VI dollar in 1998.
        Brownfields.--One of our newer initiatives, our Brownfields
    Redevelopment Initiative, is beginning to have an extraordinary impact
    in cities by returning contaminated land to good use. Last year we
    committed just $25 million in direct grants to 23 communities. In
    addition to leveraging $141 million in guaranteed loans, this initial
    outlay will generate another $811 million in additional investments,
    creating an estimated 9,500 jobs.
        Elderly housing.--We are proud of the track record of our elderly
    housing programs. Over the past two years our Section 202 program has
    funded 320 projects, for approximately $900 million--creating some
    12,500 new elderly housing units. Overall, the program has about 7,600
    projects and serves 350,000 people. Also, over the past two years,
    through our Section 232 mortgage insurance program we have insured 334
    nursing homes or assisted living facilities for $2.4 billion. Another
    440,000 elderly people live in public housing, approximately 400,000
    receive housing vouchers or certificates, and another 100,000 elderly
    live in project-based Section 8 facilities.
        Mr. Chairman, with these kinds of initiatives already in place and
    our management reforms underway, we are better positioned than ever to
    take on the new challenges of the 21st century--challenges addressed by
    this budget.
            fiscal year 2000 budget addresses five major challenges
        HUDs' fiscal year 2000 budget addresses five major challenges
    facing America: (1) ensuring that our communities remain economically
    competitive in the new global economy; (2) tackling the continuing
    crisis of affordable housing; (3) moving closer to One America; (4)
    finding regional solutions and creating sustainable communities; and
    (5) a addressing the aging of America.
                      competing in the new global economy
        HUD's economic development mission has become more important than
    ever in the rapidly-changing global economy. By any measure, the nation
    is doing well. The numbers are compelling: eighteen million new jobs,
    the lowest peacetime unemployment in more than 40 years, a stock market
    that is off-the charts, the lowest inflation since the 1950s.
        But the rising tide of opportunity has not yet lifted all
    communities. There are still too many places--in both our inner cities
    and rural areas--where jobs are scarce and poverty persists at levels
    well above the national average.
        The good news is that, as the President said in the State of the
    Union Address: ``Our greatest untapped markets are not overseas--they
    are right here at home. And we should go after them.''
        Several HUD programs will help communities tap these markets, and,
    at the same time, help spread our prosperity to all corners of our
    nation. The goal of these programs is to ensure economic
    competitiveness of all communities by uncovering new markets, ensuring
    strong regional economies, tapping new sources of private capital,
    helping businesses grow and prosper in underserved communities, and
    expanding our effort to move people from welfare to work.
    CDBG
        CDBG is the most flexible federal aid to both cities and smaller
    rural communities. Contributing to vital community infrastructure,
    housing, and economic development, this year's request for the CDBG
    program is up $25 million to $4.775 billion. And formula funding that
    goes directly to entitlement communities and states will increase by
    $130 million over 1999 enacted levels.
    Community Empowerment Fund
        Our proposed Community Empowerment Fund will boost capital for
    business investment and job creation in underserved inner city and
    rural areas. The CEF combines and streamlines two existing HUD
    programs: our existing Economic Development Initiative (EDI) grants
    program and with Section 108 guaranteed loans. We are requesting $125
    million in competitive EDI grants, which will leverage an estimated
    $625 million in guaranteed private loans and support an estimated
    100,000 new jobs. Overall, our budget seeks $1.3 billion in loan
    guarantee authority under Section 108 of the Housing and Community
    Development Act.
        We have established two priorities this year for these grants:
    Welfare-to-Work job creation and City-Suburb Business Connections that
    help central city firms tap into regional economies. Under a pilot to
    be launched later this year, we will also use the CEF to nurture a
    badly-needed secondary market for economic development loans.
    America's Private Investment Companies (APICs)
        The President has proposed a comprehensive New Markets initiative
    to bring business investment to underserved inner city and rural
    communities. HUD is requesting $37 million to subsidize and secure $1
    billion in privately issued, federally-guaranteed loans, along with
    $500 million in private equity commitments, to create for-profit
    venture capital funds known as America's Private Investment Companies
    (APICs). APICs will make much-needed private equity capital available
    to larger businesses that are expanding, or relocating, or joint
    venturing in inner cities and rural areas. APICs will be jointly
    administered jointly administered by HUD and the Small Business
    Administration.
    Empowerment Zones
        Empowerment Zones and Enterprise Communities have successfully
    combined tax credits with federal grants and loans, along with local
    resources to attract billions in private sector investment. Our fiscal
    year 2000 budget requests $150 million for Empowerment Zones--$105
    million that will go to 15 recently-selected Round II urban Empowerment
    Zones, and another $45 million for Strategic Planning Communities that
    placed 16th through 30th in the Round II competition. Our budget also
    requests funds for three related programs: to support additional, non-
    designated communities, to establish technical assistance partnerships,
    and to emphasize regional strategies that tie the zones to their
    regional economies and employ urban youth.
    Youthbuild
        Finally, we are requesting an increase in the highly successful
    Youthbuild program. In 1999, Youthbuild will serve between 5,000 and
    6,000 disadvantaged youth, who will--literally--will help rebuild their
    communities as they learn vital job skills. We are requesting an
    increase from $43 million to $75 million.
                  the continuing crisis of affordable housing
        At the core of HUD's mission is the charge to provide housing that
    is decent, safe and, affordable to all. Despite the longest peacetime
    economic expansion in the Nation's history, rents have soared in many
    regions with strong economies. In fact, an all-time high of 5.3 million
    households--12.5 million people--face the high rent burden known as
    ``worst case'' housing need. And worst case needs have grown especially
    fast among working families.
        What's more, persistent gaps in homeownership remain for low- and
    moderate-income families and other under-served groups. With the
    nation's homeownership rate running at a record high of 66.3 percent,
    large gaps remain--cities lag behind suburbs, and underserved groups
    need increased access to mortgage credit. Special housing needs persist
    for homeless people, disabled people, and people living with HIV/AIDS.
    And as many as 600,000 individuals have no home at all on any given
    night.
        To meet this challenge, our budget opens doors to affordable
    housing in three ways: First, by expanding affordable rental housing.
    Second, by expanding homeownership opportunities. And third, by meeting
    special housing needs.
    Section 8 renewals and incremental vouchers
        To expand rental housing, HUD is requesting $10.6 billion in new
    budget authority to renew existing Section 8 contracts--covering 2.4
    million rental units. We are also requesting 100,000 new vouchers to
    help address the tremendous need that remains.
        A number of the proposed new vouchers have designated purposes:
    25,000 will expand the pool of Welfare-to-Work vouchers; 18,000 will be
    for homeless persons, to ensure the availability of permanent housing
    solutions at the end of the Continuum of Care; and 15,000 will be
    targeted to extremely low-income elderly persons. Another 42,000 will
    be unencumbered and will be distributed to Public Housing Authorities
    to help the many families on the Section 8 waiting lists throughout the
    country.
    Transforming Public Housing
        We must continue our efforts to transform public housing. Last year
    the Congress enacted a historic public housing bill. This year, our
    budget requests a significant increase in public housing operating
    funds, from $2.81 billion to $3.0 billion. We are also are proposing
    $2.55 billion for the Capital Fund, a slight increase over last year's
    request. We are also are requesting continued funding for HOPE VI,
    which allows communities to replace obsolete high rises with new,
    mixed-income, mixed-use livable communities and housing vouchers. We
    are also are seeking continued funding for the Drug Elimination Grant
    Program (DEG) to reduce crime and restore safety in public housing.
    HOME
        The HOME program is a proven housing rehabilitation and production
    tool in both urban and rural America. We are requesting $1.61 billion,
    a small increase over last year's level. This will provide more than
    85,000 units of affordable housing for both owners and renters through
    a combination of new construction, rehabilitation, acquisition and
    tenant based-assistance.
    Homeownership
        We must redouble our efforts to expand homeownership. This year's
    State of the Cities report this year again identified homeownership
    gaps between whites and other groups--African-Americans, Hispanics and
    other minorities--as well as between cities and suburbs. As a result of
    the FHA loan limit increase approved last year by Congress, we are
    projecting expanded demand for FHA and therefore are requesting a $10
    billion boost in the FHA loan volume cap, and a $50 billion increase in
    the Ginnie Mae guarantee limitation. Additional proposals to boost
    homeownership include continued funding for Housing Counseling and
    another round of Homeownership Zones.
    Native American assistance
        Native American housing needs will be served through the Indian
    Housing Block Grant Program, and the Indian Housing Loan Program. And,
    per Congress direction in last year's budget, we propose to address
    rural housing needs through the Rural Housing and Economic Development
    program. There we will focus on innovations that complement USDA's
    important work in rural housing.
    Homelessness and Special Needs
        Reducing homelessness is one of this Department's top priorities.
    In 1993, HUD initiated the Continuum of Care to provide a coordinated
    community approach to homeless assistance, with the goal of moving
    homeless persons from homelessness into jobs and permanent housing.
        The Continuum of Care is working, leveraging many times the
    investment of Federal resources. For fiscal year 2000, we propose an
    increase of $150 million, to $1.12 billion. This increase, plus 18,000
    new rental vouchers to create permanent housing solutions, will address
    the housing needs of the most vulnerable Americans--those making a
    transition from the streets back into homes and community life.
        HUD is also proposing an increase of $15 million in the Housing
    Opportunities for People with Aids program (HOPWA), to $240 million.
    This increase is solely dictated by the increase in the number of cases
    and in the number of jurisdictions eligible for funding.
    Elderly and the disabled
        Our special needs programs also serve the elderly and disabled. We
    are proposing $194 million for the Section 811 program serving persons
    with disabilities, matching last year's enacted level the same as last
    year. We also propose to increase the number of disabled persons served
    by increasing the portion of funds that may be used for vouchers from
    25 percent to 50 percent. We are also proposing a total of $747 million
    to fund programs that serve the nation's rapidly expanding growing
    elderly population. These elderly programs are discussed in more detail
    below.
    Citizens Volunteer Housing Corps
        We are also proposing a modest initiative--at $5 million--to
    mobilize a corps of citizens through a new Citizens Volunteer Housing
    Corps to help reclaim and to rebuild abandoned and dilapidated housing
    in cities across the country. The Corps will tap into the spirit of
    civic pride and expand the stock of affordable housing, doing for
    existing housing what Habitat for Humanity and other groups now do in
    the arena of new home building.
                          moving closer to one america
        For Despite the more than 30 years, of prohibition of
    discrimination in housing has been prohibited under law. Yet audits of
    discrimination in the rental and sales market show that an estimated
    over 2.5 million plus instances of discrimination still occur annually
    nationwide. Today's discrimination is often more subtle than it was in
    the past, but it is no less real and no less damaging to our social
    contract as a nation that values equality of opportunity for all. It
    might not always be overt as it has been in the past, but it is there.
    We will only reach ``One America,'' in the President's words, when we
    all have equal housing opportunities.
        Last year, President Clinton announced his commitment to doubling
    the number of fair housing enforcement actions by the year 2000. To
    help complete this effort, we propose to increase the Fair Housing
    Enforcement budget by 18 percent--to a total of $47 million.
        Our budget request provides for increased funding of both the Fair
    Housing Assistance Program (FHAP) and the Fair Housing Initiatives
    Program (FHIP). This request includes monies for innovative
    partnerships between public and nonprofit fair housing groups, as well
    as the second year of FHIP funding for a national audit of
    discrimination in housing rental and sales. This audit will create the
    first ever report card at both the national and local levels of the
    extent of discrimination against each of the Nation's major racial and
    ethnic groups.
                 regional solutions and sustainable communities
        Our communities face a number of threats to sustainable
    development, from uncontrolled growth to crime and drug abuse, from
    environmental hazards and a lack of energy efficiency in housing to
    blight and under-investment in vital community infrastructure. Many of
    these challenges call for cooperative regional solutions that span
    jurisdictional lines.
        To address these challenges, the Administration has proposed a
    comprehensive Livable Communities initiative. This provides communities
    with new tools and resources to preserve green space, ease traffic
    congestion and pursue regional smart growth strategies.
        Many HUD programs already support these goals. CDBG grants can be--
    and are being--used to support an array of activities to create safe
    and livable communities; HUD's Community 2020 mapping software allows
    communities to quickly match government resources with community needs,
    using state-of-the art geographic information system technology; and
    HOPE VI helps create sustainable, mixed used communities.
    Regional Connections
        In addition, we are proposing $50 million in competitive Regional
    Connections grants as a key part of the Administration's livability
    initiative. These funds may be used by states, partnerships of local
    governments, businesses and civic groups to develop and pursue smarter
    growth strategies across traditional municipal lines. Without in any
    way mandating solutions or telling local communities what to choose,
    Regional Connections will define ``smarter growth'' to mean two things,
    broadly speaking: first, more compact development in new growth areas,
    and, second, coordinated reinvestment in already built-up and
    infrastructure-rich areas (usually cities and older suburbs). Smarter
    growth is not slow growth or no growth--but different growth, growth
    back in, growth in support of livable communities.
    Brownfields
        The Department is proposing to double the funding for the
    Brownfields Initiative to $50 million in fiscal year 2000. This will
    accelerate the Administration's previous commitment to a four-year,
    $100 million program.
    Abandoned Buildings
        Our Abandoned Buildings Initiative will turn ``Brown Yards into
    Backyards'' by addressing some of the primary sources of blight in our
    urban neighborhoods: abandoned apartment houses, single family homes,
    warehouses, and even office buildings. As part of the Administration's
    Better Quality of Life initiative, we are requesting $50 million in
    competitive grants that will go to local governments to demolish
    blighted abandoned buildings as part of a comprehensive plan to
    redevelop properties for commercial or for residential use, while
    safeguarding historic buildings.
    Lead Paint and PATH
        We are also proposing continued funding for Lead-Based Paint
    Reduction and the Partnership for Advancing Technology in Housing
    (PATH), at the same levels as the fiscal year 1999 appropriation.
                              the aging of america
        The final challenge addressed by the HUD budget is the ``Aging of
    America''. Just as we are committed as a nation to saving Social
    Security, we must also ensure housing security for older Americans. HUD
    is proposing a total of $747 million in fiscal year 2000--an increase
    of $87 million--as well as changes in existing programs. These are
    aimed at both increasing the supply of housing for America's elderly,
    and improving the housing of those already receiving assistance.
        We propose a comprehensive approach--a Continuum of Care--that will
    enable our seniors to both obtain decent housing and access the
    supportive services they need.
    Healthy Homes for Seniors
        This Continuum begins with helping seniors stay in their own homes.
    Elderly residents are often house-rich and cash-poor. To help them get
    the money they need to stay in their homes, HUD will expand and focus
    its Healthy Homes for Healthy Seniors Initiative on the needs of the
    elderly. Healthy Homes will allow seniors to convert the equity in
    their homes into rehabilitation and property improvement loans through
    HUD's reverse mortgage program.
    Administrative changes
        Because caring for our elders starts with the family, the
    Administration has proposed a $1,000 long-term care tax credit to help
    families meet the costs of long-term care for their relatives. HUD will
    build on this proposal by allowing families who own apartments to rent
    them to family members under the Section 8 program while retaining
    appropriate safeguards against abuse.
    Section 202
        Finally, HUD will continue its commitment to the successful and
    popular Section 202 Housing for the Elderly program with $660 million
    in fiscal year 2000. The funds in fiscal year 2000 will expand non-
    profit senior housing by an estimated 5,790 new rental units. We
    propose that $100 million of the 202 funds will be used to convert some
    existing elderly housing to assisted living facilities, with additional
    services to help low-income frail elderly live as independently as
    possible.
    Elderly housing vouchers
        We are also requesting an additional $87 million for 15,000 new
    vouchers for extremely low-income elderly, to be used in projects using
    the Low Income Housing Tax Credit. The Administration will shortly
    submit legislation to authorize these additional subsidies.
                                   conclusion
        This is a reasonable, responsible and critically needed budget
    request that will serve America's communities well as they take on the
    challenges of the next century.
        It addresses the needs of millions of Americans who, despite our
    great national prosperity, do not yet have the affordable housing they
    need or the economic opportunity to live in safety and security. Our
    budget brings together HUD's programs in innovative, integrated ways
    that will truly make a difference in people's lives and in the places
    they live.
        Mr. Chairman, with this budget, along with our management reform
    efforts, I look forward to working with you and the Members of this
    Committee to make the goal of decent housing and a suitable living
    environment a reality for all Americans.

        Senator Bond. Thank you, Mr. Secretary.
        Because of scheduling conflicts, Senator Craig is going to
    have to leave to meet the British Prime Minister.
        So let me turn the questioning over to you, Senator Craig.

                         idaho fair housing complaints

        Senator Craig. Mr. Chairman, thank you for that courtesy.
        I have one question of you, Mr. Secretary. There are
    others, but let me ask this one, because it is the one most
    perplexing in my State of Idaho right now.
        You have mentioned fair housing and fair housing
    enforcement. Let me run you through a scenario that we are
    finding ourselves in conflict with right now in Idaho that is
    causing some real problems. In 1988, Congress passes the Fair
    Housing Act. In 1991, Fair Housing amendments go into effect.
        In 1991, HUD publishes Fair Housing guidelines, makes
    points that they are not mandatory. In 1996, HUD releases
    manual with disclaimer that the regulations were not accurate
    or complete, and I have looked at the manual and it is printed
    right in there. In 1998, Idaho, the first 25 complaints filed
    by the Idaho Fair Housing Council. In 1999, an additional 52
    complaints filed.
        Here is the problem we have, one of our builders and
    property owners has settled, all the rest are fighting it, and
    they are fighting it on this premise, but when these were built
    there were no guidelines, or there were no specific guidelines,
    or there was no educational program, or an admission within the
    manual that they were not accurate or complete.
        Now, based on a contract with the Idaho Fair Housing
    Council, they are out filing complaints and fines are being
    slapped on these builders. The builders are saying, ``Wait a
    moment. Why do you not just come to us and show us the problem
    and we will correct it, instead of fining us, because we
    operated under the law, and the law was not clear?'', and HUD
    admits it was not clear, and it is kind of like ``We do not
    give a darn. We are going to enforce it.''
        We have a big problem in Idaho, and I am not very happy,
    because I know most of these builders, I have met with them, I
    have worked with them, and they said, if we have problems, we
    will correct them.
        Interestingly enough, no one filed a complaint until you
    put a contract out and somebody needed a job, and that is how I
    am reacting, and we created an Idaho Fair Housing Council, and
    they went out around the state with a fine-toothed comb. Up
    until that time, by a very cautious and careful check on the
    part of my staff, there were no complaints.
        Nobody had felt discriminated against, and in one instance
    where it occurred, it was corrected immediately so that there
    was full access. But none of our disabled people had felt they
    had been denied access.
        Now, the initiative says we are going to walk through it
    with a fine-toothed comb, and our builders are saying, wait a
    moment, if you point it out, we will correct it, but do not
    come in here like a gestapo and slap us with complaints and
    fines and say we will meet you in court, because the builders
    are saying, fine, we will meet you in court, and when that
    happens, Mr. Secretary, it compounds the costs, and we have a
    lot of builders saying, why should we ever get involved again?
    If the government is going to do this, why should we get
    involved in constructing these kinds of facilities, if this is
    the relationship that is existing.
        The reason that is of a concern to me, Mr. Secretary, is
    Idaho fortunately is one of those growth states. Our economy
    has been relatively robust. We do not have the inner-city
    problems that you face and have dealt with. What has happened
    in a robust growth economy is that property values go up,
    people of lesser means cannot find housing, because the housing
    prices price them out of the market, as people come in for the
    jobs and can afford to buy these houses and fix them up and
    improve them.
        So we have a need, a need in Idaho for low-income housing,
    but we have a building community today that is saying, what the
    heck, if this is the relationship, we will have no
    relationship, because we can go out and build an apartment
    building and get a much greater return, and not have to worry
    about the hassle. There is the problem. How do we deal with it?
        Secretary Cuomo. Well, Senator, first, two quick points,
    and then I will ask the Assistant Secretary if she has any
    specific information on this. I share the Senator's concern.
        We are trying to attract private-sector builders to HUD
    programs, and many of them come dragging one foot, because they
    are a little afraid with dealing with government and getting
    involved with the regulations, et cetera, so we do not want to
    make the experience an uncomfortable one.
        As the Senator poses it, I would agree with the Senator,
    that you cannot change the rules once the game has begun, and
    if HUD was unclear about the rules when they began the game,
    you cannot then come back and say, well, we have decided
    retroactively.
        I would ask the Assistant Secretary if she has any specific
    information on this case.
        Ms. Plaza. Yes. I thank you, Mr. Secretary, and thank you,
    Senator.
        First of all, let me make clear that the Fair Housing Act
    is administered fairly. Fairness is part of the game, and as
    part of the requirements in the Fair Housing Act, we are
    required to enter into conciliation efforts with the builders
    or with any respondent that is being complained about under the
    Fair Housing Act.
        The law has been in the books for 10 years, and there is
    some uncertainty, and as a result, we are going around the
    country, and specifically we have gone to the State of Idaho
    and Seattle, in that area, your area, to conduct many seminars
    on the requirements of the design manual and accessibility
    requirements.
        We are not out to play ``gotcha'' at all, even though we
    are emphasizing enforcement under this Administration. I can
    tell you about a number of seminars that we have sponsored and
    many education efforts that we have sponsored in the State of
    Idaho.
        I am familiar with the complaints. The Council that you
    mentioned, the Fair Housing group that you mentioned, is
    entitled to file these complaints when they find that certain
    buildings violate the Fair Housing Act.
        We do not always take all of the complaints that are filed.
    Of those we do take, we look at them very, very carefully to
    determine whether we have jurisdiction, and then beyond that,
    we investigate the case, and we sometimes get the parties
    together and have the whole issue resolved through
    conciliation. We are not out to get any builders, we are not
    out to get any of the industry.
        Senator Craig. Well, I thank you for that explanation. Two
    years since your initiative was aggressively started, 77
    complaints. Now, that is big for Idaho. It may not be big for
    New York City or a large area, but that is very big for Idaho,
    and we have checked prior to that, none.
        Now, that does not mean there were not problems, and I am
    not willing to say there were not, but I have checked this
    personally, because of the outcry from folks who are just
    simply saying, look, we are not being treated fairly here, if
    we had known the difference and it were clear.
        Education is a part of that responsibility, and as I have
    said, I just checked last night before the hearing how many of
    these complaints have been settled. One in 2 years. The rest of
    them are ongoing, and my builders say that they feel they are
    being mistreated, and they are going to fight it.
        Now, many of them have gone on to correct the problem,
    because they did not want to deny anybody access, but they are
    going to fight out of principle, because the guidelines were
    not there, or it was not clear. So I hope you will take another
    look at this.
        This is not good in a state that needs low-income housing,
    as I have explained, and the very builders that will build that
    are the builders that are walking away from it.
        Secretary Cuomo. Senator, just so we are clear, because you
    raised two issues. One is we do fund Fair Housing groups who
    are charged with taking the law, and educating about it, and
    enforcing the law, and I think they do a good service, because
    many times people just do not know about this law. The second
    issue is that we are retroactively trying to enforce a law
    which was unclear, ambiguous, or did not exist at the time.
        Senator Craig. It is the retroactivity that we are
    frustrated over.
        Secretary Cuomo. Yes, and I can see the Senator's
    frustration there. I will look at it myself, and I agree with
    the Senator, if we are retroactively enforcing a law which was
    unclear or ambiguous, we should not be doing that.
        Senator Craig. But as you know, in those instances, a
    partnership works a lot better than a whip. Let us jointly
    correct this together for the sake of the people who need the
    service, instead of saying gotcha.
        I know you say you are not doing that, but the fines that
    are levied and the frustrations that are out there cause our
    builders to think that way.
        Ms. Plaza. I can understand that.
        Secretary Cuomo. We will look into it, Senator, and we will
    get back to you.
        Senator Craig. I appreciate it.
        Senator Bond. Thank you very much, Senator Craig. We are
    very pleased to be joined by the Chairman of the Full
    Committee. Is there anything that you wish to add?
        Senator Stevens. No.

                      flat funding for section 8 renewals

        Senator Bond. All right. You come at a very good time,
    because we are about to talk about one of the most difficult
    problems that we face in the appropriations process. I
    mentioned it in my opening statement. Mr. Secretary, as we
    discussed, the Office of Management and Budget is proposing
    flat funding of $11.5 billion for section 8 contract renewals
    for the next 10 years.
        That comes out of their comparison, and policy, and
    baseline. This means that low-income families, low-income
    disabled, and low-income elderly will be put in a position
    where they will lose their housing in the years to come. Just
    taking the year 2001, the next year, the Administration
    proposes $11.5 billion for section 8 contract renewals.
        Nevertheless, under the Administration's own estimates, it
    would require $15.6 billion for section 8 renewals' existing
    contracts in 2001.
        My question to you is: How many families will lose their
    homes if we stay with the OMB budget request of $11.5 billion
    for fiscal year 2001?
        Secretary Cuomo. Mr. Chairman, the OMB director has stated
    a number of times, unequivocally, that the Department's
    position and the Administration's position is that it is
    committed to renewing all vouchers that are there, period.
        We share the same concern that the Chairman shares, that
    the last thing we want to do is not be able to renew a voucher,
    not be able to fund public housing, and the President himself
    is committed to that, I can tell you that on firsthand
    knowledge.
        In terms of the out-year budgets, OMB will go on to explain
    that there are a number of contingencies that they are working
    through, primarily the one about the Social Security fix, and
    once that is accomplished, there could then be adjustments on
    other elements within the budget, but at the end of the day
    they are committed to funding all the section 8 certificates.
        Senator Bond. Mr. Secretary, the reason I asked this
    question is because it has a great deal to do with the
    commitments we made in this current year. The problem, the
    challenge, the fact of life in housing is the commitments we
    make this year have to be funded in future years, and we show
    the need, when you go out to fiscal year 2008, 2009, you get up
    to $26 billion, $27 billion.
        Now, I do not know any Social Security fix or any Social
    Security change that is going to impact the requirements for
    renewing these section 8 certificates, nor do they change what
    the President has projected in his request for the future. How
    many families would have to be kicked out of housing if the
    budget for fiscal year 2001 is $11.5 billion?
        Secretary Cuomo. The position of OMB, Mr. Chairman, is that
    the contingency would never occur, that they are committed to
    making sure that all the vouchers are fully funded, all the
    expiring ones, as well as the additional ones that we are
    proposing.
        Senator Bond. Mr. Secretary, are you telling me that they
    have two sets of books----
        Secretary Cuomo. No.
        Senator Bond [continuing]. One of them they presented to us
    and another one they mean?
        Secretary Cuomo. No.
        Senator Bond. This is the crux of the matter. Maybe Mr.
    Gibbons could tell me, how many families would we have to throw
    out if we had $11.5 billion in 2001? Mr. Gibbons?
        Mr. Gibbons. I would have to go back and take a look at
    that and provide that for the record.
        Senator Bond. I do not want it exact. You can do the
    figures. Tell me.
        Mr. Gibbons. Well, it would depend on what year, but by----
        Senator Bond. Fiscal year 2001.
        Mr. Gibbons. It would be----
        Senator Bond. 2001. We are looking at how many people on
    October 1, 2000, would be dumped on the streets. The
    Secretary----
        Secretary Cuomo. None.
        Senator Bond [continuing]. And I do not want to see that.
        Secretary Cuomo. But Mr. Chairman----
        Senator Bond. We are fighting an uphill battle.
        Secretary Cuomo. Mr. Chairman, to be fair, almost without
    exception during my tenure at the Department the relevant
    budget discussion is always the immediate year on the table,
    and the out-years always vary. I remember out-years where we
    were almost zeroing out CBDG in the out-years, because there
    were many assumptions, and maybe it is just being the HUD
    Secretary, but I take it 1 year at a time, that is the relevant
    year that is in discussion, and the Administration has said
    unequivocably that in the out-years they are committed to
    finding the funding, which obviously, Mr. Chairman, has to be
    the position, because it is consistent with everything that we
    have done and everything that we are saying we want to do.
        Senator Bond. But Mr. Secretary, we got relevant yeared
    this year. We put in 100,000 new incremental vouchers, and you
    and I agreed that those will be fully funded. They are not.
    This is the relevant year. This is the relevant year. We are
    $4.2 billion short on--I mean on the 100,000 vouchers we did
    not have a full amount provided in the budget, because----
        Senate Staff. We funded $50,000 incremental----
        Senator Bond. $50,000 incremental.
        Senate Staff [continuing]. But the HUD budget has pushed
    out $4.2 billion, because there is not adequate funding.
        Secretary Cuomo. Just to be clear here, Mr. Chairman, when
    you said in your opening statement that this year we fully fund
    all the vouchers within the President's budget, we said we
    would do that, and we did do that. This year they are fully
    funded, with 50,000 from last year, or 100,000, depending on
    how you count, but the incremental from last year and the
    additional we proposed this year are fully funded this year.
        Senator Bond. But that is fully funding for these vouchers
    that carry over, have to be funded in fiscal year 2001.
        Mr. Gibbons. Maybe I can sort of address this. We are
    mixing two issues. With respect to the advanced appropriations,
    the point is not correct to say that we will be postponing the
    appropriation of $4.2 billion into the year 2001. The proposal
    is that you would fully appropriate the entire $11.5 billion in
    this budget.
        That covers all renewals, including the incrementals from
    last year, plus the 100,000 that we are requesting for this
    year. It would fully fund those. What it says is, and it is a
    bit of a misnomer to call it an advanced appropriation, it
    says, having done that, we would delay the availability of $4.2
    billion of those funds until October 1, 2000.
        Probably the best way to demonstrate this is perhaps by
    example. Suppose that a contract expires on April 1.
        What the proposal would do is include immediately all the
    funds necessary to draw down and pay for that contract up
    through September 30, and then on October 1 the funds would be
    made immediately available without any future appropriation, or
    the period of October 1 through the next April, and then what
    the Administration's proposal is, is that is repeated every
    year.
        Senator Bond. Well, the problem with that is, it puts us
    farther behind, because we have traditionally provided at least
    the full year of a contract. We are going to be in a position
    where we will then have only $7.1 billion for expiring
    contracts in 2001, if you push it off.
        Mr. Gibbons. No. You are going to appropriate the entire
    $11.5 billion, and that is important to emphasize, because to
    the recipient, to the owners, and to the tenant, this becomes a
    completely invisible process. Nothing changes. The terms of the
    contract do not change, the period of the contracts do not
    change.
        The only thing that is happening here is we are making the
    funds available in the remaining part of the fiscal year 2000,
    and for the funds that will not be needed until the next fiscal
    year, they will be made available on the first day of the next
    fiscal year. In the past we have fully funded the contracts for
    the entire year, even though it crosses 2 fiscal years.
        Senator Bond. Right. My point is that we are making
    commitments, as tough as this year's budget is, we are
    struggling to fund what we already have committed, and if we
    push off the $4.2 billion to the next year, to fiscal year
    2001, that is why I am asking, we will have more, significantly
    more, section 8 contracts expiring than we will be able to fund
    with the $11.5 billion that is projected by the President's
    Office of Management and Budget.
        Secretary Cuomo. Mr. Chairman, I think we are going past
    each other here. You would appropriate the full amount this
    year to renew all the expiring contracts. We would not draw
    down on the amount we need for next fiscal year until the next
    fiscal year, but you would have appropriated the full amount.
        Mr. Gibbons. Yes, that is absolutely correct; otherwise, we
    could not legally make a contract for a whole year, but the
    fact is that you will fully appropriate these funds.
        Senator Bond. Yes, but we are having to appropriate it out
    of the 2001 funds.
        Mr. Gibbons. But you do the same thing next year and in
    each subsequent year, and if you look at the out-years, you can
    see that there is $4.2 billion that is rolled each year, so you
    are basically doing this every year from now on, so the net
    effect is no change in the out-years. This has no impact on the
    availability of funds in the out-years.
        Secretary Cuomo. Mr. Chairman, let me say it this way. What
    we have done for the first time is we have justified the period
    of the section 8 with the fiscal year. Instead of paying for a
    section 8 contract on its own annual basis, which may cross
    fiscal years, we only pay for the amount of that section 8
    contract which is in that fiscal year, which goes to September
    30.
        Senator Bond. That is correct. When I came here we had
    funded the section 8 contracts on a multi-year basis, and we
    have taken on more and more responsibilities----
        Secretary Cuomo. Yes.
        Senator Bond [continuing]. And the problem is we are caught
    in not just crack, a chasm that is getting bigger, because
    these numbers get to be huge, and I just want to go--just so we
    can figure out how many section 8 are at risk, I would like to
    know how many section 8 contracts--would there be a shortfall?
    How many section 8 contracts would we not be able to fund in
    2001 with the assumption of $11.5 billion for fiscal year 2001?
        Mr. Gibbons. In 2001, we do not think that there would be
    any shortfall in 2001.
        Secretary Cuomo. Just to stay with the Chairman's point,
    Mr. Chairman, I think what we, as you correctly stated, section
    8 at one time were 10 years, and 5 years, and then that went
    down to 1 year----
        Senator Bond. Now we are going down to part of a year.
        Secretary Cuomo. Well, now what we have said is, basically,
    yes, we will only fund that amount of a section 8 voucher which
    we actually have to pay for in that fiscal year, and the amount
    of that voucher for the next fiscal year we will pay the next
    fiscal year, yes, but we are paying for the full price of that
    section 8 voucher this year. We would be deferring costs until
    next year the other way.
        Senator Bond. Well, there is a difference between the
    budget authority and the outlays, and the outlays obviously are
    going to occur in 2001.
        Secretary Cuomo. Yes.
        Senator Bond. The budget authority you are putting the
    budget authority on a current basis, and saying you are only
    making the budget authority, but what I want to know is how
    many vouchers--there is a difference of $11.5 billion versus
    $15.6 billion. That is $4.1 billion in budget authority. If you
    are rolling that over into fiscal year 2001, then are you not
    short--you start to work with $7.1 billion in 2001.
        Secretary Cuomo. The outlays are actually the same. We are
    outlaying what we would outlay. The BA, we are only spending
    the BA this year that we need for this year and the BA for next
    year, starting September 30, from now on, would be paid next
    year. Then where do we get the BA in the out-year, that is
    where the Administration says they are committed to funding the
    BA.
        Senator Bond. Yes, but I mean their projections make the
    totally unrealistic assumption that you can hold it at $11.5
    billion, and we all know, looking at the BA needs, that that
    figure is shooting up, and we are facing a train wreck. How
    many section 8 vouchers, full-year section 8 vouchers does $4.1
    billion fund?
        Mr. Gibbons. Well, vouchers run about $6,000 a piece.
        Senator Bond. Okay. So you have a paper and pencil there. I
    know you are quick on math. We will just sit here and wait. Mr.
    DeCell is back there, he always sends letters to me, Mr. DeCell
    is a wizard at math. Somebody just give me the figures.
        Secretary Cuomo. Mr. Chairman, while they are doing that, I
    do not understand the contingency. If the Administration did
    not find the money in 2001.
        Senator Bond. This is the budget. We are trying to figure
    out what commitments we can make this year that we can continue
    next year, because I am very much concerned, as I have pointed
    along. Mr. Gibbons, the number is?
        Mr. Gibbons. The $4.2 billion continues to roll over, so
    next year's funding level for this program is still $11.5
    billion, even by the OMB estimate. It is not $7.3 billion. It
    is $11.5 billion this year and it is $11.5 billion next year,
    and part of that $11.5 billion is the roll-over of the $4.2
    billion. That occurs each and every year.
        Senator Bond. Yes, but you have already rolled it over. You
    have already rolled it over in----
        Mr. Gibbons. You will roll it again. You would roll it
    again.
        Senator Bond. You have already rolled it over to 2001.
        Mr. Gibbons. You keep rolling it every year.
        Senator Bond. You rolled it over at $11.5 billion, so
    actually you have taken advantage of that roll over. You were
    using up your cushion in 2000.
        Mr. Gibbons. You keep rolling it. Every year, if you look
    at the out-year estimates, every year shows about $11.5
    billion. Part of that is a roll-over of $4.2 billion. So $4.2
    billion is fully funding those contracts every year.
        It is a different issue as to whether--well, your first
    question was whether $11.5 billion was enough, but the $4.2
    billion is in the budget every single year, so there will be no
    reason why those vouchers would not be renewed.
        Senator Bond. Yes, but you have the $4.2 billion, it is
    rolled over from 2000 to 2001, means that you cannot get
    another $4.2 billion by--you had used up that $4.2 billion when
    2001 rolls around, so you have $15.6 billion in expiring
    vouchers, and only $11.5 billion. What is the number? How many
    section 8 certificates is that?
        Mr. Gibbons. That is a different question. It has nothing
    do with the $4.2 billion, per se.
        Senator Bond. No, but I would say it is a difference
    between what is recommended and the need. What is that? That is
    a different calculation. You are dividing $6,000 into $4.2
    billion.
        Mr. Gibbons. That would be around 8,000 units.
        Senator Bond. How many?
        Mr. Gibbons. It is 7,000 units.
        Senator Bond. Seven thousand? No. No. You are losing a
    couple of zeros. If you divide 6,000 into $4.2 billion----
        Secretary Cuomo. Mr. Chairman, if you would like----
        Senator Bond. No, no, this is simple. I mean we have to--
    can somebody do math? Can somebody do math? Six thousand goes
    into 4.2 billion a lot more than 7,000 times.
        Secretary Cuomo. About 80,000.
        Mr. Gibbons. Seventy thousand.
        Senator Bond. Try it again. This may be a problem. We may
    be--all right. How many times does $6,000 go into $4.2 billion?
    Seven sounds right. How many zeroes does it have? There is a
    voice in the back. Voice in the back.
        Secretary Cuomo. 700,000.
        Senator Bond. 700,000. Thank you very much. Okay. Seven-
    hundred-thousand vouchers are at issue here, and that is what
    we are worried about, that is why--we have 700,000 vouchers
    that are at risk under these long-term budget projections, and
    if we were to add more incremental vouchers, we would increase
    the number of existing vouchers at risk. That is my point, Mr.
    Secretary. We have not accounted for the needs of these
    expiring vouchers and the significant increase in budget
    authority needed to accommodate them.
        Secretary Cuomo. Mr. Chairman, you have lost me along the
    way, because the $4.2 billion, this economic adjustment for
    this year would continue every year on the out-years----
        Senator Bond. Right.
        Secretary Cuomo [continuing]. And, therefore, the $4
    billion, or whatever the number is, would never really come
    due, because you would continue to roll it forward, and the
    Administration has repeatedly said in the out-years they are
    committed to funding all expiring, and we also know that the
    out-year budgets are only projections that get modified, and we
    also know that this year, especially with the budget caps and
    the pressure we are under, and contingencies like Social
    Security out there, the bank on the out-years at this point I
    think would have too many variables to come up with any
    reasonable conclusion.
        Senator Bond. As much as I enjoyed this, I am going to turn
    to my ranking member and the Senator from Iowa, but I would
    make the one simple point. You can further squeeze the BA
    requirements by rolling over the BA to the actual year that it
    will be expended, but you can only get the benefit of that roll
    over one time.
        Secretary Cuomo. That is correct.
        Senator Bond. If you get the benefit of it in 2000, you
    cannot get the benefit of it in 2001. That is where we hit the
    wall. That is the kind of question that you and we have to
    resolve before we make commitments for more programs that will
    be more expensive in out-years, and that is where we have to do
    the work. Maybe for clarification and for such enlightenment I
    now turn to Senator Mikulski.
        Welcome, Senator.

                         STATEMENT OF BARBARA MIKULSKI

        Senator Mikulski. Thank you very much, Mr. Chairman, and I
    apologize both to you and Secretary Cuomo. I had to attend a
    very important NATO ceremony with the Polish Prime Minister and
    then attend the meeting with the Prime Minister of Great
    Britain, Tony Blair.
        Mr. Chairman, in the interest of time I am just going to
    ask that my opening statement be included in the record----
        Senator Bond. Without objection.
        Senator Mikulski [continuing]. As if I were here on time.
        Mr. Secretary, let me just go to some questions that I
    would like to focus on, and let me tell you what they would be.
    I would like to focus on HOPE VI, on housing for the elderly,
    and then also what success we might have seen from
    Brownfield's, or it is too early to tell. In the interest of
    time, and if it runs out, then perhaps we can go to a second
    round.

                                    hope vi

        HOPE VI, as we know it has probably been one of the single-
    most important tools to deal with the concentration of poverty
    in our high-rise public housing. However, now that we have had
    HOPE VI for several years now, I would like to ask you, number
    one, what success do you think we have had from this program,
    and give you then three questions.
        My three questions really are: Number one, not only what
    have we accomplished on the policy objective side of HOPE VI,
    but as really the originator, I am concerned about the cost of
    HOPE VI. The projects seem to be very expensive, more expensive
    than if we essentially gave vouchers to the poor.
        Number two, I am concerned about the fact that the
    demolition of the public housing, that all we have done is just
    take vertical concentrations of the poor and through the way
    that we have handled the moves of the people who are in it,
    just done horizontal concentrations of the poor, often
    destabilizing neighborhoods on the basis of social class, and
    then number three, there also seems to be an issue around the
    fact that there seems to be a small number of developers who
    are continually winning the HOPE VI contracts, and there are
    those that are concerned that we have essentially an oligopoly
    growing up of developers.
        So tell me about the money. Tell me about, is HOPE VI
    really now becoming a hollow opportunity, that for all of that
    money we spread sieged neighborhoods, distressed neighborhoods,
    and all we are doing is creating more siege, rather than
    stability, and then also the competitive bid process.
        Secretary Cuomo. Senator, thank you very much for the
    opportunity to talk about this. I am very excited about what we
    have done here and what the Senator has done by starting this
    HOPE VI. We are actually on to something I think for the first
    time in the history of public housing.
        What HOPE VI said was, let us demolish the bad and rebuild
    the bad, which was the right intention and the right idea. One
    of HUD's problems was, we had no good way of really separating
    the good from the bad. We have now put a full system into
    place, where we were actually inspecting public housing.
        The HOPE VI program basically said let us demolish the bad.
    HUD's first problem was, we did not have a good way of telling
    the good from the bad. We have since put in a full system in
    place, physical inspection, audits, full rating system for
    public housing for the first time ever. We just got the first
    sample back on the physical inspection. Eighty-seven percent of
    public housing was actually, once inspected, in good or
    excellent condition. These were by outside, private-sector
    contractors.
        So we know what is good, we also know what is bad, and then
    HOPE VI says demolish the bad and rebuild. We will meet the
    goal of about 100,000 units we think by 2003, which was the
    initial goal of HOPE VI. On the cost of HOPE VI I share the
    Senator's concern----

                  concentrations of poverty in public housing

        Senator Mikulski. Wait a minute, Mr. Secretary. The issue
    around HOPE VI was not the condition of the buildings, but the
    condition of the concentration of poverty in the buildings.
        Secretary Cuomo. Yes. Yes.
        Senator Mikulski. That is what I want you to focus on.
    Believe me, modernization, safety of architecture, but it was
    not the physical architecture that was so troubling that led to
    the HOPE VI, it was the concentrations of poverty.
        Secretary Cuomo. Okay. Then let me get to the third point
    of the three-part question that the Senator asked; the
    concentration of poverty. I checked the numbers after our
    previous conversation, and you were right, Senator, my initial
    impression was actually wrong.
        We do not now have a prohibition against the concentration
    of section 8 vouchers in the neighborhood, and I went back and
    checked after our conversation, and there is a logical misstep,
    in my opinion, upon our review.
        We do have prohibitions against the concentration of public
    housing construction. You cannot go into a neighborhood that is
    overly concentrated, your term was saturated, and build more
    public housing.
        We specifically say if a census track has a high
    concentration of assisted households, you cannot go in and
    build more public housing, because we do not want to
    concentrate. We do not have that same requirement when it comes
    to section 8.
        So you could bring in more section 8 tenant vouchers into a
    neighborhood, overload, saturate, overly concentrate a
    neighborhood with section 8 voucher holders, and it does not
    violate any HUD regulation or any HUD planning guideline, and
    that is what has been happening. I enjoyed the Senators analogy
    of the vertical/horizontal.
        We went to deconcentrate, but in the effort to
    deconcentrate we may have just reconcentrated. This is only in
    the past couple of days, prompted by the Senator's
    conversation, but we are now going to go back upon our review
    and come up with a regulation which mirrors the public housing
    regulation, the goal is not to reconcentrate a different
    neighborhood, and we would pass a regulation and put out a
    notice for comment, because there is going to be a lot to
    discuss here, but that says you cannot use section 8 tenant
    vouchers to overconcentrate an area, period, let alone in an
    effort to deconcentrate a previously concentrated area. I think
    that will get to exactly the Senator's point about what has
    been happening with the----
        Senator Mikulski. Well, I want to be very clear on where I
    would like you to go. First of all, number one, we want to
    acknowledge that if someone has a section 8 voucher that in the
    United States of America they can go anywhere with that section
    8.
        Secretary Cuomo. Yes.
        Senator Mikulski. So we want to affirm essentially the
    concept of individual freedom and mobility. Number two, we want
    to honor and respect all Fair Housing laws, so that whatever
    regulations come, we do not in any way inhibit individual
    choice and also our legal framework of fair housing.
        Number three, we want to make sure it is not a hollow
    opportunity for the poor, that it is not a hollow opportunity
    for the poor.
        Let me say this about HOPE VI. I would have thought that I
    did not have to prescribe every single thing in law for you,
    when I say you, I mean HUD, to think about the next steps. When
    we knew that a building was going to come down, the people were
    going to go somewhere. Obviously, nobody thought about that
    consequence. I did not think we had to be that prescriptive or
    micromanaged. Now that I am raising this issue, I am sure that
    there will be a consequence to that regulation.
        So before you are quick to think that you are satisfying
    me, what I am looking for is opportunity for the poor, and that
    there is no Federal program that stabilizes neighborhoods, and
    that is what has been happening.
        Either we have public housing, which concentrated poverty,
    we have private-sector apartment holders and inner-beltway
    communities that just took buckets and buckets of section 8 and
    created another form of public housing, but what did both the
    poor and the taxpayers who wanted to help the poor get for our
    money?
        Now that we have raised this issue, which obviously had
    never been raised in HUD before, I want you to really focus on
    this, because I believe you agree on the same public policy
    objectives, but do not just come out with a quick reg to think
    you are going to satisfy me.
        The question is: How can we make sure that the poor have
    hope and opportunity, and that we play a role in taking sieged
    neighborhoods and moving them into stability, not spreading
    siege to stress, and I am concerned that we are spreading siege
    to stressed neighborhoods and putting them into siege
    categories. I am using thematic language, and I do not want to
    be the prescriptive micromanager.
        Now, I gather you are going to do a careful examination of
    this. Number two, you are going to come up with a strategy and
    a framework for regulatory change, again, meeting the test of
    fair housing.
        When can we look forward to hearing your analysis and what
    you think you would like to do, in consultation with mayors,
    the National Association of Counties, civil rights groups, as
    well as grassroots community organizations?
        Secretary Cuomo. Senator, I would like to have a paper to
    you first, and I would like to have that done within several
    weeks, because this is a complex issue.
        Senator Mikulski. Very.
        Secretary Cuomo. Just so you know, Senator, it is not that
    this was a concept that was totally missed. What has actually
    happened, and again, this is only on 2 day's conversation, but
    we could not tell you, because we did not have the technology a
    couple of years ago exactly where the vouchers were being used
    by census track.
        We just did not know. We could stop the construction of
    public housing in a concentrated neighborhood, because we knew
    where the buildings were, but we did not know where the section
    8 person was going with that voucher.
        We now have improved the technology, we have improved our
    information. We can actually tell you now where all these
    section 8 vouchers are.
        Senator Mikulski. Well, I appreciate that. Remember, when
    we started the conversations on HOPE VI, we wanted to eliminate
    what I called Zip Codes of pathology and create Zip Codes of
    opportunity. So let us hear now about the costs and also
    competitive bidding.

                            total development costs

        Secretary Cuomo. I share the Senator's concern that the
    numbers on HOPE VI are apparently high on some projects, and we
    discussed this last year, and we have actually done quite a bit
    to reduce the costs, and for the first time we have cost
    limits. We have something called the TDC, Total Development
    Costs, where we say this is a cap, if you will, no how much we
    are willing to spend on the reconstruction of a unit.
        One quick caveat, sometimes, Senator, these numbers are
    somewhat deceiving, because it is not apples and apples. You
    will hear numbers that it cost $200,000 to build a HOPE VI
    unit. That may be technically correct, but it is misleading,
    because it is not apples and apples.
        When you go to do HOPE VI, you have a very high
    deconstruction or demolition cost, because you have to take
    down the old building. You very often have a very high
    abatement cost for Brownfield's problems. You often are
    building community service centers, parks, et cetera, which get
    added to the cost of the housing, but really they are separate
    costs, they are community development costs rather than housing
    unit, per se, costs.
        With that caveat and that stipulation, we have put in place
    for the first time total development costs. There are caps on
    how much we can spend. We did it in collaboration with our
    partners, our stakeholders.
        Elinor Bacon, who is a Deputy Assistant Secretary, who has
    done a phenomenal job on this, is now working on the next level
    of cost control, which is what they call ``soft costs,'' which
    will actually go below the total cap and say we now want to
    talk about the attorney's costs, the accounting costs, the
    tenant costs, and we will come up with caps on those sub-costs,
    if you will.
        On the number of developers we had a conversation from our
    first conversation, Elinor Bacon has a whole plan in place to
    reach out, to bring in more developers. We do not want to have
    a captive audience or a captive industry. We are working with a
    number of groups, Urban Institute, different building groups,
    AIA, APA, and we want to get as many private-sector developers
    as possible competing to drive down these costs, and we will.
        Senator Mikulski. Well, thank you. I know that my time is
    up. The issue around the developers came to me through other
    people who raised this as a yellow flashing light. I am not
    sure who they are or what they are, but you should be aware
    that that was a concern, and like anyone else, a good set of
    requirements and competition always works in the marketplace. I
    will go to my senior housing in my second round.
        Senator Bond. Thank you, Senator Mikulski.
        Senator Harkin.

                            statement of Tom Harkin

        Senator Harkin. Thank you, Mr. Chairman. Mr. Chairman and
    Mr. Secretary, I want to just cover some things dealing with
    rural areas.

                     rural housing and economic development

        Mr. Chairman, last year this subcommittee provided a new
    initiative, which I thank you for, the $25 million in rural
    housing, which you put out, of which $4 million of that went to
    Iowa. Just last weekend I was out visiting some of these
    projects, the rural housing that had been built with this
    money, and, again, I want to thank you, Mr. Secretary, for what
    you have done with this, because your office in Kansas City has
    just been really great about pushing this program.
        The money that we have gotten in Iowa has been leveraged up
    to five times, five times, with Fannie Mae Foundation, with
    local banks, I think with Farmer's Home Rural Development, and
    the Iowa Department of Economic Development. Five times.
        So I was seeing some of this housing built in these small
    towns, so families that I have seen moving into these new
    houses with maybe as much as 60 percent of median income now
    becoming homeowners, and I have to tell you, to see the look on
    their faces, many times single mothers with two or three kids,
    they do not have much money and now they have a home that they
    can call their own. It is just an incredible thing that is
    going on out there.
        I would like to invite you out there to take a look at it,
    because they are really doing good stuff out there. I do not
    know what they are doing in Missouri, or whatever, in other
    states, but I can just tell you in Iowa they have leveraged
    this money up to five times and it is doing a great thing.
        So I just wanted to tell you that, and as the Department
    considers grant applications for the Office of Rural Housing
    and Economic Development I hope we will see a real priority for
    proposals that provide for home ownership in small towns, where
    they can take this money that we allocated and really leverage
    it up. So I hope you take a look at what we have done in Iowa.
        I do not know if we are unique. I have not been in other
    states, but it just seems to me they have done it, and they
    have done it in a short period of time. So whatever is
    happening out there, I hope you will take a look at it and give
    some priority to this in small towns. We need that housing out
    there.
        Now, secondly, I was listening to your exchange with
    Senator Mikulski on section 8, we have a real--whatever
    problems you have in urban America, we have them in spades in
    rural America in section 8 housing, Senator Mikulski. Vouchers
    do not work too good in a small town, because you have a lot of
    these elderly people living in these small towns, they are in
    these section 8, they have no place to go. So a voucher just
    does not work for them.
        We are losing a lot of the section 8 housing in Iowa. I
    have talked to some of these people. You have people who have
    been paying up to 40 percent, and these are people in their
    seventies. The only income they have is Social Security. They
    have nothing else. Eighty percent of the elderly people in Iowa
    exist only on Social Security, and the average Social Security
    check in Iowa is around $700 a month. You go figure. They are
    paying up to 40 percent.
        The housing, as opted out, I have talked to them, now they
    are up to 60 percent of their monthly income going to rent.
    They have no other place to go. You can give them all the
    vouchers you want, unless they move half-way across the state
    or go to Davenport, or Des Moines, or someplace like that, and
    then they are away from their kinfolks, their families, and
    stuff like that. So I really think and hope that you will do
    some real targeting, the projects. Now, I am not very cognizant
    of what is happening in some of the urban areas. I leave that
    to my friend and my colleague from Maryland, and others, but I
    can tell you about rural America, and these small towns, and
    somehow we have to start targeting in these areas. I do not
    know if you can do it administratively, I hope you can, and if
    you can comment on that I would sure appreciate that.
        Secretary Cuomo. Yes. Senator, first, thank you for the
    words about the rural housing and economic development
    initiative, it is something we are very excited about. It is
    going very well in your state. We have a good team of what we
    call community builders out there who are people who work with
    the local governments, work with the state government, and that
    is working well.
        The problem you point to, we discussed it earlier, we
    called it the opt out problem, it is, in my opinion, the
    housing crisis for this year. These are buildings which were
    under contract with the federal government----
        Senator Harkin. I understand.
        Secretary Cuomo [continuing]. For about 20 years----
        Senator Harkin. I understand that.
        Secretary Cuomo [continuing]. Different terms.
        Senator Harkin. I understand that.
        Secretary Cuomo. The contracts are expiring, the owners are
    now saying we may opt-out of the program. They tend to be
    opting out of the program where they have better buildings,
    frankly, where they can go on the market and make more money.
    Those are precisely the buildings we want to keep.
        Our answer has been, ``Well, do not worry, we will give the
    tenants a section 8 voucher, and they can go find an
    apartment,'' but that is not enough, frankly, because a lot of
    the tenants are elderly, they do not want to go out on the
    market and find an apartment, they cannot find an apartment for
    the rent that the section 8 voucher pays, and it is just a life
    crisis for them.
        I think we have to go at it two ways. One is we need a
    systemic solution for these opt outs, where we can go to the
    table with these owners and say, I want to renegotiate, and
    where it is a good building that we want to keep in the
    inventory, we have to be in a position where we can negotiate
    with the owner and keep that building in the inventory, and
    figure out a way that we do not have to go through this every
    year, because this is such a tumult on the tenants.
        We have a legal, or maybe a statute, or a regulation that
    on an annual basis the landlord is notifying all the tenants
    that their lease may be up at the end of the year, which just
    gets all the tenants in an uproar on an annual basis.
        We need to be able to negotiate with the owner, we need to
    come up with a longer-term contract so we do not go through
    this every year, and we need to keep the good buildings in the
    inventory.

                               fair market rents

        At the same time, we have to make sure that the section 8
    vouchers do work everywhere, and that they are paying an amount
    where you can actually get an apartment in those circumstances
    where you must.
        This gets into something called the fair market rent, how
    much the voucher pays, and we are working through that now, but
    there are too many instances right now, frankly, where the
    section 8 voucher does not pay what it needs to pay to get an
    apartment in an area where we want the person to live.
        Senator Harkin. I appreciate that, and that is true. I know
    about the FMRs, but keep in mind, and this may be somewhat
    unique to Iowa, but I think it is true of a lot of the rural
    states. We have a disproportionate portion of elderly living in
    small towns.
        They are in these section 8 houses, and they are pretty
    accessible for elderly, but if they get a voucher, even if they
    get the FMR, and they have to go to another place, usually
    those apartments are not that accessible, they have a lot of
    stairs, or upstairs someplace, that they are just not that
    accessible in small towns.
        I mean you have to get out of your mind that we are in an
    urban area. These are these small, little towns. So they are
    just not really a kind of a place where these elderly people
    can go.
        Maybe it is a little bit unique to Iowa. I do not know. We
    have the highest proportion of the elderly over the age of 80,
    and second only to Florida in over 65, so perhaps we are a
    little bit unique, but I can tell you that in these small
    towns, the FMRs just will not work either, you know, that 40
    percent thing, where you are talking about giving them 40
    percent of the fair market rent for the area like that.
        In some cases it might work, but in a lot of these cases it
    just does not work. So I do not know, if you are going to be
    talking to section 8 landlords and getting them to renew their
    contracts, obviously, it is going to cost you some money.
        You do not have a lot of money, so I am asking you to look
    at targeting, and to think about some things, Mr. Secretary,
    where you say, okay, let us look at areas where we have very
    low vacancy areas, we have rural elderly projects, in which
    there is little in the way of alternative or appropriate
    housing, and sort of build that into some kind of targeting. If
    you cannot do that administratively, I would like to know and
    maybe we ought to do something legislatively, if you cannot do
    it administratively.
        Secretary Cuomo. I agree with the Senator's concerns 100
    percent. Within the next couple of weeks, we are actually going
    to have a plan exactly on this problem, because as it is
    unfolding it is getting worse. I agree with the Senator's point
    about the targeting, and we do have to have some targeting. The
    elderly are in prime rural areas where there is not an
    alternative.
        But we also have to be careful the way we do this, because
    this becomes a negotiation with the owners, and we cannot be in
    a position where the owners believe they have us over a barrel
    either, and we have no choice but to renew the contract,
    because then our negotiating position just went out the window,
    and we will wind up in a position where it is not a negotiation
    at all, it is one-sided, and we are going to have to pay
    whatever they demand, and we do not want to be in that
    position, also.
        Senator Harkin. I agree. I agree.
        Secretary Cuomo. It is a tricky situation, but I hear what
    the Senator is saying 100 percent. We are aware of it. The
    Administration is aware of it, and we will have a full proposal
    that meets the needs nationwide, and the particular needs in
    your state.
        Senator Harkin. Thank you, Mr. Secretary.
        Can I get one more in?
        Senator Bond. Sure. Quick.
        Senator Harkin. Thank you, Mr. Chairman.
        Senator Bond. It has not turned red yet.

                            housing for the disabled

        Senator Harkin. All right. Housing for the disabled. The
    disability community is very upset, Mr. Secretary, over the
    limited support for housing assistance. The need is very high.
    The funding has dropped considerably from its funding levels in
    the early 1990s for the 811 program.
        The Consortium for Citizens with Disabilities did an
    analysis of the loss of housing for the disabled, because of
    the elderly only designation passed in 1992. They found
    considerable housing units being lost from 1993 to now. I
    understand that HUD is doing an inventory of the losses for
    assisted housing for the disabled.
        You do not have to tell me now, but if you could just get
    to me the status of the study, and please have HUD take a look
    and make available to field offices and disability advocates
    the specified and specific assisted housing projects that have
    changed their tenant selection policies to not include the
    disabled.
        I do not know what more can be done, but if you have any
    more ideas on what could be done to help the disability-
    oriented non-profit organizations, and there are some out
    there, to compete and administer these housing units in a
    quality fashion, what more can be done to help these non-profit
    organizations compete and administer these housing units in a
    quality fashion.
        It has to do with, I am hearing from disabled groups saying
    that under the 811 program, because of the elderly-only, they
    are losing a lot of this, they have lost a lot of the assisted
    housing units. How many, we do not know. I hope you can do an
    inventory and tell us.
        [The information follows:]

                         Loss of Units for the Disabled

        The Department has designed a study which will examine the extent
    to which the privately-owned assisted stock serves the non-elderly
    disabled. It will also detail the way in which non-elderly people with
    disabilities access the assisted housing stock in 10 housing markets.
    The contract for the study is expected to be signed be the end of July
    1999, with results available approximately one year later.

        Senator Harkin. And second, can you develop some better
    criteria or are you in the process of doing so to get these
    non-profit groups out there better able to compete and
    administer these?
        Secretary Cuomo. Senator, we were in the midst of doing
    both. I will get to you the study of the numbers as soon as
    that is ready, but that should be ready almost imminently. I
    agree with the concern, I have met with the disabled groups. We
    have the 811 program, it is $194 million. We proposed to
    continue the funding at $194 million.
        I would very much like to be able to say, Senator, we will
    put more money in the 811 program, but as the preceding
    conversation with the Chairman would suggest, I think he is
    trying to suggest to me that money is a little tight this year.
    I am starting to get that general hint.
        Senator Bond. Mr. Secretary, I am glad we are kind of
    reaching that conclusion, and if you would, provide for Senator
    Harkin and us your full answer to that, we are faced with a
    vote coming up fairly shortly, and we are going to try to get
    in a couple more rounds, go as quickly as we can on this, but I
    do want to follow-up on Senator Harkin's question on the opt
    out.

                                    opt-outs

        We appreciate the practical problems, but there have been
    some confusion over the authority and the ability of HUD to
    deal with the opt-out problems. I am a little confused about
    Mr. Apgar's testimony before the House Appropriations
    Committee. He did seem to indicate that the Department has the
    authority and funding through a tenant protection appropriation
    that could be used to resolve it, and I would appreciate
    knowing whether HUD has the authority to resolve the opt-outs,
    which are vitally important, particularly in rural communities
    with limited housing supply.
        Is there authority in the appropriations account, or is
    there authority as part of the existing mark-to-market
    legislation, which really is the flip side of the opt-out
    problem. Do you need more authority? We have to get it
    resolved. You need authority one way or the other.
        Secretary Cuomo. Mr. Chairman, thank you very much. You are
    right, this is the flip side of the mark-to-market crisis, if
    you will. If you remember, last year, and the year I was
    confirmed, the big crisis was the mark-to-market, and we had to
    address that.
        We addressed that crisis, and now we are on to the next
    one, which is almost the flip side. As this is unfolding, Mr.
    Chairman, it is getting worse, and the pervasiveness of it is
    now starting to communicate itself.
        Section 8, Senator, is normally an urban problem, inner
    cities. We are hearing from everyone all across the nation, and
    the number of landlords who are now considering opting-out, is
    increasing, my own theory is, as the economy is getting better.
        Senator Bond. Mr. Secretary, let us move on to the
    authority issue.
        Secretary Cuomo. Let me ask Commissioner Apgar if he would
    like to respond.
        Senator Bond. Excuse me for interrupting. Can you do it?
        Mr. Apgar. In the mark-to-market legislation it did provide
    our capacity to raise rents under certain circumstances, that
    is correct, but as the Secretary mentioned we need a
    comprehensive approach, otherwise, we will just get in a bad
    negotiating posture with the property owners.
        We estimate that fully marking-up all the inventory to
    market across the board would require about $600 million to
    $800 million worth of research this year and every year out in
    the future. So obviously that is a non-starter.
        We have to think about a way to target the resources toward
    the appropriate cases. We need to have other tools that we do
    not have authority for to complement this, for example, to take
    the tenant issue off the table by making sure that we have
    enhanced vouchers, so we are not debating whether or not we are
    going to be throwing tenants out or not, that we have the
    authority to give enhanced vouchers for residents everywhere.
        We need to talk about this renewal issue, whether or not we
    can do something around the multi-year renewal without
    committing funds. So there are elements for which we have
    authority for and elements which we need authority for.
        Senator Bond. Do you need additional legislative authority?
        Secretary Cuomo. Yes.
        Senator Bond. When will you provide it for us?
        Secretary Cuomo. We are in the process of putting together
    a package and working on the House side with folks who have
    already put legislation forth.
        Senator Bond. Okay. Let us know, would you please, because
    it is vitally important. If you need legislation, let us know.
        Secretary Cuomo. We will.
        [The information follows:]

                                    Opt-Outs

        Market rents for certain properties.--Building on HUD's emergency
    actions, a longer-term program should be established to raise selected
    properties' rents to market. This program should include targeting
    criteria for which properties' rents will be increased and specific
    commitments that will be required from owners in return for increased
    rents. By extending the criteria and commitments embodied in HUD's
    initiative to a full fiscal year, the Administration proposes to spend
    up to $100 million for this purpose in fiscal year 2000.
        Improve Section 8 renewals.--Recent changes in renewal policy have
    led to greater insecurity for residents and owners through frequent
    resident notifications and changing rules. Recognizing this, Congress
    provided for a single notification under a five-year contract that
    could replace the current annual notifications. HUD is using this
    provision as part of the five-year commitment required from owners
    under its emergency initiative. Extending this authority to allow a
    single notification prior to the expiration of a contract of any length
    would encourage longer-term preservation of affordable housing while
    removing the fear among residents caused by misleading notices each and
    every year. Second, renewal of Section 8 contracts could provide
    greater security to owners while reducing HUD's administrative burden.
    Currently, owners may be required to perform a study of comparable
    market rents each year at the renewal of the contract. A better
    alternative would be to allow an operating cost adjustment to be
    applied for four years, with a comparability study needed only every
    fifth year to ensure that rents remain in line with the local market.
        Market returns for other properties.--While lifting Section 8 rents
    to market and providing more secure renewals can limit opt-outs of
    valuable affordable housing, these actions will have limited success in
    avoiding prepayments in properties that are important to preserve as
    project-based housing. Limiting prepayments is more difficult than
    limiting opt-outs because the subsidy level provided by the mortgages
    is fixed. Part of a potential solution could be a reexamination of
    current limits on rents, distributions and ``excess income'', all of
    which were called for by statute at a time when subsidized rents were
    not linked to local markets. Now that Congress has realigned project-
    based Section 8 rents so they are driven by local market conditions,
    HUD could further this change by realigning rents, distributions and
    ``excess income'' more closely to market in HUD's other privately-owned
    project-based properties. These changes could be targeted to the best
    properties and none of them would require additional appropriations.
    Rents in Section 236 and 221(d)(3) properties could be capped at the
    market level (offset for the interest subsidy) instead of the current
    budget-based formula, although still limited to 30 percent of
    residents' incomes. Distributions could be revised to allow for
    recognition of project equity built up over time instead of remaining
    tied to the original equity contribution. And continuing a trend by
    Congress over recent years, ``excess income'' could be made available
    to the owners of certain 236 projects to better approach a true market
    return.
        New resources and ownership.--Even when owners choose to remain in
    HUD's multifamily subsidy programs, there are cases when new ownership
    or resources are needed to preserve decent affordable housing. Whether
    for tax or other business reasons, owners may be effectively locked
    into ownership despite a waning interest in running the property. Or in
    markets where local rents are below what is needed to pay for
    recapitalization later in the project's life cycle, other forms of
    resources may be necessary outside of current rent and interest
    subsidies. Any effort to stop the loss of affordable housing should
    take account of these cases by encouraging the transfer of properties
    to more motivated owners, particularly tenant organizations and non-
    profits. One way to do this is through targeted increases in Section 8
    rents to market for valuable properties in strong markets that would
    not otherwise be eligible but agree to a transfer to a tenant
    organization or non-profit. A second method would be to target federal
    subsidies to affordable multifamily properties that receive State and
    local contributions subsidizing a transfer or recapitalization.
    Finally, the current legislation guiding the disposition of properties
    foreclosed by HUD could be made permanent, including the option to
    transfer properties to resident organizations and non-profits with Up-
    Front Grants in negotiated sales.
        More effective resident protection.--Even with a comprehensive
    proposal that includes all the suggested changes discussed, there will
    still be cases where owners choose to opt out. In these cases, HUD can
    better protect residents by offering ``enhanced'' vouchers that allow
    them to remain in their homes without substantial rent increases when
    an opt-out occurs. Any proposed solution should give HUD the authority
    to offer ``enhanced'' vouchers in all opt-outs at up to market rent
    levels. In addition, Congress could clarify the permissible increases
    in ``enhanced'' rent levels over time by allowing them to track
    reasonable increases after the first year.

                                      gao

        Senator Bond. We will try first to get it through the
    authorizing side. If that fails, you know what happens. We
    would love to see it authorized.
        Mr. Secretary, I mentioned a grave concern I had about GAO.
    GAO has told us that their staff cannot meet and talk with HUD
    people directly, that GAO is required to submit written
    questions on all issues rather than dialogue. As I mentioned,
    GAO is our eyes and ears. What is the problem, and can we get
    your commitment to get back working a normal relationship?
        Secretary Cuomo. Mr. Chairman, I was not aware that we were
    not. I have no problem. I have not been informed. I will ask
    the Deputy Secretary, who does this on a day-to-day basis, if
    he has any ideas.
        Mr. Ramirez. What we have done, Senator and Mr. Chairman,
    is that, quite frankly, with the different tasks that we have
    put at hand, the staff that we have available, we have asked
    GAO to help coordinate the work that they are asking for. It
    requires a great deal of time and manpower to respond to a lot
    of their requests.
        We want to organize it and make it as expeditious as
    possible to compile the information that has been requested.
    What has happened is that when it comes down to specifically
    the concerns they have had as it relates to the budget, is that
    we would like to coordinate our responses on the budget through
    the CFO's office.
        We have been more than willing to set up any sort of
    working schedule with the different program areas to be able to
    answer those questions, but to give you a recent example, just
    yesterday they called in and asked for two pages of information
    on work that they wanted to get out of the budget office from
    specific program areas, and they wanted to meet yesterday, and
    it is very hard to assemble the team of a half-a-dozen or a
    dozen individuals that actually have to deal with responding to
    the issues, because they were very program specific in that
    kind of short order.
        We want to keep our working relationship a strong one, we
    appreciate the work that they do, and we want to work with them
    to coordinate a more effective way of getting that
    information----
        Senator Bond. GAO does this all the time, they go around
    and ask lots of questions of lots of agencies, and this is the
    first time I have ever heard them really complain that they
    were getting stiffed. I would like to not worry about this
    problem.
        I have a lot of other things to worry about, but if it is a
    problem you can bet I am going to be worrying about it, and you
    can either solve it at the Department, or you will solve it in
    my office. I really would be in a bad mood if we had to solve
    it in my office.
        Secretary Cuomo. We do not want you in a bad mood, Mr.
    Chairman.

                          rental subsidy overpayments

        Senator Bond. Rental subsidy overpayments. The HUD IG's
    financial statements found a number of material weaknesses. For
    example, HUD reported in 1997 that it spent $18 billion to
    provide rent and operating subsidies to a variety of programs,
    but on the basis of data collected for 1996, HUD estimated it
    had provided over $900 million in overpayments, $900 million,
    funds that could be used, for example, to fund all these other
    things. What has HUD done to reduce subsidy overpayments?
        Secretary Cuomo. Mr. Chairman, I would ask FHA Commissioner
    Bill Apgar to respond.
        Senator Bond. Please.
        Mr. Apgar. Well, as you know, we are engaged, first, in a
    pilot effort to establish the capacity to do income matching
    where we use income records and other things to match to tenant
    income files to identify which situations that might exist in
    terms of overpaying. That has been successful, and now we are
    moving to a total income matching approach.
        We have designated REAC, the Real Estate Assessment Center,
    our new data analysis agency to take over that responsibility,
    and they are literally matching millions of files of
    information to try to identify which particular vouchers, or
    project-based subsidies, or public housing residents may be
    mispaying their rent, and providing that information back to
    the authority.
        There are some constraints on that process, because of our
    limited capacity to use and divulge the income tax records, but
    we are working within the confines of confidentiality to get
    the information so that the local housing authority and the
    residents can move their rent payment in line.

                     obligation and monitoring of hud funds

        Senator Bond. I am going to have a number of questions for
    the record. I will submit one that has been called to our
    attention about, it says, ``As of September 30 of last year,
    HUD had unexpended balances totaling more than $158 billion.
    About $40 billion was unobligated, and $114 billion was
    obligated, but not expended.''
        I am concerned about these very high balances. It seems to
    be the equivalent of about 6 years of budget authority, and I
    would appreciate for the record, and I will give you a fuller
    question for the record, how HUD monitors and oversees the
    funds to ensure they are obligated and expended as prescribed,
    because that seems like a huge number, and I would like to get
    to the bottom of that. I do not know if you have looked at
    that.
        Secretary Cuomo. We have. I will get you that, Mr.
    Chairman, in detail; but just a general comment, in some ways
    it is the nature of our business. Many times, we often will
    award a certain amount of money and the organization, the city,
    the PHA then has to go find a site; then has to do
    architecturals; and then has to break ground.
        Sometimes there is even a lawsuit, believe it or not, in
    the midst somewhere. So it tends to be the nature of our
    business, but I will get you a thorough explanation.

                                   eeoc costs

        Senator Bond. One final question. As we all know the HUD IG
    is currently the subject of an EEOC investigation centering on
    the promotion of a staff member. It has come to my attention
    that the Department has contracted with outside counsel in a
    manner that is inconsistent with typical investigative
    practices for EEOC complaints, and that there has been hundreds
    of thousands of dollars spent on it.
        What are the normal costs associated with an EEOC
    complaint, and how much is being spent on this investigation?
        Secretary Cuomo. Mr. Chairman, the Chairman I am sure knows
    that one of the things that the Department does is fair housing
    anti-discrimination work. We take that very seriously. A charge
    like this against a senior official we take very seriously, and
    we wanted to make sure that we practice what we preach.
        Senator Craig was talking about our fair housing work, and
    how good we are at telling everybody do not discriminate. When
    we have a complaint in-house we want to make sure we are just
    as good as reviewing ourselves as we want to be at reviewing
    everyone else.
        The matter is now in Federal court. I believe there is a
    Federal lawsuit, because the Department did not come to any
    conclusion, did not take action, and the aggrieved party has
    the right to go to Federal court, which they did exercise, and
    the matter is now in court, and will be resolved through the
    judicial process.
        Senator Bond. Is it customary to spend several hundred
    thousand dollars on counsel to investigate other EEOC----
        Secretary Cuomo. I do not know that that was the number,
    but I do not know that it is customary to have this type of
    complaint by this senior of an official against this senior
    official, especially when the Department has been as adamant as
    it has about racism and discrimination. So I do not think this
    is at all a typical situation, Mr. Chairman.
        Senator Bond. I would appreciate knowing if there are any
    similar circumstances or any similar cases, how much it cost,
    how it was handled, any other officials. With that, let me turn
    the questioning back to Senator Mikulski.
        [The information follows:]

                             Cost of EEOC Complaint

        The normal costs associated with the investigation of an EEO
    complaint, as will as the amounts of the contracts awarded to the law
    firms Williams & Connolly and Day, Berry & Howard for the specific EEO
    investigation at issue, are described in the report prepared for HUD by
    Donald Bucklin of Squire, Sanders & Dempsey. Copies of that report and
    its attached exhibits have been provided to the Committee under
    separate cover.

                                elderly housing

        Senator Mikulski. Thank you, Mr. Chairman. In anticipation
    of a vote shortly, I just want to say to the Secretary, I am
    going to submit the rest of my questions for the record, but
    let me give you the framework for my questions on housing for
    the elderly.
        As you know, I have persistently raised the issue that
    demography is destiny, and that we have senior housing that was
    built under the Carter Administration and in the early days of
    the Ford Administration. The seniors themselves are aging in
    place, and the buildings are getting old, and the question is,
    what is the public policy thrust in what we are going to do to
    help that particular population.
        They are going from 60 and robust to 80, and many being
    frail elderly, different situation, with no continuum of care.
    Then, number two, really with the aging baby boomers coming
    online, how also are we--not all boomers have Cuisinarts, and
    401Ks, and a variety of other things, they are poor, so the
    question is, what about them?
        As you know, I asked for a report, it was delivered this
    week. We have not had a chance to review it, but let me give
    you three yellow flashing lights that I am going to respond to
    in your testimony.
        You want to have something called Healthy Homes, help
    seniors stay in their homes. My experience is that that is
    often a platitude and not a program. That is in every program
    where I hear let us help people. That is not only at HUD, that
    is throughout social agencies. So I do not want platitudes, I
    want programs.
        Second, your recommendation is to convert equity in their
    homes and to rehab and property. My flashing yellow light in
    that is one of the biggest senior scams has been reversed
    mortgage.
        There is the bonafide reverse mortgage that has helped
    people for independence, but it has been fraught with scam, and
    our friends at Fannie Mae have been one of the leaders to make
    sure again that we know that where there is need, there is
    greed, and that often we go to scams run by scum. I do not want
    this to happen here. So I do not want platitudes, I want a
    program, and I do not want another senior scam.
        Having then said that, it is how we are going to use tax
    credits. We are going to have more vouchers. There is what
    Senator Harkin has raised, $87 million for your new vouchers. I
    really do not know if this is a program or essentially people
    forage through what is existing, try to come up with something
    new, and again, I am out of the placating me business, I want
    to be in the senior opportunity business, and the senior safety
    net business.
        So we are going to raise questions with your initiative for
    which we have significant yellow flashing lights, and then
    perhaps we could work together to see what we can really do to
    address these problems in a way that is not more vouchers,
    complicated programs around tax credits, and oh, gee, we are
    going to keep them in their own home.
        Poor people do not often have equity in homes. If your
    house is already going to a siege neighborhood, and you paid
    $50,000 for it, it is now worth $12,000. There is not a lot of
    equity there.
        Secretary Cuomo. Senator, let me make one quick comment,
    and then I refer it over to the FHA commissioner. I know time
    is short, so I will keep it brief. You just received the
    report, I am aware, but you should also know that the basis of
    the work, there has been a lot of work that has gone on over
    the past year, a lot of consultation, and I believe this
    program that we have come up with is not a platitude at all,
    but it is a program.
        You should also know the situation we find ourselves in at
    HUD time and time again is we cannot buy our way out of these
    problems. It could be very easy for me to say I will tell you
    the solution to senior housing, take the 202 program, bring it
    from $600 million to $7 billion. We do not have that luxury.
        I also do not think that would be responsible. We have many
    different programs at HUD, and sometimes the truth is, bringing
    those fragmented programs into a systemic approach that
    actually makes sense, we did that with the homeless programs
    and the continuum of care----
        Senator Mikulski. Exactly right.
        Secretary Cuomo [continuing]. And that is what we are
    trying to do with the senior programs.
        Senator Mikulski. Well, rather than have everyone respond,
    let us look at the report, you know my yellow flashing lights--
    --
        Secretary Cuomo. Yes.
        Senator Mikulski [continuing]. And then let us see, as we
    move forward, what we can do, again, for a safety net for
    seniors, why stewardship of taxpayers' funds, and that
    continuity of care just along what you said about the homeless
    program, and I think we could really do something exciting and
    beneficial. Thank you very much.
        Secretary Cuomo. I think we can, Senator. Thank you.
        Senator Mikulski. Mr. Chairman, that is it for me.
        Senator Bond. Thank you, Senator Mikulski.
        Senator Harkin, do you have----

                             privatization of gnma

        Senator Harkin. One short one, Mr. Chairman. Thank you.
        I just want to talk a little bit about Ginnie Mae, there
    have been some proposals out there to privatize Ginnie Mae. It
    was suggested in the Senate budget resolution, and I am
    informed that while there might be a gain for the year 2000 of
    some $2.5 million, that HUD would lose money every year
    thereafter. I do not have figures on that, but I understand it
    is quite a bit, and I expect that some of the targeted efforts
    by Ginnie Mae to promote housing would be lost, and I just want
    to know what your thoughts are on this issue. Do you have any
    figure on about how much HUD might lose in the future?
        [The information follows:]

               Would Money Be Lost If Ginnie Mae Were Privatized?

        The answer has a couple of parts, one of which is relatively
    straight forward and the other more problematical.
        The straight forward part of the response is that the Treasury
    looses the compound value of the net income foregone by not having
    Ginnie Mae. The average annual growth rate of Ginnie Mae's net income
    over the past 8 years (through 1998) was 9.5 percent. If we assume that
    that rate would prevail over the next 10 years, on average, then the
    Treasury would be giving up approximately 12 billion dollars in net
    income. Of course the offset would be tax revenues from a fully taxable
    entity and the price received from the sale of the Ginnie Mae
    franchise.
        The more problematical part of the response is that a sale of
    Ginnie Mae would also likely affect the volume of loans to be insured
    or guaranteed by FHA, VA and RHS. A private Ginnie Mae would most
    likely be traded at a significant discount price to the current Ginnie
    Mae MBS because it would not likely have the full faith and credit
    guaranty of the U.S. Treasury. Moreover, over the initial formative
    years of the new ``Ginnie Mae'', there would not likely be a
    significant volume of securities issued (the old Ginnie Mae and the new
    Ginnie Mae securities would not trade on the same basis, i.e. they are
    not interchangeable) which would also serve to lower its price relative
    to current Ginnie Mae MBS. The lower prices of the new Ginnie Mae's
    have a twofold effect on lending to low- and moderate-income families,
    the primary beneficiaries of the Government mortgage insurance and
    guaranty programs. More time would be necessary to estimate this
    effect.
        The first effect of lower Ginnie Mae prices is that the interest
    rate to potential FHA/VA/RHS borrowers is higher because interest rates
    and prices are inverse to each other. The higher interest rates on home
    loans necessitated by lower prices on the securities would disqualify a
    number of such borrowers at the margin. Families and communities would
    not enjoy the benefits of home ownership and the Government would loose
    the premium income on the loans that would not be made.
        The second effect of lower Ginnie Mae prices would be to encourage
    lenders to turn their attention to secondary market instruments that
    would yield relatively higher prices and, therefore, lower rates for
    their customers. They would follow this course of action because of
    competitive reasons--offer their customers the lowest rates possible on
    home loans--and because they seek the highest return on their capital
    in order to remain in business-higher prices, and increased customer
    base, mean more potential return. The alternative secondary market
    sources (i.e. the other GSEs) would not likely be of primary benefit to
    low and moderate income borrowers, especially first time buyers, since,
    today's market, the alternative sources tend to not place priority on
    FHA/VA/RHS lending or loans to borrowers that typically use FHA/VA/RHS.

        Secretary Cuomo. Senator, I will get you the numbers, but I
    could not agree with you more, this would be a terrible
    mistake, this would be a fire sale tragedy, fiscal
    irresponsibility, in my opinion. Ginnie Mae makes about $600
    million this year, $670 million----
        Senator Harkin. $600 million, yes.
        Secretary Cuomo [continuing]. $674 million this year. They
    proposed selling it for like $2.5 billion or $2.8 billion. That
    would be very shortsighted, in my opinion, to take a recurring
    asset, just on the dollars and cents, you are making $670
    million, you settle for $2.4 billion, $2.8 billion, it is not
    an intelligent financial transaction, plus Ginnie Mae works
    amazingly well with FHA as part of this affordable housing
    system.
        Why would you want to take Ginnie Mae out, disassemble the
    system that is working? FHA works. Ginnie Mae works. They are
    working better than ever before. They are doing more loans,
    they are making more money. We have so many things that are
    broken.
        Why do we want to go to the one place that is working well
    by everyone's admission and fix what is not broken?
        Senator Harkin. Well, I appreciate that, and Mr. Chairman,
    I do know what your personal feelings are on this, but
    obviously you know what mine are now, but it just seems to me
    that, first of all, OMB is suggesting it, and we have the
    Senate budget resolution suggesting it, and I say a pox on both
    their houses on this one. I just do not understand how OMB
    could come up with that.
        My staff tells me that the preliminary figures might be
    that HUD might lose somewhere in the neighborhood of maybe $300
    million to $500 million, something like that. Anyway, it is
    extensive. So it just seemed to me very shortsighted for OMB to
    suggest that.
        Thank you, Mr. Chairman.
        Senator Bond. I can assure you that suggestions sometimes
    go into the budget resolution, and assumptions or suggestions
    from OMB do not necessarily drive the bus around here.
        Senator Harkin. I sure hope that is true on this one.
        Senator Bond. We will take their views for what they are
    worth. Mr. Secretary, do you want to add----
        Secretary Cuomo. Just as a point of clarification. On this
    one, I do not want to have OMB unfairly criticized. They
    originally thought of this idea, they thought again, and OMB is
    against the sale of Ginnie Mae.
        Senator Bond. Oh, is that a fact now?
        Secretary Cuomo. Yes, it is.
        Senator Bond. Okay.
        Senator Harkin. Good.

                         Additional committee questions

        Senator Bond. We have plenty of other things to worry
    about. We promised to submit some interesting and challenging
    questions for the record. Our colleagues may wish to have
    additional statements. We will keep the record open.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                      Questions Submitted by Senator Bond

        section 8 contract renewal and incremental section 8 assistance
        Question. As I discussed elsewhere, the HUD budget for fiscal year
    2000 has raised expectations about providing additional section 8
    housing assistance while implementing policies and long-term budget
    goals that will actually decrease the availability of housing for low-
    income families, including the elderly and disabled.
        For example, the HUD fiscal year 2000 Budget proposes 100,000 new
    incremental vouchers for fiscal year 2000 while actually reducing
    substantially the level of funding needed in the future to preserve and
    support rental assistance for families that are currently assisted. In
    the first place, HUD has shifted the responsibility for paying for
    expiring fiscal year 2000 section 8 contracts by deferring $4.2 billion
    until fiscal year 2001, despite the fact that the cost of expiring
    section 8 contracts will increase by some $2 billion in additional
    funding needs in fiscal year 2001 to maintain existing section 8
    contracts. In addition, OMB has decided to freeze the funding of rental
    assistance for section 8 contract renewals at $11.5 billion for fiscal
    year 2001 and each year thereafter through fiscal year 2009. This would
    mean over 250,000 low-income families, including the elderly and
    disabled, will lose existing section 8 housing assistance under HUD's
    proposal. To put this in real terms, this also means for every new
    family HUD proposes to provide incremental housing assistance, HUD will
    be kicking some 2 to 3 families out the back door. How can you justify
    the HUD fiscal year 2000 budget when, as a practical matter, it removes
    housing resources from those who can least afford to lose it?
        Answer. The Department's long standing policy has been to renew all
    existing section 8 contracts and the Department did not deviate from
    this policy in the fiscal year 2000 budget request. When the Department
    requested the $4.2 billion in advance appropriation, the intention was
    to shift the date the funding is appropriated to the time the funding
    needs actually occur. With the advance appropriation, there is no need
    to change the expiration dates on contracts, and there will be
    absolutely no impact on either the tenants or the owners. The advance
    appropriation will not actually be scored under the rules of the Budget
    Enforcement Act until the start of the next fiscal year, on October 1,
    2000. Because we are providing funding for a large portion of our
    section 8 renewals only through the last day of fiscal year 2000, as
    opposed to a full 12 months, we will need to be certain that funds to
    continue those contracts will be available the first day of fiscal year
    2001.
        It is true that OMB decided to freeze the funding of rental
    assistance for section 8 contracts in future years. This issue will be
    addressed during internal budget negotiation on the fiscal year 2001
    Budget. OMB Director Lew has also stated that funds have been set aside
    within the Administration's total budget request to fully fund contract
    renewals and other programs once Congress and the Administration reach
    an agreement on Social Security.
        Again, as mentioned before, if full funding for contract renewals
    is enacted as requested with advance appropriation or if the full
    amount needed is available in the beginning of fiscal year 2000, no one
    will be ``kicked'' out including the elderly or the disabled.
        The 100,000 new incremental vouchers requested by the Department
    are desperately needed. As described in last year's Report to Congress
    on Worst Case Housing Needs, there are 5.3 million households with
    worst case needs. HUD's most recent report, Waiting in Vain: an update
    on America's Rental Housing Crisis, tells us that the waiting lists for
    public housing and Section 8 tenant-based assistance is growing and
    that the average time on the waiting list, before receiving assistance
    has increased. In the nation's largest cities, the wait can be as long
    as 5-10 years. Among the causal factors are the loss of affordable
    housing stock--a drop of 1.3 million units or 19 percent between 1996
    and 1998--and the lack of additional Federal support for affordable
    housing.
        Question. Mr. Secretary, as you know, I support additional housing
    assistance, including section 8 assistance as part of a menu of
    flexible tools subject to local decision-making. However, because of
    budget constraints and the need to meet a number of national objectives
    in a number of agencies, I have had to make certain compromises that
    balance funding decisions in a fiscally responsible manner.
        Nevertheless, as part of our discussion last year in adding 50,000
    incremental vouchers, you promised to ensure that adequate funding
    would be provided to cover the cost of this incremental rental
    assistance in fiscally responsible manner. Nevertheless, the HUD fiscal
    year 2000 Budget now proposes an additional, 100,000 incremental
    vouchers at an annual cost of some $585 million. In addition, the VA/
    HUD Appropriations Subcommittee has the responsibility to cover the
    cost of those 50,000 incremental vouchers as a recurring annual cost.
        Again, I remind you that the costs of renewing expiring section 8
    contracts continues to rise each year. For example, the cost of
    renewing section 8 expiring contracts in fiscal year 1999 is $9.5
    billion and will rise to an actual cost of $13.6 billion in fiscal year
    2000 and to $15.6 billion in fiscal year 2001. How has HUD responsibly
    covered the cost of the fiscal year 1999 incremental vouchers and
    fiscal year 2000 proposed incremental vouchers, especially since HUD
    has used a budget gimmick of pushing off until fiscal year 2001 or that
    other programs, such as VA Medical, will have to cut to pay for these
    contracts. I always try to look ahead that overcharging my credit cards
    now. How do you plan to pay for these additional contracts in fiscal
    year 2001 (and to make it real assume flat funding for fiscal year 2001
    at the President's budget level for HUD for fiscal year 2000 or at a
    funding level of $11.5 billion)?
        Answer. I can assure you that the cost of renewing 50,000
    incremental units enacted in fiscal year 1999 is fully covered in
    fiscal year 2000. As stated earlier, the advance appropriation was
    requested to shift the date the funding is appropriated to the time the
    funding needs actually occur. The advance appropriation will not be
    scored under the rules of the Budget Enforcement Act until the start of
    the next fiscal year, on October 1, 2000. Neither the owners nor the
    tenants will feel the impact with this methodology change since there
    will be no change on the expiration dates on the contracts. Funding for
    contracts renewals in fiscal year 2001 and forward will be addressed
    again during internal budget negotiation on the fiscal year 2001
    Budget. The 50,000 vouchers enacted in fiscal year 1999 and 100,000
    vouchers requested in fiscal year 2001 will be covered in our fiscal
    year 2001 budget request. As Director Lew has stated that funds have
    been set aside within the Administration's total budget request to
    fully fund contract renewals and other programs once Congress and the
    Administration reach an agreement on Social Security.
                               section 8 opt-outs
        Question. HUD has made a point of emphasizing its commitment to
    low-income families and the provision of affordable housing.
    Nevertheless, there are a number of section 8 project-based housing
    developments throughout the country that receive rents that are below
    market. Because of lost revenue, a number of owners are opting out of
    the section 8 program and raising rents beyond the financial ability of
    many residents. This is especially troubling where the projects are
    elderly or are located in areas where vacancy rates are low. For
    example, in 1998, 219 section 8 properties with some 25,488 units opted
    out of the section 8 program. HUD has done little to address this
    problem and, in fact, a number of HUD policies have exacerbated the
    loss of this housing and the displacement of low-income families,
    including the elderly and disabled. This is even more troubling since
    HUD has both the authority and funding available to renew these section
    8 contracts. I am looking for a commitment from HUD to preserve this
    housing for low-income families and a time schedule reflective of the
    seriousness of this problem to the many families facing displacement.
    Also, please advise as to why HUD has not acted.
        Answer. HUD has done and is doing all that is feasible with the
    legislative authority and funds that Congress has made available to
    this effort. For example, we have just issued instructions to our field
    offices for an Emergency Initiative to mark up to market project-based
    rents in developments we believe are most likely to opt-out. Our
    initiative is necessarily limited by the cost of such increased Section
    8 rents and by the authorities available under existing law, but the
    Emergency Initiative is to prevent further losses in the assisted
    housing inventory pending Congressional action on the appropriations
    request for fiscal year 2000, and a package of legislative changes
    which are being formulated. The Budget request includes sufficient
    funding for a broader program to stop opt-outs, as well as funding to
    permit expanded availability of enhanced vouchers to prevent
    displacement of families in circumstances where owners decline to
    renew.
        In the final analysis, we believe that owners are opting-out for a
    number of reasons, many of which are outside of the Department's
    ability to address. HUD cannot unilaterally solve the opt-out problem.
    We must work in partnership with the Congress to address this important
    issue.
                               eeoc investigation
        Question. Mr. Secretary, as you know, Ms. Gaffney, the HUD IG, is
    currently the subject of an EEOC investigation centering on a complaint
    that Ms. Gaffney discriminated in the promotion of a minority staff. It
    has come to my attention that the Department has contracted with
    outside counsel in a manner inconsistent with typical investigative
    practices for EEOC complaints with the Department spending hundreds of
    thousands of dollars in hiring a number of law firms to handle the
    investigation. What are the normal costs associated with this type of
    complaint at HUD?
        Answer. The normal costs associated with the investigation of an
    EEO complaint are described in the exhibits to the report prepared for
    HUD by Donald Bucklin of Squire, Sanders & Dempsey. Copies of that
    report and its attached exhibits are attached.
        Question. How much has HUD spent and will spend on this
    investigation? Also what firms have been hired and what have each of
    these firms been hired to do?
        Answer. The law firms Williams & Connolly and Day, Berry & Howard
    submitted a joint proposal in response to HUD's request for proposals
    for an EEO investigation and related legal services. The respective
    responsibilities of these firms and the amounts of their contracts is
    described in a report prepared for HUD by Donald Bucklin of Squire,
    Sanders & Dempsey. Copies of that report and its attached exhibits are
    attached.
         Question. Finally, why did HUD feel it necessary to not follow the
    normal investigative procedures? Does this mean that the normal
    procedures are inadequate and that other parties in the EEOC process
    are receiving less justice?
        Answer. The specific reasons for HUD's decision to select a new
    contract investigator for Mr. Newsome's complaint are detailed in a
    report prepared for HUD by Donald Bucklin of Squire, Sanders & Dempsey.
    A copy of that report and its attached exhibits are enclosed.
        [Clerk's note.--The following report ``HUD EEO Complaint IG-98-01:
    Review of HUD Actions Relating to the Investigation of the Newsome
    Allegations,'' prepared for HUD by Donald Bucklin of Squire, Sanders &
    Dempsey can be found in the subcommittee files.]
                                eeoc complaints
        Question. Please provide a breakdown of all EEOC complaints since
    January of 1993 by each HUD office, including the Office of the
    Inspector General, Office of the General Counsel and Office of the
    Secretary.
        Answer. An EEO complaint inventory summary is attached.

                      TABLE I.--COMPLAINT INVENTORY SUMMARY
                  [Reporting period from 10/01/93 to 09/30/98]
    ------------------------------------------------------------------------
                                                     Complaints
                                       -------------------------------------
                HUD regions              On hand    Files    Closed  On hand
                                        beginning   during   during   at end
    ------------------------------------------------------------------------
    1.................................         6         1        7  .......
    2.................................         6         2        8  .......
    3.................................        16         3       19  .......
    4.................................        49        16       65  .......
    5.................................        39        14       53  .......
    6.................................       104        20      124  .......
    7.................................        14         4       18  .......
    8.................................        42         2       44  .......
    9.................................        49        10       59  .......
    10................................         6         2        8  .......
    OSEC..............................         2        19        5       16
    ADSFM.............................  .........       10        7        3
    CPD...............................         4        39       29       14
    OGC...............................         1        26       15       12
    OLCR..............................  .........        1        1  .......
    GNMA..............................  .........        2        2  .......
    HOUS..............................        24       270      154      140
    PIH...............................        16        90       58       48
    FHEO..............................        13       129       78       64
    PDR...............................  .........        1  .......        1
    ADMIN.............................        12        62       40       34
    GIG...............................         7        41       36       12
    CFO...............................  .........        5        5  .......
    LBP...............................  .........        5        2        3
                                       -------------------------------------
          Total.......................       410       774      837      347
    ------------------------------------------------------------------------

        Question. Please identify all actions taken to reduce any concerns
    identified through EEOC complaints determined to be valid.
        Answer. For each EEO complaint which results in an administrative
    or judicial finding of discriminatory conduct, HUD complies with any
    resulting orders to remedy the injury suffered by the complainant. Such
    remedies can include reinstatement, promotion, transfer, money damages,
    amendments to personnel records and changes to agency personnel
    practices. In addition, the vast majority of EEO complaints are
    resolved by agreement between the complainant and the agency. In such
    cases, without conceding that discriminatory conduct has occurred, HUD
    negotiates appropriate responses and/or remedies with the complainant
    to address the concerns underlying the original complaint.
                         rental assistance overpayments
        Question. The HUD IG's fiscal year 1997 financial statements audit
    found a number of material weaknesses in HUD's internal controls. For
    example, HUD reported in 1997 that it spent some $18 billion to provide
    rent and operating subsidies through a variety of programs. On the
    basis of data for calendar year 1996, HUD estimated that it had
    provided over $900 million in overpayments. This is a huge amount of
    funds lost to the Department--funds that could, for example, be used
    for section 8 assistance. What has HUD done to reduce subsidy
    overpayments?
        Answer. The $900 million indicated in the question represents the
    potential for excess payments, which even if true, may not be
    recoverable by the Department. The potential overpayments arise from a
    number of factors, including but not limited to: tenants under
    reporting or unreported income and underpayment of rent, falsifying
    deductions which on which rent is based, errors in data base
    information, etc.
        To overcome the problem of potential excess payment, The Secretary
    has directed the Department's Real Estate Assessment Center to lead a
    task force to analyze several income verification techniques with
    potential for expanded use of Federal tax return data. In recent years
    HUD has used computer matching to Federal tax return (Form W-2 and Form
    1099 data obtained from the Social Security Administration and the
    Internal Revenue Service), to identify unreported tenant income and
    excessive housing assistance for tenants who receive rental assistance
    from housing agencies, owners and agents. Use of Federal tax return
    data has been effective in identifying prior underreported income.
    However, to date use of Federal tax return data has been limited to
    random samples of households and to selected housing agencies and
    owners/agents. Various techniques for expanding the use of the
    alternative techniques are being assessed during 1999 by the Task
    Force. The Department is aggressively working at putting in place the
    information technology and human resources necessary to implement a
    large scale computer matching program.
        Through the implementation of new systems and reforms, it is
    expected that the task force will address any policies or procedures
    which created the climate for either overpayments or the potential for
    overpayments. Six action teams chartered by the Task Force, comprised
    of staff from CFO, CPD, Housing, OGC, PIH and REAC, will address the
    following areas: 1. continue and expand income matching programs; 2.
    strengthen re-certification efforts; 3. expand the Social Security
    Administration computer matching; 4. ensure full population and data
    integrity of HUD's systems; and 5. institute penalties for overpayments
    of rental assistance, and perform monitoring and oversight.
        HUD's Office of Policy Development and Research also is contracting
    for an evaluation of housing agencies'/owners'/agents' effectiveness in
    (re)certifying tenants for rental assistance.
        However, it should be noted that there are various legal, technical
    and administrative barriers to HUD's efforts to fully and
    comprehensively implement income matching and verification of tenant
    reported income during the eligibility certification and
    recertification processes.
        Further, the implementation of various provisions of the 1998
    Housing Act will significantly impact tenant income verification.
    Examples of such provisions include flat rents and minimum rents.
    Extensive efforts have been made to improve the accuracy and timely
    reporting of information to the tenant data bases.
        HUD with the support of the Social Security Administration, has
    implemented social security (SS) and supplemental security income (SSI)
    computer matching for all housing agencies. This computer matching is
    highly effective in detecting past unreported SS and SSI for tenants
    and in preventing future unreported income. HUD also has modified the
    computer system it uses to facilitate SS and SSI matching and reporting
    for tenants who receive rental assistance from owners and agents who
    administer programs of the Office of Housing. A pilot of SS and SSI
    matching for the Office of Housing's rental assistance programs
    commenced in September 1998. It is anticipated that the SS and SSI
    computer matching program will be expanded to all owners and agents
    during fiscal year 1999.
        All of these initiatives are on-going and are expected to yield
    results during fiscal year 2000. To supplement the initial statement in
    this response, it should also be noted that the Task Force's full scale
    review also has the potential to uncover instances where tenants
    overpaid their rent due to not being given credit for eligible
    deductions, inaccuracies in the recertification process, errors in the
    database, etc.
                             public housing issues
        Question. We understand that the PHA in San Juan, Puerto Rico was
    permitted to privatize and is now under review by Justice and the HUD
    IG for criminal fraud. What steps has HUD taken to limit fraud at this
    PHA?
        Answer. HUD's Atlanta Office of the Inspector General (OIG) is
    preparing a comprehensive report of their findings. Pending the release
    of that report, the Department has been informed that the following
    issues were raised by the Caribbean Office OIG: (1) weak internal
    controls; (2) some procurements were selected without sufficient
    competition; (3) advertising of competitive procurements was below
    standard; (4) cost analyses were incomplete, (5) procurement actions
    were not properly documented; and (6) procurement staff were not
    properly trained.
        Pending the completion of the Atlanta OIG report, the Department
    developed a ``work out'' plan with the HA and has initiated the
    following interim steps:
      --Increased monitoring and oversight of procurement activity at the
            Puerto Rico Housing Authority (PRHA) by the field office;
      --Required the PRHA to hire an independent firm to run the day-to-day
            operation of the modernization program ($180 million--largest
            source of funding, and the program that is the focus of the
            investigation);
      --Required the PRHA to retain an Independent Public Accounting (IPA)
            firm to audit the accounting operations. The IPA has completed
            an audit of the PRHA's fiscal year 1997 and issued a qualified
            letter of opinion. The fiscal year 1998 audit of the PRHA
            operations has not been completed. The IPA has been requested
            to examine and reconcile all accounts/expenditures called into
            question during the period 1993-1996;
      --Insured that the PRHA's accounting operations conform with
            Generally Accepted Accounting Principles (GAAP) (the PRHA
            complied with this requirement this month, 6 months ahead of
            the time established in the ``work out'' plan);
      --Required the PRHA to create an Office of Internal Auditing to
            monitor and enforce compliance with internal controls (based on
            a proposed restructuring plan developed by the IPA); and
      --Took steps to establish a training program to permit procurement
            staff from the PRHA to learn from another housing authority
            that has a model procurement system.
        Question. What tools does HUD have to limit this type of problem
    and what has HUD done in this case?
        Answer. Some of the tools available to the Department are noted
    above in the response to the specific actions that the Department has
    taken in the specific instance of the alleged fraud at the PRHA.
    However, this question and the response deals specifically with tools
    from a preventive perspective.
        Under the new Public Housing Assessment System (PHAS), which
    replaced PHMAP, the annual audit of HAs by an Independent Public
    Accounting firm will be more stringent. In addition, pursuant to
    Management Reform 2020, HA accounting practices are now required to
    conform with the GAAP. Further, HUD will continue to require risk-based
    Field Office monitoring, and more responsive public trust (i.e.,
    earlier reporting of perceived discrepancies, inconsistencies or
    potential fraud). Finally, as appropriate, the Department will request
    assistance from the OIG in uncovering procurement irregularities.
                              homeless assistance
        Question. HUD moved over $20 million from the fiscal year 1999
    homeless assistance funds to fund fiscal year 1998 supportive housing
    applications. Congress was not advised of this funding decision before
    the transfer of funds and the decision runs counter to how we budget
    for activities under appropriation accounts within the Subcommittee.
    What is HUD's legal justification for this action and was the action
    reviewed for consistency with the HUD Reform Act as well as relevant
    appropriation requirements?
        Answer. The Department acted in full accordance with all
    programmatic statutory and regulatory requirements, HUD Reform Act
    requirements and all applicable appropriation requirements in the award
    of 65 non-competitive Supportive Housing Program (SHP) grants in fiscal
    year 1999. As detailed in the January 19, 1999 opinion by Associate
    General Counsel Robert Kenison, the legal authority for non-competitive
    awards under SHP is expressly identified in Section 583.235(a) of the
    Code of Federal Regulations. Additionally, as specified in Associate
    General Counsel Kenison's opinion, HUD published notice in the Federal
    Register on February 4, 1999 identifying the legal basis for awarding
    SHP funds non-competitively and advising all applicants of the funding
    action being taken.
        Question. Please identify the legal citation for this action?
        Answer. As stated immediately above, the legal basis for the
    funding action taken in awarding SHP funds non-competitively is found
    at 24 CFR 583.235(a). This provision specifically provides that SHP
    projects ``may be renewed on a non-competitive basis.''
        Question. Were conversations held with jurisdictions before awards
    were made? Please identify all conversations--the dates, subject matter
    and parties.
        Answer. It is normal, routine, and expected practice that
    applicants not selected during the award of McKinney Act funding make
    contact with various HUD officials in both Headquarters and Field
    Offices following the grant announcement process seeking an explanation
    for their non-selection. That pattern was maintained following the
    December 1998 announcement of McKinney Act project selections. Please
    find attached, to the extent this information could be recollected by
    the individuals involved, a listing of conversations by date, subject
    and individuals that we believe is responsive to your request.

              REQUESTED CHART OF CONVERSATIONS WITH APPLICANTS SUBSEQUENTLY AWARDED FUNDS NON-COMPETITIVELY
    ----------------------------------------------------------------------------------------------------------------
                  Date                              Spoke with                               Regarding
    ----------------------------------------------------------------------------------------------------------------
      HUD Participant: Jean Whaley

    December 29, 1998..............  Bob Durando City of Portland, Maine....  Debriefing on lack of award.
    December 29, 1998..............  Matthew Eddy & Dana Totmann, City of     Other resources for homeless
                                      Portland & State of Maine.               assistance review team process
                                                                               comparison of last year's
                                                                               applications.
    January 4, 1999................  Bob Duraslo, City of Portland, Maine...  Request for faxing of Gaps Chart
                                     Matthew Eddy, City of Portland, Maine..   submitted.
                                     Bill Johnson congressional staff         (No notes).
                                      (Maine).                                Explanation of award process.
    January 5, 1999................  Matthew Eddy, City of Portland, Maine..  No notes.
    January 6, 1999................  Bill Johnson, congressional staff        Arranging meeting between Maine
                                      (Maine).                                 officials and HUD.
    January 7, 1999................  Bill Johnson, congressional staff        Confirm meeting.
                                      (Maine).
    January 11, 1999...............  Matthew Eddy, City of Portland, Maine..  Questions on (1) S+C 10 percent set
                                                                               aside; (2) PRN for 1998; (3) Scores;
                                                                               and (4) Differences in Gaps Chart.
    January 11, 1999...............  Penny Madrey Johnson, Director of        Debriefing Dayton applicants via
                                      Housing, Dayton, OH.                     phone.
    January 13, 1999...............  Stacy Austin & Bob Durando's assistant,  Faxing Bob Durando the scores for
                                      City of Portland, Maine.                 Maine.
    January 13, 1999...............  Unknown Participants from Oklahoma       Debriefing Oklahoma City applicants
                                      City, Oklahoma.                          via phone.
    January 15, 1999...............  Stacy Austin, City of Portland, Maine..  (No notes).
    January 19, 1999...............  Penny Madrey Johnson-Director of         Debriefing phone call for applicants
                                      Housing, Dayton, OH.                     in Dayton.
    January 20, 1999...............  Delegation of representatives from both  Attended meeting between HUD and Maine
                                      the City of Portland and the State of    delegation.
                                      Maine.

     HUD Participant: Cliff Taffet

    January 20, 1999...............  Delegation of representatives from both  Failure of any projects in either
                                      the city of Portland and the State of    Portland, Maine or State of Maine to
                                      Maine.                                   be funded.

     HUD Participant: John Garrity

    January 13, 1999...............  Unknown participants from Oklahoma       Conference call to debrief applicant
                                      City, Oklahoma.                          on reasons for low score in the
                                                                               homeless competition.
    January 19, 1999...............  Penny Madrey Johnson, Director of        Conference call to debrief applicant
                                      Housing; Dayton, OH.                     on reasons for low score in the
                                                                               homeless competition.
    Numerous calls (uncertain of     Matthew Eddy, City of Portland, Maine..  Information on reasons the City of
     exact dates) between January                                              Portland, Maine and the State of
     11-19.                                                                    Maine failed to be selected for any
                                                                               award in the homeless competition.
    January 20, 1999...............  Delegation of representatives from both  Failure of any projects in either
                                      the city of Portland and the State of    Portland, Maine or State of Maine to
                                      Maine.                                   be funded.
    ----------------------------------------------------------------------------------------------------------------

                               empowerment zones
        Question. A recent IG audit concluded that HUD does not have an
    effective program of oversight and control of the program. What is HUD
    doing to ensure that empowerment zones are functioning according to
    their local plan?
        Answer. On March 12, 1999, the Empowerment Zone/Enterprise
    Community (EZ/EC) Initiative Office fully responded to the finding and
    conclusions reached in the recent IG audit report. The report was based
    on audits in four Empowerment Zones and a review of HUD's EZ/EC
    Initiative Office. The EZ/EC Initiative Office found that the report
    came to a number of erroneous conclusions.
        HUD's oversight and controls are consistent with its statutory and
    regulatory responsibilities. HUD has two main statutory and regulatory
    responsibilities related to the EZ/EC Initiative. First, HUD is
    responsible for designating new urban EZ/ECs. See 26 U.S.C. 1391. 24
    CFR 597.300-597.302. Second, HUD is responsible for ``regularly''
    assessing the progress of the urban EZ/ECs so it can make a periodic
    determination as to the continuing eligibility of the EZ/EC.
        HUD's monitoring responsibility derives primarily from section
    1391(d)(2) of the Omnibus Budget Reconciliation Act of 1993, which
    provides for the revocation of an EZ/EC's designation if the HUD
    Secretary determines among other things, that a designated EZ/EC is not
    complying substantially with, or has failed to make progress in
    achieving the benchmarks set forth in the strategic plan. The
    implication of this responsibility is that HUD will collect and review
    information relating to the progress of the EZ/EC toward achieving its
    strategic plans.
        The Department has issued regulations to implement this
    requirement. See 24 CFR 597.400-597.403. Pursuant to regulation, EZ/ECs
    must submit ``periodic'' reports to HUD detailing the actions they have
    taken to implement their strategic plans. HUD uses this information
    along with other information to evaluate the progress of the EZ/ECs.
        To keep abreast of the EZ/EC activities, HUD requires each EZ/EC to
    submit performance reports that detail the progress made toward
    implementation of the strategic plan. To date, HUD has formally
    evaluated the progress of the EZ/ECs once and released the results of
    that determination in March 1997. As a result of the first biennial
    evaluation, five of the 72 EZ/ECs were issued warning letters requiring
    them to improve their performance or risk losing their designation.
        HUD uses a number of tools to keep track and oversee the interim
    progress of the EZ/ECs. For example, the EZ/EC Office receives feedback
    based upon annual field office assessments. In addition the annual
    reports from EZ/ECs and field office assessments, HUD receives
    information from the following:
      --the applicable HUD Secretary's Representative who is responsible
            for helping the particular EZ/EC implement its strategic plan;
      --monthly telephone conferences with the EZ/ECs;
      --residents or other stakeholders associated with the EZ/EC;
      --HHS--the agency that funds the EZ/EC Initiative;
      --the States that are responsible for distributing the funds to the
            EZ/ECs;
      --the lead entity responsible for implementing the EZ/EC strategic
            plan; and
      --news accounts relating to the EZ/EC.
        As noted above, one of the unique aspects of the EZ/EC initiative
    is its reliance on performance measurements to ensure local
    implementation efforts are a success. The HUD EZ/EC Office works
    closely with the EZ/ECs to ensure they fully understand the principles
    of performance measurement and the importance of accurate reporting. In
    fact, the EZ/EC Office has implemented a new automated Performance
    Measurement System (PERMS) to improve the understanding of EZ/ECs and
    the accuracy of reporting. Training and technical assistance to
    grantees on performance measurement is scheduled for July. This will
    include hands-on instruction from a staff and a consultant who will
    review EZ reporting for accuracy and appropriateness.
        The next ``periodic'' performance report is due at HUD the end of
    August 1999. At that time, it will be forwarded electronically to the
    appropriate field office for review and evaluation. The field offices
    will evaluate the progress or lack of progress and the status of each
    implementation plan and report to Headquarters that information.
        In addition, each EZ/EC keeps track of the projects and programs it
    uses to meet the goals of its strategic plan. In addition, the
    individual projects and programs have implementation plans formerly
    called ``benchmarks'' that track the results such as the number of jobs
    created, the number of loans provided to businesses, and the number of
    child care slots provided to residents. The implementation plans, which
    are approved by the local EZ/EC governance structure, provide a
    blueprint for action by and evaluation of the EZ/EC. Together with
    State and local government oversight these efforts result in continuous
    tracking of EZ/EC progress.
        Question. Please provide a status review of each empowerment zone--
    achievements and failures.
        Answer. Since its inception in 1994, the Clinton/Gore
    Administration's EZ/EC Initiative has produced outstanding results by
    empowering people to create business opportunities and jobs, leverage
    public and private partnerships, provide affordable housing and make
    their communities safer and better places to live. Distressed
    neighborhoods--with some of the deepest pockets of poverty in the
    nation--are now on the road to recovery. After decades of decline,
    there are now great opportunities and brighter futures for residents
    and families living in the EZ/EC neighborhoods.
        Hundreds of individual EZ/EC achievements are featured in our three
    best practice publications called, ``What Works!--Volume 1, Volume 2 &
    Volume 3.'' The following EZ/EC-reported accomplishments provide a
    national snapshot of the cumulative accomplishments of the Empowerment
    Zones and Enterprise Communities as reported by the EZ/ECs. The EZ/ECs
    reported this information using the new Internet-based EZ/EC
    Performance Measurement System (PERMS). The cumulative results shown
    below are based on the inaugural submissions by the EZ/ECs. We expect
    the quality and quantity of reporting to improve over time as the EZ/
    ECs become more familiar with PERMS and more sophisticated in the art
    of performance measurement in general.
        Projects and Programs.--The EZ/ECs report that 2,600 neighborhood-
    based projects and programs have been developed and are underway as a
    result of each EZ/ECs' locally-derived strategic plan. Federal EZ/EC
    seed money has leveraged over $10 billion in additional public and
    private sector investments related to the implementation of local EZ/EC
    strategic plans.
        Workforce Development.--The Empowerment Zones and Enterprise
    Communities report that they are engaged in more than 550 job training
    programs with over 42,000 Zone residents having received job training.
    Nearly 30,000 Zone residents have been placed in jobs as a result of
    these job training programs. Zone residents have attended approximately
    270 job fairs resulting in 16,000 job placements.
        Access to Capital.--As a result of the Empowerment and Enterprise
    Zone initiative, access to cheap sources of capital--the lifeblood of
    commerce--has greatly improved. Loan pools totaling $2 billion dollars
    have been created with 1,700 loans processed and 5,000 jobs created
    from those loans. The EZ/ECs report that over 4,300 businesses have
    been served by the capital access/credit access programs and 4,500
    businesses have received technical assistance. In addition, the EZ/EC
    Initiative has created the largest community development bank in the
    nation--the $430 million dollar Los Angeles Community Development
    Bank--which has loaned over $70 million to businesses that could not
    obtain conventional bank financing.
        Housing.--The Empowerment Zone and Enterprise Communities report
    that they have completed 2,400 housing units and have rehabilitated
    another 11,000. Nearly 14,000 homeless people have been served under
    the ``homeless to housing'' program. Within the Zones and Communities,
    there are 146 homeownership programs that have served 8,600 residents.
        Private Sector Involvement.--Private sector involvement has played
    a vital role in the Empowerment Zones and Enterprise Communities.
    Countless corporations have hired Zone residents and actively
    participated in EZ/EC governance, as well as provided funds and in-kind
    technical assistance to the Zones. Well-known companies involved in the
    Zones include General Motors, Ford, Chrysler, Home Depot, The Walt
    Disney Company, GAP, Inc., Ameritech, Rite Aid, Microsoft, Starbucks,
    MCI/Worldcom, IBM, and scores of others.
        Environment.--The EZ/ECs report that they are engaged in 39
    Brownfield's projects--transforming abandoned and contaminated
    commercial and industrial sites into clean, reusable parcels of land.
    Forty-three sites have been transformed to date. The EZ/EC's are also
    involved in approximately 180 beautification programs.
        Public Safety.--The EZ/ECs report that nearly 380,000 people have
    been served by the 300 public safety programs operating in the
    Empowerment Zones and Enterprise Communities. There are 580 crime
    prevention programs which have served 310,000 residents.
        Health Care.--There are 220 health-related programs in the EZ/ECs
    serving 94,000 residents. Seven new health-care facilities have opened
    in the EZ/EC neighborhoods and four have been remodeled which has
    expanded service to 9,000 EZ/EC residents.
        Human Services.--Within the Empowerment Zones and Enterprise
    Communities, there are a number of human services underway serving
    residents including:
      --369 recreation programs serving over 116,000 Zone residents;
      --157 child care programs serving over 4,850 Zone families;
      --21 elderly programs serving over 2,480 Zone residents; and
      --339 youth programs serving over 65,000 Zone youth.
        Education.--Vital to the well-being and economic development in the
    EZ/EC's is education and as a result of the EZ/EC initiative, many
    education and training programs have served Zone residents. The EZ/ECs
    report:
      --residents have been served in 641 K-12 education programs;
      --residents have been served in 106 vocational education programs;
      --residents have been served in 74 post-secondary assistance
            programs; and
      --Approximately 13,300 residents have been served in 152 head-start/
            pre-school programs.
                      fha single family property insurance
        Question. What steps has HUD made to reduce actuarial risk to the
    Mutual Mortgage Insurance Fund. For example, insurance claims increased
    over 25 percent between 1996 and 1998, from 60,884 claims to 76,086
    claims. In addition, the total claim payments increased 38 percent,
    from $4.2 billion to $5.8 billion during this period.
        Answer. MMI claims have increased from 53 thousand claims for $4.1
    billion in 1996 to 59 thousand claims for $5.3 billion in 1998, an
    increase of 12 percent in the number of claims and 29 percent in cost.
    In order to reduce the risk from claims, the Department has analyzed
    the reasons for the increases.
        1. The average dollar value of an MMI insured mortgage has risen 34
    percent between the 1992 book of business and the 1998 book, even while
    the loan limits locked FHA into a lower value portion of the market in
    many areas.
        2. The very large 1993 and 1994 books-of-business are approaching
    their peak claim period (estimated to be in years 5-8 after
    endorsement).
        3. The economic downturn in California led to increased reliance on
    FHA insurance during the 1990s, since FHA does not reduce the level of
    business in economically troubled areas. In 1992, California loans
    comprised only 9 percent of the dollar volume of MMI portfolio; steady
    growth brought this to 19 percent in 1998. Additionally, much of
    California also qualifies as high cost area, so that the average loan
    is higher than much of the rest of the U.S. and the continuing economic
    problems in some areas of the State have produced higher claim rates.
        4. The increased use of adjustable rate mortgages (ARMs)--rising
    from 16 percent in 1992 to 35 percent in 1997--has led to increases in
    both costs and numbers of claims in MMI. Currently the low mortgage
    interest rates on fixed-rate mortgages (FRMs) in 1998, combined with
    FHA actions changing underwriting for ARMs, have reduced the percentage
    of ARMs to about 20 percent in 1998.
        As a result of this analysis FHA has taken several steps to
    mitigate these risks which include:
        1. In 1998, FHA started requiring that borrowers qualify for ARMs
    at 1 percent above the initial interest rate, and prohibiting
    ``buydowns'' of the ARM interest rate. This change will not be an
    immediate cure, as FHA cannot change the terms of loans already
    written, but we expect ARM claim rates should be more similar to the
    FRMs in the future.
        2. The FHA loan limits were increased to a 48 percent floor and an
    87 percent ceiling relative to the Fannie/Freddie conforming loan
    limit. These increases are also expected to reduce the rate of FHA
    claims relative to the Insurance in Force (IIF), and increase
    recoveries on claims. FHA experience has shown that loans in the middle
    of a market are less likely to go to claim, and are less costly. They
    also result in higher recoveries, as the properties are more salable.
    Increasing the loan limit allows FHA more participation in the lower-
    risk mid-market loans.
        3. FHA has increased the use of loss mitigation which allows
    homeowners to stay in their homes where possible, and preforeclosure
    sales which reduce the magnitude of loss to the Fund. Making incentive
    payment to a lender for modifying a loan; engaging in special
    forbearance action; or filing partial claims are substantially less
    expensive than the cost of foreclosing, holding, and selling a
    property. There are substantial savings to the MMI Fund and benefits to
    the homeowners and communities in applying loss mitigation techniques
    to allow the homeowners the chance to keep their homes.
        4. The Department has implemented an REO disposition method which
    uses management and marketing contractors. This is also expected to
    reduce expenses by providing a higher recovery on FHA properties than
    previously received.
        5. The Department has implemented the Homebuyer Protection Plan.
    This plan was designed to address the issue of inadequate FHA
    appraisals. The plan has the following components:
      --Appraisals will be more thorough and will identify basic physical
            conditions and potential problems;
      --Homebuyers will be notified of defects and the FHA insured loan
            cannot be closed until all conditions are satisfied;
      --Appraisers will be accountable and tougher sanctions will be
            imposed for deficient appraisals;
      --The appraiser will recommend a full home inspection if a
            significant problem is present;
      --Home inspection costs up to $300 may be financed in FHA mortgages;
      --Homeowner counseling will be emphasized;
      --The FHA loan evaluation system will be available to all FHA-
            approved lenders;
      --FHA up-front premiums will be reduced for homebuyers who receive
            counseling and/or purchase center city properties after
            counseling; and
      --A system to refer homeowners who are in danger of serious default
            to counseling or other assistance will be developed.
        These actions are expected to ensure that homebuyers get good
    quality homes that will prevent major unexpected costs which might lead
    to early claims and to give more timely access to counseling or other
    assistance before a homeowner is enmeshed deeply in debt. Where a claim
    is unavoidable, the actions are also expected to provide a better
    return to the MMI Fund.
        Question. In addition, REO properties have risen over 25 percent
    over the last two years, with ``on-hand'' properties of 31,000 and
    40,000 properties in 1997 and 1998.Has HUD implemented the property
    disposition reform legislation included as part of the VA/HUD 1999
    Appropriations bill? What other steps is HUD taking to reduce its HUD-
    owned inventory?
        Answer. HUD has not yet implemented the new property disposition
    legislation; and, as stated in the 1999 and 2000 Budgets, does not
    intend to begin implementation before fiscal year 2002, with a phase-in
    period through fiscal year 2004. One of the lessons of the assignment
    reform legislation is that FHA needs sufficient time to implement major
    changes to the FHA programs to involve the community and to allow
    lenders and credit counselors to become familiar with the changes. This
    legislation was requested to give FHA an additional tool to increase
    returns to the fund, to be applied as conditions warrant.
        An additional reason for delaying the implementation of the
    legislation is that FHA implemented, in March of 1999, the Management
    and Marketing contracts which allow private concerns to maintain and
    sell HUD-held properties. Some time will be required to evaluate the
    effectiveness of this effort.
        Question. Also, GAO's high-risk review of HUD indicated that there
    are serious issue with regard to the use of appraisals (based on audits
    in New Jersey and Ohio), where the appraisals did not take into account
    structural soundness and continued marketability of Housing. What is
    HUD doing to ensure that appraisals reflect the market value of a
    property?
        Answer. The Management and Marketing contracts are a major step HUD
    has taken to reduce the property inventory. As of March 31, 1999, 16
    contractors have been managing the FHA-held single family properties,
    each handling a region of the country. The contractors have bid to
    receive a percentage of the selling price, so they have a real
    incentive to sell the properties for the highest possible price and as
    fast as possible. These contracts are expected to reduce inventories,
    lower holding time and costs, provide better security and maintenance
    while properties are in the inventory, and increase sales proceeds.
        Note: Senator Bond is using claim numbers somewhat at variance with
    our budget numbers. MMI claims shown in the actual columns of the
    Budgets were:
      --53,111 and $4,113M in 1996 (1998 Budget) and
      --59,275 and $5,291M in 1998 (2000 Budget) and
      --The total SF number of properties shown on the roll-forward tables
            from accounting is 26,837 on 9/30/96; 34,116 on 9/30/97, and
            39,370 on 9/30/98.
                     fair housing insurance investigations
        Question. HUD is trying to micromanage CDBG, HOME and public
    housing through fair housing policy. For example, HUD recently issued a
    proposed rule that conditioned the receipt of CDBG funds on an
    acceptable (as approved by HUD) fair housing policy by the state or
    locality. HUD also has interfered with the ability of PHAs to address
    discrimination complaints by prohibiting PHAs from using public housing
    funds to investigate or litigate complaints. HUD also has threatened to
    cut off public housing funds to PHAs unless PHAs settle any
    discrimination complaints. Mr. Secretary, your comments.
        Answer. A ``charge'' of a violation of the Fair Housing Act by HUD
    is not mere accusation or allegation. Pursuant to the Fair Housing Act
    regulations, HUD may only issue a charge after HUD has:
      --determined that the allegations state a claim under the Fair
            Housing Act;
      --determined that the claim is timely;
      --determined that the complainant has standing to assert the
            violation;
      --notified the respondent of the Fair Housing Act complaint;
      --permitted the person to submit any evidence that responds to the
            allegations;
      --investigated the complaint, including exculpatory evidence;
      --attempted to conciliate the complaint; and
      --based upon its full investigation and all evidence submitted by
            both parties, determined that reasonable cause exists to
            believe a discriminatory housing practice has occurred.
        The Department has a statutory duty to affirmatively further fair
    housing in all HUD programs, including the Community Development Block
    Grant program. When the Department has credible evidence that a
    jurisdiction has violated the Fair Housing Act or other civil rights
    authorities administered by the Department, it is obligated not only to
    pursue the case under civil rights authorities, but to ensure that HUD
    is not furthering the discrimination by funding the jurisdiction that
    is violating a fair housing law. HUD has been sued for its failure to
    ensure such affirmative furthering of the fair housing laws in the
    past.
        If a jurisdiction has been charged with a Fair Housing Act
    violation, this serves as evidence challenging the jurisdiction's
    certification that it is complying with fair housing laws. HUD
    regulations require that the jurisdiction be consulted and be given an
    opportunity to cure the suspect certification. In many instances, the
    Department will require the jurisdiction to provide special assurances
    of compliance with fair housing laws prior to obligating the CDBG
    funding. If the jurisdiction does not cure the suspect certification by
    resolving the fair housing charge or providing adequate special
    assurances, then the Department will reallocate the CDBG funding to
    other jurisdictions that are complying with fair housing laws.
        Once a court renders a judgment in a fair housing case, the matter
    is resolved and there is no need for the Department to take further
    action.
        HUD issued a proposed rule in order to obtain public comment. The
    Administrative Procedures Act requires this and the Department was
    evaluating the public comments. HUD fully complied with the
    Administrative Procedure Act requirements. In fact, HUD extended the
    comment period and invited numerous groups (including a briefing with
    representatives from the House Majority staff of the Housing
    Subcommittee on Housing and Community Opportunity) to discuss their
    views during this comment period.
        HUD does not require submission and approval of a jurisdiction's
    analysis of impediments to fair housing choice. However, HUD provided
    extensive training and developed a guide to provide information on
    developing an analysis of impediments. In 1996, HUD published a Fair
    Housing Planning Guide which provided information on how to conduct an
    Analysis to Fair Housing Choice, undertook activities to correct the
    identified impediments, and the types of documentary records to be
    maintained. In addition to HUD field staff working with communities,
    HUD conducted 22 training sessions nationwide during the summer, fall,
    and winter of 1997. These sessions were attended by over 1,700 people
    representing CDBG and HOME grantees, public housing agencies, fair
    housing organizations, and housing industry groups. These sessions
    educated participants about the rights of their constituents to fair
    housing planning.
                             home improvement loans
        Question. GAO in July 1998 reported problems with HUD's oversight
    of the lenders' compliance of the home improvement loan program, noting
    that in fiscal year 1997, HUD conducted on-site quality assurance
    reviews of only 4 of the 3,700 lenders in the program. What is HUD
    doing to ensure that lenders' comply with the home improvement loan
    program and homeowners are not being defrauded?
        Answer. FHA has charged the Home-Ownership Centers (HOCS) with
    reviewing a portion of the 203(k) home improvement loans, as well as
    other FHA loans, for compliance with FHA regulations. If substantial
    violations are found the case is forwarded for remediation and/or
    penalties. This April, FHA furnished additional information to GAO
    regarding oversight of the 203(k) program. A summary of this
    information follows: from January 1, 1996 through February 28, 1999,
    FHA performed 52 quality assurance reviews on lenders originating
    203(k) loans, resulting in 3 referrals for Limited Denial of
    Participation, 6 Referrals for Debarment, 9 lenders referrals to the
    Mortgagee Review Board, and 3 additional firms referred to the HUD OIG
    for violations.
        Based on data for January 1996 through February 1999 period, 203(k)
    loans are concentrated among a relatively few lenders. While 2,158
    different lenders made these loans, 89 lenders (4 percent) wrote 60
    percent of the 50 thousand loans. The Quality Assurance Divisions
    monitored 19 percent of these high volume lenders in this period.
        On Title I cases, a training program is being developed so that
    staff can exercise closer scrutiny on cases going to claim to ensure
    that the proper underwriting standards were applied when the loan was
    written. FHA plans to review cases going to claim in 1998 and 1999,
    with further reviews depending on the results.
                                home warranties
        Question. HUD is revising the requirement that new homes covered by
    FHA mortgage insurance be protected through 10-year structural
    warranties; in the future, the warranties will not have to exceed a 1-
    year period. Why is HUD reducing the time that new homes must be
    covered by structural warranties?
        Answer. HUD published the Builder Warranty Rule for High-Ratio FHA-
    insured Single Family Mortgages for New Homes in the Federal Register
    on March 25, 1999, as an interim rule in order to avoid elimination of
    all warranties under the terms of the Downpayment Simplification
    provisions (Sec. 212) of the fiscal year 1999 Appropriations Act.
    Congress extended this legislation for Downpayment Simplification for
    loans executed for insurance in fiscal years 1998, 1999 and 2000.
    Statutory provisions of the Downpayment Simplification program would
    override and eliminate all existing FHA high ratio requirements.
    However, instead of eliminating warranty requirements entirely, FHA
    changed the requirement to a comprehensive, 1-year builder warranty.
    This type of warranty, which is standard in the home building industry,
    is consistent with the intent of the Down Payment Simplification
    legislation, which was to bring FHA requirements more in line with the
    private sector practices.
        The background and rationale behind the Builder Warranty Interim
    Rule also provide perspective on the interim rule. Prior to approval of
    the 1999 HUD/VA Appropriations Act, FHA required new homes (a year old
    or less) to meet certain conditions in order to qualify for a high
    ratio loan (defined as those loans with a loan-to-value ratio greater
    than 90 percent), including pre-approval of plans and specifications
    for the home or the requirement of a home warranty ``acceptable to the
    Secretary of HUD.''
        FHA believes that the warranty change is sound policy for several
    additional reasons:
        1. The 10-year warranty requirement costs FHA borrowers hundreds of
    dollars more than a standard 1-year builder's warranty, yet it provides
    relatively little effective protection to consumers in the later years.
    Rather than force FHA borrowers to pay for this warranty, HUD is
    bringing its requirements into line with the rest of the home finance
    industry.
        2. FHA is not prohibiting 10-year warranties; rather it would no
    longer require these warranties to qualify for high ratio loans. The
    builder or 10-year warranty provider can still provide these warranties
    and homebuyers can still purchase them. New construction represents
    approximately 3 percent of FHA business in the recent past, so the
    overall impact of the elimination of the 10-year warranty requirement
    is slight.
        3. Building industry standards and local code enforcement practices
    have progressed substantially since the 10-year warranty was first
    instituted, providing much greater protection to consumers.
    Furthermore, local government agencies are much more aggressive in
    enforcing local building codes, further mitigating the risk of
    significant problems with a newly constructed home.
        That being said, the Department is sensitive to the issues outlined
    in the comments we have received, and, as a result, has withdrawn the
    Builder Warranty interim rule, effective April 23, 1999. Although the
    points outlined still represent the position of the Department, it has
    agreed to further consider this issue.
        financial audit of hud's fiscal year 1998 financial statements.
        Question. Clean Financial Audit of HUD's fiscal year 1998 Financial
    Statements. For the first time, the HUD IG (and KPMG) was able to
    conclude that HUD's consolidated financial statements were reliable in
    all material aspects. Nevertheless, while HUD deserves praised for this
    result, the final audit reflects serious and continued weaknesses in
    HUD's internal controls and financial management systems. For example,
    HUD remains unable to ensure the reliability of income data for
    purposes of determining the Federal subsidy payment. As discussed
    elsewhere, HUD estimated that it overpaid rental subsidies by $900
    million in 1997 because of poor data control. This audit also
    determined that HUD was unable to substantially comply with the Federal
    Financial Management Improvement Act (FFMIA).
        Nevertheless, KPMG's March 9, 1999 report on FHA's financial
    statements concluded that (1) FHA must address staff and administrative
    resource issues; (2) FHA must place additional emphasis on early
    warning and loss prevention systems for insured mortgages; (3) FHA must
    improve federal basis and budgetary accounting; and (4) Information
    technology systems must be improved. KPMG raised a number of other
    serious FHA issues, especially with regard to HUD-held properties. What
    steps has HUD taken to address these concerns?
        Answer. Local administrators of HUD's rental assistance programs
    (i.e., public housing agencies and private owners/management agents)
    determine rental assistance eligibility and level of benefits based
    primarily on household income data. Long-standing problems have been
    that: (a) some tenants fail to report all income as required, and
    therefore receive excess rental assistance, and (b) local
    administrators generally do not have access to income data needed to
    determine if tenants failed to disclose all their income.
        As a partial solution to the problem, in recent years HUD has
    supplied local administrators with social security and supplemental
    security income data that HUD receives from the Social Security
    Administration, for tenants scheduled to recertify for rental
    assistance. The income data provides up-front income data to prevent
    future abuses, and to detect past abuses.
        Because of various legal, technical and administrative constraints,
    local administrators generally cannot obtain access to other income
    data, i.e., wages and unearned income data, needed to detect income
    amounts that tenants fail to report. The excess rental assistance
    tenants receive from failing to report their income occurs primarily
    from the legal, technical and administrative constraints--not from poor
    data control. HUD plans to implement a large-scale computer matching
    program in calendar year 1999 that will aid significantly in detecting
    and deterring program abuses involving unreported income. This
    initiative involves the use of wage and unearned income data that HUD
    receives from the Social Security Administration and the IRS.
        Hopefully, by the end of July, detailed Corrective Action Plans
    will be established to address all of the deficiencies identified in
    both the FHA and HUD audits. In most cases, the Department has already
    initiated, or is well on its way in accomplishing recommended
    improvements. For example, FHA developed and implemented an approach in
    the past year to meet Federal accounting standards for the fiscal year
    1998 Financial Statements, in addition to continued compliance with
    commercial standards. This was a major accomplishment and enabled the
    auditor to render a clean opinion on the Department's consolidated
    financial statement. FHA has formulated detailed workplans to refine
    and make further improvements. For example, for the material weakness
    ``Federal Basis and Budgetary Accounting Must Be Improved'' identified
    in the audit of 1998 FHA financial statement and noted in the question,
    KPMG made five specific recommendations. FHA responded with a
    management workplan to implement each, with which the independent
    auditor agreed. The audit recommendations and workplan are as follows:
        1. Implement routine procedures to analyze unliquidated obligations
    for contracts and purchase orders and de-obligate those items which
    have expired, timely;
      --FHA plans to implement routine procedures, as recommended, to
            analyze unliquidated obligations for contracts and purchase
            orders and de-obligate those items which have expired, all in a
            timely manner. Although details of the new procedures have yet
            to be worked out, the three offices to be involved in
            coordinating the new procedures have all agreed in writing to
            ensure that the task is accomplished.
        2. Reconcile the accounting and budget systems for loan guarantee
    commitments and endorsements, to ensure all credit subsidy amounts are
    recorded properly;
      --FHA is reconciling the accounting and budget systems for loan
            guarantee commitments and endorsements and has reissued to the
            field the established procedures related to positive credit
            subsidy. Beginning with fiscal year 1999, regular
            reconciliation of obligational and disbursement reports are
            being conducted to resolve discrepancies and to correct records
            on an on-going basis. Prior-year disbursements and obligations
            are being reconciled to determine whether a cumulative
            adjustment is needed. Additionally, a comprehensive examination
            of reporting systems, field guidance, and budget execution
            procedures is underway, including implementation of a new
            Development Application Processing (DAP) System to provide
            integrate loan application processing by field offices with on-
            line funds assignment and control.
        3. Prepare formal documentation of the process to prepare Federal
    basis financial statements and the SF-133, which includes cross walks
    of GAAP accounts to the Federal basis, and identify all required
    sources of budgetary system information;
      --Last year FHA recognized the need for documentation of the process,
            and included the requirement in the statement of work provided
            to the contractor responsible for preparation of the fiscal
            year 1998 financial statements. The contractor has documented
            the process to prepare Federal basis Financial Statements and
            the SF 133s. Also, the contractor is implementing the use of
            budgetary accounts in the FHA accounting system.
        4. Prepare formal documentation of the cost allocation time survey
    process, and conduct the survey periodically during the year; and
      --FHA agrees that a routine cost allocation time survey must occur.
            The process used to conduct the cost allocation survey for
            fiscal year 1998 was not formally documented because FHA had
            not decided whether to continue using the same survey
            methodology, however, this documentation was completed in
            March. FHA plans to conduct a mid-year and an year-end time
            allocation survey for fiscal year 1999 using the same approach
            used last year. The mid-year survey will be initiated shortly
            using an updated list of approximately 150 survey recipients.
            In fiscal year 2000 and future years, FHA will continue to
            utilize the time allocation survey approach periodically
            throughout the fiscal year, while also investigating alternate
            sources of full cost identification and time allocation data
            such as Activity Based Costing (ABC).
        5. Implement existing plans to address identified financial
    management issues related to the LLG.
      --FHA's contractor has completed documentation of model data sources
            and assumptions, as well as LLG methodology and sensitivity
            analysis. Policies and procedures are currently being
            developed.
                  los angeles community development bank (cdb)
        Question. This CDB was funded by HUD with $430 million as part of
    the Federal efforts to rebuild LA after the 1992 riots. The bank was
    created to help businesses rejected by commercial lenders and assisting
    unsophisticated borrowers into the banking world while requiring them
    to hire residents of the urban core. While the bank is still operating,
    it is troubled with more than a third of its major borrowers out of
    business or in trouble with their loans. Also, only about 132 jobs for
    residents in the poorest areas obtained jobs as a result of bank
    investments. Currently, the bank is subject to a number of lawsuits
    which claim intrusive requirements by the bank caused defaults and
    business failures. This is a HUD-funded entity and HUD retains
    responsibility for oversight of the use of the HUD funds used to
    capitalize this institution. What has HUD done to provide oversight of
    this institution and what steps has HUD taken to prevent continued
    losses and possible misuse of funds.
        Answer. HUD's designation of the Los Angeles City and County
    Empowerment Zone application as a supplemental Empowerment Zone was not
    part of the Federal government's initial commitment to rebuild Los
    Angeles after the 1992 riots. Rather, it grew out of the
    Administration's Empowerment Zone/Enterprise Community initiative.
        The city cited the need for the CDB as the lack of financial
    assistance from commercial lenders to new and existing businesses in
    the EZ target area. However, there was no requirement in the EDI grant
    or Section 108 Loan Guarantee that the CDB assist businesses rejected
    by commercial lenders or to assist unsophisticated borrowers.
        The Los Angeles Community Development Bank was funded as part of
    HUD's designation of the Los Angeles City and County empowerment zone
    competition in December 1994. The City of Los Angeles received $100
    million in Economic Development Initiative (EDI) grant funding to be
    matched with an equal amount of Section 108 Loan Guarantee funding and
    the County of Los Angeles received $25 million in EDI grant funding to
    be used in conjunction with $25 million in Section 108 Loan Guarantees.
    Note that of the amounts provided to LA County, $15 million in EDI and
    $15 million in funds guaranteed by Section 108 were pledged to the CDB.
    Thus, the LA CDB was to be capitalized with $115 million in EDI grant
    funds and $115 million in Section 108 Loan guarantees.
        Seventy-five percent of these funds were to be used within the
    City's and County's Empowerment Zone (EZ) target area. The remainder of
    the funds could be used for activities in an area up to a one mile
    radius around the EZ target area as long as 51 percent of the jobs
    created went to Zone residents. Overall, the funds were to create jobs
    primarily for Empowerment Zone residents.
        In addition to this funding, the City and County of Los Angeles had
    received pledges from private banks in Los Angeles to contribute an
    additional $200 million to the CDB for its lending operations. Finally,
    at the time that the City applied for the EDI grant funds, it also
    advised HUD that it intended to request an additional $200 million in
    Section 108 Loan Guarantee commitments. The CDB would administer this
    amount in areas which are outside of the EZ target area and are not
    part of HUD's original EZ supplemental designation.
        With respect to the CDB's performance, the CDB, as of March 1999,
    has accomplished the following:
      --approved 132 loans totaling $73.1 million, consistent with the
            CDB's 10-year business plan;
      --funded businesses that are projected to create or retain 2,148
            jobs;
      --created 744 jobs of which 19 percent have gone to residents who
            live within the boundaries of the federally designated
            Empowerment Zone (and though 51 percent of the jobs created to
            date have not gone to EZ target area residents, the CDB
            believes that this percentage can be met).
        Note that HUD's expectations are that over the 10-year projected
    life of the funds provided to the CDB, the jobs created or retained
    will go predominantly to target area residents. The CDB has introduced
    new measures to work with businesses to achieve this target.
        Through January 31, 1999, the CDB has charged off 8 loans out of
    more than 100 loans. Those 8 loans total $2.5 million. Of the 8, 50
    percent were for loan amounts of less than $100,000 each. To the best
    of the CBD's knowledge, two of the remaining 4 have gone out of
    business.
        With regard to the subject of lawsuits and intrusive requirements
    by the bank, it is our understanding that these requirements relate to
    the HUD federal program requirements emanating from the EDI grant
    program and the Section 108 Loan Guarantee program generally and this
    specific EDI grant developed for the CDB in particular, especially
    those requirements regarding location in or within the one-mile radius
    of the EZ target area and job requirements.
        In May of 1999, HUD carried out an intensive review of the CDB for
    compliance with the program regulations, EDI grant and Section 108 Loan
    Guarantee regulations and related contracts. Based upon preliminary
    information from those reviews, HUD believes that the CDB and Los
    Angeles City and County are generally in compliance with such
    requirements. It is expected that some recommendations will be made to
    improve the quality of record-keeping.
        With regard to the particular steps HUD has taken to prevent
    continued losses and possible misuse of funds, HUD has not found that
    any funds have been misused. HUD believes that the CDB has established
    generally acceptable underwriting and due diligence criteria. However,
    we expect to make some observations on the issue.
        Finally, the initial CDB proposal had $200 million, a dollar-for-
    dollar match, in commitments from private financial institutions to co-
    lend and otherwise participate with the CDB in assisting businesses. To
    date, the co-lending commitments have provided a tiny fraction of that
    amount. In fact, $28 million in such commitments have been realized
    from other commercial banking institutions that had not originally made
    such pledges.
        This lack of private market participation has placed additional
    burdens on the CDB in terms of loan origination and shared security and
    risk. As a result, the CDB appears to be taking on a greater level of
    responsibility for the economic revitalization of the target area than
    originally contemplated. At the moment, HUD believes that the CDB's
    performance is consistent with its original business plan projections.
    We believe that operations to date are generally within the original
    parameters of the EDI grant agreements and the Section 108 Loan
    Guarantee contracts.
                                  section 108
        Question. Please provide a status of all section 108 loan
    guarantees by amount and project use. Also, identify the failure rate
    and the reasons for any failures.
        Answer. A list of all commitments approved under Section 108 (to
    May 31, 1999) is attached. A breakdown of projects by activity
    classification is available for commitments approved during fiscal year
    1996 and fiscal year 1997. The results are as follows:

                                    [Percent]
    ------------------------------------------------------------------------
                                                              Fiscal year
                                                         -------------------
                                                          1996 \1\  1997 \1\
    ------------------------------------------------------------------------
    Economic development................................        61        56
    Housing activities..................................        16        23
    Public facilities/improvements......................        15        13
    Acquisition (and related activities)................         7        9
    ------------------------------------------------------------------------
    \1\ Does not equal 100 percent due to rounding.

        With respect to the ``failure'' rate, it is assumed that
    information is requested regarding default and loss rates. A few
    technical defaults have occurred on Section 108 loans, but no loss has
    ever been incurred by the Federal Government.
        This does not mean that communities who use Section 108 funds to
    make loans to third parties (e.g., economic development loans) have not
    experienced defaults on those loans or incurred losses due to
    inadequate collateral. However, to the extent these losses created a
    shortfall in the amount necessary to service the Section 108 loans,
    that shortfall has always been covered by pledged CDBG funds.
        In a survey conducted in 1998, the Department received more
    detailed information regarding the use of CDBG funds for 332 Section
    108 projects funded between 1992 and 1997. Of the 332 projects
    surveyed, 202 were characterized as being for economic development
    assistance. Of these 202 projects, 39 involved the unplanned use of
    CDBG funds to make a required Section 108 Loan repayment and of these
    39 projects, 30 were project-specific and 9 were revolving loan funds.
        The 30 project-specific projects had 15 defaults or a calculated
    default rate from this survey for all economic development loans of
    approximately 7.4 percent. The 9 revolving loan funds funded 106 loans
    and had 16 defaults or an approximately 15.1 percent default rate.
        For all of the 332 projects surveyed, loan advances totaled
    approximately $1.116 billion. Advances for economic development
    assistance totaled approximately $736.3 million.
        The defaults for the economic development project-specific grants
    represented approximately 6.5 percent of the advances for economic
    development assistance and approximately 4.3 percent of all advances
    made by HUD between 1992 and 1998. These defaults can be attributed to
    factors that influence defaults on loans made by all private and public
    lenders. These factors are both endogenous (e.g., the business
    competence of the borrower) and exogenous (e.g., international trade
    policies that might adversely affect some lines of business). However,
    given that Section 108 assistance can only be used where communities
    have been unable to obtain financing without the Federal guarantee and
    are frequently carried out in distressed areas, the default and loss
    rates disclosed by the survey are not out of line.

                             SECTION 108 COMMITMENTS
                            Approved to May 31, 1999
    ------------------------------------------------------------------------
                                                                     FISCAL
                      RECIPIENT                        AMOUNT         YEAR
                                                                    APPROVED
    ------------------------------------------------------------------------
    ABILENE, TX..................................        $250,000         89
    ABILENE, TX..................................         190,000         90
    ABILENE, TX..................................       1,865,000         92
    ABILENE, TX..................................       7,000,000         95
    AGUADILLA, PR................................       4,850,000         86
    AGUADILLA, PR................................       3,200,000         90
    AGUAS BUENAS, PR.............................       2,300,000         96
    AKRON, OH....................................       1,000,000         81
    AKRON, OH....................................       1,210,000         84
    AKRON, OH....................................       1,700,000         95
    ALBANY, NY...................................       3,000,000         81
    ALBANY, NY...................................       3,000,000         81
    ALBANY, NY...................................         640,000         83
    ALBANY, NY...................................       3,358,838         85
    ALBANY, NY...................................       3,500,000         85
    ALBANY, NY...................................          91,000         85
    ALBANY, GA...................................       2,200,000         88
    ALBANY, NY...................................         500,000         89
    ALBANY COUNTY, NY............................         660,000         97
    ALBANY COUNTY, NY............................         650,000         98
    ALBANY COUNTY, NY............................         100,000         98
    ALBION, NY...................................         480,000         97
    ALBION, NY...................................         265,000         98
    ALBION, NY...................................         255,000         99
    ALHAMBRA, CA.................................       1,370,285         85
    ALHAMBRA, CA.................................       3,000,000         95
    ALHAMBRA, CA.................................       2,025,000         97
    ALLENTOWN, PA................................         954,107         80
    ALLENTOWN, PA................................         600,000         85
    ALLENTOWN, PA................................       1,900,000         91
    ALLENTOWN, PA................................       4,000,000         95
    ALTOONA, PA..................................       1,500,000         81
    AMSTERDAM, NY................................         150,000         97
    ANAHEIM, CA..................................       3,000,000         97
    ANDERSON, SC.................................         200,000         86
    ANDERSON, SC.................................         200,000         89
    ANDERSON, SC.................................       1,500,000         96
    ANDERSON, SC.................................       2,000,000         97
    ANDERSON, IN.................................       1,000,000         97
    ANNAPOLIS, MD................................         210,000         94
    ARCADIA, NY..................................          20,000         97
    ARCADIA, NY..................................         500,000         98
    ARECIBO, PR..................................       4,500,000         88
    ARECIBO, PR..................................       2,000,000         89
    ARECIBO, PR..................................       9,575,000         94
    ASHEVILLE, NC................................       1,500,000         98
    ASHLAND, KY..................................         600,000         82
    ATHENS-CLARKE COUNTY, GA.....................       5,000,000         95
    ATLANTA. GA..................................       3,500,000         82
    ATLANTA, GA..................................       2,600,000         84
    ATLANTA, GA..................................       1,600,000         85
    ATLANTA, GA..................................       1,715,000         89
    ATLANTA, GA..................................       4,980,000         93
    ATLANTA, GA..................................         500,000         96
    ATLANTA, GA..................................       6,170,000         95
    ATLANTA, GA..................................       6,825,000         95
    ATLANTA, GA..................................       4,400,000         98
    ATLANTA, GA..................................         500,000         99
    ATLANTIC CITY, NJ............................       2,000,000         95
    ATTLEBORO, MA................................         180,000         85
    AUGUSTA, GA..................................       1,600,000         89
    AUSTIN, TX...................................       8,785,000         95
    AUSTIN, TX...................................       9,035,000         95
    AUSTIN, TX...................................       2,000,000         96
    BABYLON, NY..................................       1,600,000         94
    BABYLON, NY..................................         600,000         95
    BABYLON, NY..................................       1,500,000         95
    BAKERSFIELD, CA..............................       2,500,000         94
    BALDWIN PARK, CA.............................         800,000         82
    BALDWIN PARK, CA.............................       1,700,000         83
    BALDWIN PARK, CA.............................         150,000         84
    BALTIMORE, MD................................       2,000,000         81
    BALTIMORE, MD................................       1,333,000         85
    BALTIMORE, MD................................       3,000,000         85
    BALTIMORE, MD................................       1,575,187         86
    BALTIMORE, MD................................         750,000         86
    BALTIMORE, MD................................      20,500,000         88
    BALTIMORE, MD................................       5,000,000         88
    BALTIMORE, MD................................       6,750,000         91
    BALTIMORE, MD................................       4,700,000         93
    BALTIMORE, MD................................      14,000,000         95
    BALTIMORE, MD................................      34,100,000         96
    BALTIMORE, MD................................       2,100,000         96
    BALTIMORE, MD................................      13,000,000         97
    BALTIMORE, MD................................       6,700,000         98
    BARBERTON, OH................................       2,225,000         93
    BARCELONETA, PR..............................       2,800,000         95
    BARNSTABLE, MA...............................         500,000         95
    BATTLE CREEK, MI.............................       2,000,000         86
    BAXTER SPRINGS, KS...........................       7,000,000         94
    BAY CITY, MI.................................         350,000         90
    BAY CITY, MI.................................         375,000         95
    BAY CITY, MI.................................         590,000         97
    BAY CITY, MI.................................       3,500,000         99
    BAYAMON, PR..................................       6,600,000         86
    BAYAMON, PR..................................       3,400,000         88
    BEAUMONT, TX.................................       1,800,000         83
    BEAUMONT, TX.................................       1,050,000         82
    BEAUMONT, TX.................................       2,175,000         87
    BEAUMONT, TX.................................         820,000         88
    BEAUMONT, TX.................................         700,000         88
    BEAUMONT, TX.................................      11,000,000         98
    BEAVER COUNTY, PA............................         400,000         80
    BEAVER COUNTY, PA............................       1,200,000         98
    BELLFLOWER, CA...............................         415,000         85
    BELLFLOWER, CA...............................       1,725,000         85
    BELLINGHAM, WA...............................       1,542,540         86
    BELLINGHAM, WA...............................       1,755,000         90
    BELLINGHAM, WA...............................         700,000         95
    BENTON HARBOR, MI............................         260,000         98
    BERKELEY COUNTY, SC..........................      12,000,000         95
    BERKS COUNTY, PA.............................       2,000,000         94
    BESSEMER, AL.................................         840,000         88
    BESSEMER, AL.................................       1,000,000         92
    BESSEMER, AL.................................       4,000,000         96
    BETHLEHEM, PA................................         633,000         85
    BETHLEHEM, PA................................         800,000         89
    BETHLEHEM, PA................................       1,364,000         91
    BILLINGS, MT.................................         400,000         90
    BILOXI, MS...................................       2,100,000         85
    BINGHAMTON, NY...............................       7,780,000         82
    BINGHAMTON, NY...............................       4,205,000         92
    BINGHAMTON, NY...............................         800,000         94
    BIRMINGHAM, AL...............................       2,500,000         81
    BIRMINGHAM, AL...............................       3,300,000         95
    BIRMINGHAM, AL...............................       1,200,000         98
    BOCA RATON, FL...............................         230,000         81
    BOCA RATON, FL...............................         700,000         94
    BOSTON, MA...................................       6,250,400         81
    BOSTON, MA...................................       5,000,000         82
    BOSTON, MA...................................       5,000,000         82
    BOSTON, MA...................................      40,000,000         94
    BOSTON, MA...................................       2,000,000         95
    BOSTON, MA...................................      22,000,000         95
    BOSTON, MA...................................       2,000,000         95
    BOULDER, CO..................................       4,200,000         98
    BOWLING GREEN, OH............................       2,000,000         99
    BRIDGEPORT, CT...............................         250,000         94
    BRIDGEPORT, CT...............................       5,000,000         95
    BRIDGEPORT, CT...............................       1,750,000         95
    BRIDGEPORT, CT...............................       7,295,000         97
    BRIDGETON, NJ................................         300,000         83
    BRISTOL, VA..................................         508,000         84
    BRISTOL, RI..................................       2,000,000         97
    BROWNSVILLE, TX..............................       1,200,000         85
    BROWNSVILLE, TX..............................         450,000         89
    BROWNSVILLE, TX..............................       2,560,000         96
    BRYAN, TX....................................         500,000         94
    BRYAN, TX....................................         200,000         95
    BRYAN, TX....................................       3,200,000         97
    BRYAN, TX....................................       1,200,000         99
    BUCKS COUNTY, PA.............................       4,500,000         98
    BUENA VISTA TOWNSHIP, NJ.....................       1,400,000         93
    BUFFALO, NY..................................       2,500,000         81
    BUFFALO, NY..................................       1,500,000         82
    BUFFALO, NY..................................       5,000,000         86
    BUFFALO, NY..................................       5,000,000         89
    BUFFALO, NY..................................       5,000,000         89
    BUFFALO, NY..................................       8,000,000         90
    BUFFALO, NY..................................       5,000,000         92
    BUFFALO, NY..................................       1,000,000         93
    BUFFALO, NY..................................       3,000,000         94
    BUFFALO, NY..................................       2,200,000         94
    BUFFALO, NY..................................       5,000,000         95
    BUFFALO, NY..................................       1,290,000         95
    BUFFALO, NY..................................       8,500,000         95
    BUFFALO, NY..................................       2,235,000         95
    BUFFALO, NY..................................       2,465,000         97
    BUFFALO, NY..................................       7,675,000         97
    BUFFALO, NY..................................       1,325,000         98
    BURLINGTON, VT...............................       5,400,000         96
    BURLINGTON, NC...............................         300,000         96
    CAGUAS, PR...................................         452,000         85
    CAGUAS, PR...................................       8,070,000         89
    CAGUAS, PR...................................       2,800,000         91
    CAGUAS, PR...................................       8,000,000         99
    CALDWELL COUNTY, NC..........................       2,000,000         97
    CAMBRIA COUNTY, PA...........................       3,000,000         94
    CAMBRIDGE, MA................................       5,000,000         93
    CAMBRIDGE, MA................................       1,000,000         94
    CAMDEN, NJ...................................       4,000,000         82
    CAMDEN, NJ...................................       1,000,000         89
    CAMDEN, NJ...................................       2,750,000         89
    CAMDEN, NJ...................................       3,000,000         90
    CAMDEN, NJ...................................         180,000         92
    CAMDEN, NJ...................................         475,000         92
    CANAJOHARIE, NY..............................         800,000         97
    CANAJOHARIE, NY..............................         130,000         99
    CANANDAIGUA, NY..............................       1,480,000         97
    CANANDAIGUA, NY..............................       2,100,000         98
    CANOVANAS, PR................................       4,770,000         97
    CANTON, OH...................................       5,000,000         94
    CARLISLE, PA.................................         800,000         98
    CARLSBAD, CA.................................       1,200,000         94
    CAROLINA, PR.................................       5,221,000         80
    CAROLINA, PR.................................       4,240,000         87
    CAROLINA, PR.................................       9,340,000         89
    CAROLINA, PR.................................       8,000,000         93
    CAYEY, PR....................................       5,000,000         95
    CAYEY, PR....................................       4,800,000         95
    CAYUGA COUNTY, NY............................         380,000         97
    CAYUGA COUNTY, NY............................       2,000,000         98
    CHARLESTON, SC...............................       4,250,000         94
    CHARLOTTE, NC................................       1,645,000         95
    CHARLOTTE, NC................................       3,000,000         99
    CHEBOYGAN, MI................................       3,000,000         93
    CHEEKTOWAGA, NY..............................       2,000,000         85
    CHESAPEAKE, VA...............................       6,830,000         95
    CHEYENNE, WY.................................         800,000         95
    CHICAGO, IL..................................       1,500,000         82
    CHICAGO, IL..................................      12,500,000         85
    CHICAGO, IL..................................      50,000,000         95
    CHICAGO, IL..................................      20,000,000         96
    CHICAGO, IL..................................      30,000,000         96
    CHINO, CA....................................         860,000         95
    CHULA VISTA, CA..............................       1,000,000         79
    CHULA VISTA, CA..............................         750,000         91
    CHULA VISTA, CA..............................       1,000,000         99
    CHULA VISTA, CA..............................         215,000         99
    CINCINNATI, OH...............................       2,000,000         81
    CINCINNATI, OH...............................       9,400,000         90
    CINCINNATI, OH...............................       1,300,000         96
    CLEVELAND, OH................................       7,320,500         81
    CLEVELAND, OH................................       2,000,000         82
    CLEVELAND, OH................................         260,000         95
    CLEVELAND, OH................................       2,100,000         95
    CLEVELAND, OH................................         590,000         95
    CLEVELAND, OH................................      87,000,000         95
    CLEVELAND, OH................................       2,100,000         95
    CLEVELAND, OH................................       3,000,000         97
    CLEVELAND, OH................................       1,200,000         97
    CLEVELAND, OH................................       2,500,000         97
    CLEVELAND, OH................................      12,000,000         98
    CLEVELAND HEIGHTS, OH........................         700,000         92
    CLYDE, NY....................................         270,000         97
    CLYDE, NY....................................       1,500,000         98
    CLYDE, NY....................................         205,000         99
    COLLEGE STATION, TX..........................         400,000         83
    COLUMBIA, SC.................................         500,000         81
    COLUMBIA, SC.................................       1,515,000         94
    COLUMBIA, SC.................................       1,515,000         95
    COLUMBIA, SC.................................         200,000         95
    COLUMBIANA COUNTY, OH........................         600,000         95
    COLUMBUS, OH.................................       2,700,000         82
    COLUMBUS, OH.................................       1,500,000         89
    COLUMBUS, OH.................................       8,360,000         95
    COLUMBUS, OH.................................       9,000,000         96
    COLUMBUS, GA.................................      14,465,000         96
    COMPTON, CA..................................       5,000,000         95
    COSTA MESA, CA...............................       2,451,000         86
    COUNCIL BLUFFS, IA...........................       2,000,000         84
    COVINGTON, KY................................         900,000         81
    CRANSTON, RI.................................         285,000         93
    CUMBERLAND, MD...............................         550,000         94
    CUMBERLAND COUNTY, NC........................       1,500,000         99
    CUYAHOGA COUNTY, OH..........................      10,000,000         95
    DADE COUNTY, FL..............................       5,300,000         82
    DADE COUNTY, FL..............................       3,120,000         86
    DADE COUNTY, FL..............................       5,750,000         97
    DADE COUNTY, FL..............................      13,000,000         98
    DADE COUNTY, FL..............................      25,000,000         99
    DALLAS, TX...................................      25,000,000         94
    DALLAS, TX...................................      25,000,000         95
    DANVILLE, VA.................................       2,000,000         86
    DANVILLE, VA.................................       2,000,000         97
    DAYTON, OH...................................         860,000         95
    DEARBORN HEIGHTS, MI.........................         500,000         84
    DECATUR, IL..................................       2,500,000         95
    DECATUR, IL..................................       6,000,000         95
    DELAWARE COUNTY, NY..........................         375,000         99
    DELRAY BEACH, FL.............................         200,000         95
    DENVER, CO...................................       1,300,000         93
    DENVER, CO...................................      15,000,000         93
    DENVER, CO...................................       7,000,000         94
    DENVER, CO...................................      10,000,000         95
    DENVER, CO...................................       1,200,000         97
    DENVER, CO...................................       7,000,000         97
    DES MOINES, IA...............................         750,000         82
    DES MOINES, IA...............................         407,000         90
    DES MOINES, IA...............................       1,000,000         94
    DES MOINES, IA...............................       1,000,000         95
    DETROIT, MI..................................      38,000,000         80
    DETROIT, MI..................................       3,626,487         81
    DETROIT, MI..................................      16,000,000         82
    DETROIT, MI..................................      60,500,000         80
    DETROIT, MI..................................      39,500,000         81
    DETROIT, MI..................................      35,000,000         86
    DETROIT, MI..................................      16,000,000         88
    DETROIT, MI..................................       7,000,000         89
    DETROIT, MI..................................       2,000,000         90
    DETROIT, MI..................................       2,000,000         92
    DETROIT, MI..................................       2,570,000         95
    DETROIT, MI..................................       3,060,000         95
    DETROIT, MI..................................       1,150,000         95
    DETROIT, MI..................................         450,000         96
    DETROIT, MI..................................         400,000         97
    DETROIT, MI..................................       1,500,000         97
    DETROIT, MI..................................       2,900,000         98
    DETROIT, MI..................................      60,000,000         99
    DORADO, PR...................................       4,105,000         95
    DOWNEY, CA...................................       1,700,000         91
    DOWNEY, CA...................................       1,400,000         96
    DUBUQUE, IA..................................         400,000         80
    DUBUQUE, IA..................................       1,200,000         90
    DUBUQUE, IA..................................       1,000,000         91
    DUBUQUE, IA..................................       4,040,000         97
    DURHAM, NC...................................       3,940,000         85
    DUTCHESS COUNTY, NY..........................         250,000         96
    EAST CHICAGO, IN.............................       3,500,000         95
    EAST CHICAGO, IN.............................       3,565,000         98
    EAST HARTFORD, CT............................       3,000,000         97
    EAST LIVERPOOL, OH...........................         125,000         95
    EAST ORANGE, NJ..............................       8,500,000         95
    EASTON, PA...................................       1,000,000         94
    EDINBURG, TX.................................       3,000,000         95
    EGG HARBOR CITY, NJ..........................       3,550,000         93
    EGG HARBOR TOWNSHIP, NJ......................       5,000,000         98
    EL MONTE, CA.................................       5,685,000         86
    EL MONTE, CA.................................       1,550,000         96
    EL MONTE, CA.................................       2,200,000         98
    ELIZABETH, NJ................................         635,000         84
    ELIZABETH, NJ................................       5,000,000         91
    ELIZABETH, NJ................................         350,000         98
    ELMIRA, NY...................................       8,775,000         96
    ELYRIA, OH...................................         500,000         99
    ERIE, PA.....................................       1,000,000         81
    ERIE, PA.....................................       1,000,000         82
    ERIE, PA.....................................       1,000,000         82
    ERIE, PA.....................................       6,000,000         92
    ERIE, PA.....................................       2,000,000         93
    ERIE COUNTY, PA..............................       3,000,000         89
    ESOPUS, NY...................................         140,000         97
    ESOPUS, NY...................................       2,000,000         98
    ESSEX COUNTY, NJ.............................         535,000         98
    EUCLID, OH...................................       1,250,000         93
    FAIRFAX, VA..................................       1,000,000         98
    FAIRFAX COUNTY, VA...........................       3,480,000         79
    FAIRFAX COUNTY, VA...........................       3,325,000         88
    FAIRFAX COUNTY, VA...........................       1,700,000         89
    FAIRFAX COUNTY, VA...........................       5,690,000         90
    FAIRFAX COUNTY, VA...........................       2,120,000         91
    FAIRFAX COUNTY, VA...........................       4,755,000         92
    FAIRFAX COUNTY, VA...........................         500,000         94
    FAIRFAX COUNTY, VA...........................          80,000         95
    FAIRFAX COUNTY, VA...........................         500,000         95
    FAIRFAX COUNTY, VA...........................       1,000,000         95
    FAIRFAX COUNTY, VA...........................       9,300,000         96
    FAJARDO, PR..................................       3,700,000         91
    FAJARDO, PR..................................       2,500,000         95
    FALL RIVER, MA...............................       1,800,000         88
    FALL RIVER, MA...............................       1,210,000         95
    FALL RIVER, MA...............................       5,000,000         96
    FAYETTEVILLE, NC.............................         500,000         84
    FAYETTEVILLE, NC.............................         900,000         96
    FILLMORE CITY, UT............................         650,000         95
    FLINT, MI....................................       4,500,000         82
    FLORENCE, SC.................................       1,100,000         85
    FLORENCE, AL.................................         800,000         95
    FORT BEND COUNTY, TX.........................       1,030,000         95
    FORT EDWARD, NY..............................         595,000         97
    FORT EDWARD, NY..............................         250,000         98
    FORT MYERS, FL...............................         800,000         90
    FORT MYERS, FL...............................         750,000         93
    FORT MYERS, FL...............................         500,000         95
    FORT WAYNE, IN...............................       6,500,000         82
    FORT WAYNE, IN...............................       1,200,000         96
    FORT WORTH, TX...............................       6,600,000         95
    FORT WORTH, TX...............................       5,000,000         98
    FRANKFORT, NY................................         850,000         97
    FRANKFORT, NY................................       1,700,000         98
    FRANKFORT, NY................................         300,000         98
    FRESNO, CA...................................       3,150,000         95
    FRESNO, CA...................................       4,900,000         95
    FRESNO COUNTY, CA............................         500,000         97
    FRESNO COUNTY, CA............................       1,800,000         98
    FRESNO COUNTY, CA............................         500,000         98
    FULTON, NY...................................       1,600,000         97
    FULTON, NY...................................       2,200,000         98
    FULTON COUNTY, GA............................         600,000         85
    FULTON COUNTY, GA............................       1,000,000         96
    GADSDEN, AL..................................       1,000,000         90
    GARDEN GROVE, CA.............................       4,200,000         84
    GARDEN GROVE, CA.............................      13,580,000         97
    GARY, IN.....................................       2,342,000         80
    GARY, IN.....................................       7,440,000         94
    GARY, IN.....................................       2,550,000         95
    GARY, IN.....................................       3,470,000         95
    GASTONIA, NC.................................       3,305,000         94
    GENEVA, NY...................................       4,500,000         96
    GLENVILLE, NY................................         940,000         99
    GLOUCESTER, MA...............................         175,000         93
    GLOUCESTER, MA...............................       1,750,000         94
    GLOUCESTER COUNTY, NJ........................         525,000         97
    GLOUCESTER COUNTY, NJ........................       2,500,000         98
    GRAND RAPIDS, MI.............................         400,000         82
    GRAND RAPIDS, MI.............................         400,000         88
    GREELEY, CO..................................         700,000         85
    GREELEY, CO..................................         500,000         95
    GREENCASTLE, IN..............................      25,000,000         95
    GREENE COUNTY, AL............................       9,000,000         95
    GREENE COUNTY, NY............................         425,000         97
    GREENE COUNTY, NY............................         400,000         98
    GREENE COUNTY, NY............................         400,000         99
    GREENSBORO, NC...............................       1,640,000         94
    GREENVILLE, MS...............................       2,445,000         93
    GREENVILLE, SC...............................         750,000         95
    GREENVILLE COUNTY, SC........................         880,000         95
    GUAYNABO, PR.................................       2,800,000         85
    GUAYNABO, PR.................................       9,870,000         95
    GULFPORT, MS.................................         235,000         82
    GULFPORT, MS.................................       1,000,000         88
    HAMMOND, IN..................................       4,193,970         81
    HAMMOND, IN..................................         500,000         82
    HAMMOND, IN..................................       1,050,000         93
    HAMMOND, IN..................................       1,495,000         96
    HARLINGEN, TX................................       2,700,000         87
    HARRIS COUNTY, TX............................       1,290,000         95
    HARRISBURG, PA...............................       1,474,951         85
    HARRISBURG, PA...............................         830,100         85
    HARRISBURG, PA...............................         150,000         86
    HARRISBURG, PA...............................         650,000         86
    HARRISBURG, PA...............................       1,680,000         90
    HARRISBURG, PA...............................       2,795,000         95
    HARRISBURG, PA...............................         930,000         98
    HARRISBURG, PA...............................       4,205,000         99
    HARTFORD, CT.................................       2,400,000         95
    HAVERHILL, MA................................       4,000,000         97
    HAZLETON, PA.................................         476,000         78
    HESPERIA, CA.................................       3,000,000         96
    HIALEAH, FL..................................       4,655,000         81
    HIALEAH, FL..................................         850,000         84
    HIDALGO COUNTY, TX...........................         335,000         90
    HIDALGO COUNTY, TX...........................       1,000,000         95
    HIDALGO COUNTY, TX...........................       1,000,000         97
    HIDALGO COUNTY, TX...........................       1,500,000         98
    HIDALGO COUNTY, TX...........................       3,000,000         99
    HOLLEY, NY...................................         340,000         97
    HOLLEY, NY...................................         685,000         98
    HOLLYWOOD, FL................................       8,285,000         98
    HOQUIAM, WA..................................       3,300,000         94
    HOUSTON, TX..................................     175,000,000         95
    HUDSON, NY...................................         217,000         97
    HUDSON, NY...................................       1,200,000         97
    HUDSON, NY...................................         310,000         98
    HUDSON, NY...................................         200,000         98
    HUDSON COUNTY, NJ............................       2,000,000         89
    HUDSON COUNTY, NJ............................       5,000,000         92
    HUDSON COUNTY, NJ............................       8,300,000         96
    HUDSON COUNTY, NJ............................       6,690,000         98
    HUNTINGTON, WV...............................       3,500,000         96
    HUNTINGTON BEACH, CA.........................       2,570,000         99
    HUNTINGTON BEACH, CA.........................       6,000,000         99
    HUNTINGTON PARK, CA..........................         550,000         88
    HUNTINGTON PARK, CA..........................       2,970,000         95
    HUNTINGTON PARK, CA..........................       1,800,000         96
    HUNTSVILLE, AL...............................       3,540,000         92
    ILION, NY....................................         270,000         97
    ILION, NY....................................         500,000         99
    INDIANAPOLIS, IN.............................       2,000,000         79
    INDIANAPOLIS, IN.............................       4,500,000         83
    INDIANAPOLIS, IN.............................      14,424,571         84
    INDIANAPOLIS, IN.............................       5,841,429         86
    INDIANAPOLIS, IN.............................       3,200,000         95
    INDIANAPOLIS, IN.............................       7,600,000         95
    INDIANAPOLIS, IN.............................       6,000,000         99
    INGLEWOOD, CA................................       5,808,000         84
    INGLEWOOD, CA................................      10,000,000         95
    ISLIP, NY....................................       2,000,000         97
    ITHACA, NY...................................         700,000         97
    JACKSON, MI..................................       2,110,000         95
    JACKSON, MS..................................       1,845,000         96
    JACKSON, MS..................................       1,870,000         97
    JACKSONVILLE, FL.............................         500,000         80
    JACKSONVILLE, FL.............................       4,400,000         89
    JACKSONVILLE, FL.............................       2,850,000         90
    JACKSONVILLE, FL.............................      10,000,000         94
    JACKSONVILLE, FL.............................       3,845,000         95
    JACKSONVILLE, FL.............................       1,065,000         96
    JACKSONVILLE, FL.............................       1,700,000         96
    JACKSONVILLE, FL.............................       3,400,000         96
    JACKSONVILLE, FL.............................         700,000         96
    JACKSONVILLE, FL.............................       2,850,000         96
    JACKSONVILLE, FL.............................         550,000         97
    JACKSONVILLE, FL.............................         775,000         97
    JACKSONVILLE, FL.............................       1,220,000         98
    JACKSONVILLE, FL.............................      10,750,000         98
    JANESVILLE, WI...............................         400,000         85
    JAYUYA, PR...................................       4,690,000         96
    JEFFERSON COUNTY, KY.........................       9,500,000         81
    JEFFERSON PARISH, LA.........................       6,800,000         90
    JEFFERSON PARISH, LA.........................       2,625,000         94
    JERSEY CITY, NJ..............................      26,400,000         82
    JERSEY CITY, NJ..............................       8,000,000         95
    JERSEY CITY, NJ..............................       7,000,000         96
    JOHNSTOWN, PA................................       2,000,000         88
    JOHNSTOWN, PA................................       5,500,000         94
    JUNCOS, PR...................................       4,220,000         96
    KANKAKEE, IL.................................         600,000         85
    KANKAKEE, IL.................................       1,600,000         98
    KANSAS CITY, MO..............................       4,000,000         79
    KANSAS CITY, MO..............................       1,000,000         80
    KANSAS CITY, MO..............................       3,000,000         83
    KANSAS CITY, MO..............................       7,000,000         83
    KANSAS CITY, MO..............................       1,000,000         85
    KANSAS CITY, MO..............................       1,500,000         85
    KANSAS CITY, MO..............................       1,755,000         88
    KANSAS CITY, MO..............................       3,000,000         90
    KANSAS CITY, MO..............................       3,250,000         92
    KANSAS CITY, MO..............................       2,000,000         92
    KANSAS CITY, MO..............................       4,500,000         92
    KANSAS CITY, MO..............................       5,000,000         94
    KANSAS CITY, MO..............................         500,000         94
    KANSAS CITY, MO..............................         250,000         94
    KANSAS CITY, MO..............................       1,500,000         94
    KANSAS CITY, MO..............................       1,500,000         95
    KANSAS CITY, MO..............................       3,500,000         95
    KANSAS CITY, MO..............................       1,600,000         95
    KANSAS CITY, KS..............................       7,800,000         95
    KANSAS CITY, MO..............................      14,200,000         95
    KANSAS CITY, MO..............................      10,000,000         99
    KENNER, LA...................................         750,000         89
    KENNER, LA...................................         300,000         90
    KENNER, LA...................................         250,000         90
    KENNER, LA...................................         700,000         92
    KENOSHA, WI..................................       1,100,000         81
    KENOSHA, WI..................................         500,000         82
    KETTERING, OH................................         515,000         88
    KETTERING, OH................................       2,255,000         96
    KING COUNTY, WA..............................       8,000,000         96
    KINGSTON, NY.................................       3,700,000         95
    KINGSTON, NY.................................         436,000         97
    KIRYAS JOEL, NY..............................       2,280,000         96
    KIRYAS JOEL, NY..............................         220,000         97
    KITSAP COUNTY, WA............................       1,500,000         96
    KITSAP COUNTY, WA............................       2,700,000         96
    KNOXVILLE, TN................................       4,280,000         89
    LAFAYETTE, LA................................         100,000         90
    LAFAYETTE, IN................................       3,300,000         95
    LAKE COUNTY, OH..............................       3,000,000         93
    LAKELAND, FL.................................         310,000         94
    LAKEWOOD, CO.................................       2,805,000         94
    LAKEWOOD, CO.................................       2,050,000         95
    LANCASTER, OH................................         300,000         89
    LANCASTER, PA................................       1,500,000         94
    LANCASTER, CA................................       4,000,000         95
    LANCASTER, OH................................       1,750,000         97
    LANCASTER, CA................................       3,100,000         99
    LANSING, MI..................................         500,000         82
    LANSING, MI..................................       3,500,000         83
    LARAMIE, WY..................................       1,500,000         95
    LAREDO, TX...................................       1,700,000         99
    LAS MARIAS, PR...............................       1,300,000         96
    LAWRENCE, MA.................................       3,800,000         80
    LAWRENCE, MA.................................       3,316,000         83
    LAWRENCE, MA.................................         700,000         93
    LAWRENCE, MA.................................      12,000,000         95
    LAWTON, OK...................................         445,000         99
    LEAVENWORTH, WA..............................       2,220,000         95
    LEWIS COUNTY, NY.............................       3,000,000         99
    LEWISTON, ME.................................         500,000         95
    LEXINGTON COUNTY, SC.........................      12,000,000         94
    LINCOLN, NE..................................         270,000         82
    LINCOLN, NE..................................         446,000         85
    LINCOLN, NE..................................       1,000,000         85
    LINCOLN, NE..................................       1,000,000         86
    LINCOLN, NE..................................         675,000         91
    LINCOLN, NE..................................         315,000         94
    LITTLE FALLS, NY.............................         850,000         97
    LITTLE FALLS, NY.............................         900,000         98
    LITTLE ROCK, AR..............................       1,800,000         91
    LITTLE ROCK, AR..............................       1,800,000         96
    LITTLE ROCK, AR..............................         830,000         97
    LITTLE ROCK, AR..............................       3,000,000         98
    LIVERMORE, CA................................         185,000         94
    LOCKPORT, NY.................................       1,000,000         97
    LOCKPORT, NY.................................         750,000         98
    LONG BEACH, CA...............................       5,000,000         80
    LONG BEACH, CA...............................       8,000,000         82
    LONG BEACH, CA...............................       5,000,000         85
    LONG BEACH, CA...............................       5,000,000         95
    LONG BEACH, CA...............................      40,000,000         95
    LORAIN, OH...................................       1,000,000         84
    LORAIN, OH...................................         700,000         85
    LORAIN, OH...................................         500,000         88
    LORAIN, OH...................................         350,000         91
    LORAIN, OH...................................         170,000         92
    LORAIN, OH...................................       2,200,000         92
    LOS ANGELES, CA..............................         795,000         80
    LOS ANGELES, CA..............................       9,532,684         87
    LOS ANGELES, CA..............................      60,000,000         93
    LOS ANGELES, CA..............................     300,000,000         95
    LOS ANGELES, CA..............................       5,915,000         95
    LOS ANGELES, CA..............................      40,000,000         96
    LOS ANGELES COUNTY, CA.......................         600,000         83
    LOS ANGELES COUNTY, CA.......................         400,000         84
    LOS ANGELES COUNTY, CA.......................         218,400         85
    LOS ANGELES COUNTY, CA.......................       2,300,000         86
    LOS ANGELES COUNTY, CA.......................       1,414,000         87
    LOS ANGELES COUNTY, CA.......................         500,000         89
    LOS ANGELES COUNTY, CA.......................       1,060,000         90
    LOS ANGELES COUNTY, CA.......................         305,000         94
    LOS ANGELES COUNTY, CA.......................       4,000,000         95
    LOS ANGELES COUNTY, CA.......................       2,180,000         94
    LOS ANGELES COUNTY, CA.......................      25,000,000         95
    LOS ANGELES COUNTY, CA.......................      30,000,000         95
    LOS ANGELES COUNTY, CA.......................       2,000,000         96
    LOUISVILLE, KY...............................       4,064,000         81
    LOUISVILLE, KY...............................       7,280,000         83
    LOUISVILLE, KY...............................       2,150,000         85
    LOUISVILLE, KY...............................       7,000,000         95
    LOUISVILLE, KY...............................       4,000,000         97
    LOUISVILLE, KY...............................       5,000,000         97
    LOWELL, MA...................................      10,000,000         94
    LYNN, MA.....................................      10,500,000         82
    LYNN, MA.....................................       7,890,000         92
    LYNN, MA.....................................       3,400,000         95
    LYNN, MA.....................................       3,000,000         95
    LYNN, MA.....................................       1,200,000         95
    LYNN, MA.....................................       1,750,000         98
    LYNWOOD, CA..................................       1,500,000         89
    LYONS, NY....................................         500,000         98
    LYONS, NY....................................         200,000         99
    MACEDON, NY..................................         130,000         97
    MACON, GA....................................       1,130,000         87
    MACON, GA....................................         750,000         89
    MACON, GA....................................         280,000         89
    MACON, GA....................................       2,500,000         93
    MACON, GA....................................         500,000         95
    MADISON, WI..................................       2,900,000         98
    MADISON COUNTY, NY...........................         725,000         97
    MAHONING COUNTY, OH..........................       1,000,000         95
    MALDEN, MA...................................         500,000         85
    MALDEN, MA...................................         475,000         90
    MALDEN, MA...................................       1,800,000         92
    MALDEN, MA...................................         500,000         95
    MALDEN, MA...................................       3,000,000         95
    MANATI, PR...................................       8,915,000         95
    MANSFIELD, OH................................       1,100,000         83
    MANSFIELD, OH................................       4,000,000         98
    MASSILLON, OH................................         800,000         85
    MASSILLON, OH................................       2,250,000         99
    MAURICE RIVER TOWNSHIP, NJ...................         660,000         98
    MAYAGUEZ, PR.................................       2,942,080         80
    MAYAGUEZ, PR.................................       2,785,000         85
    MAYAGUEZ, PR.................................       5,000,000         89
    MCKEESPORT, PA...............................       3,000,000         96
    MEDFORD, MA..................................       4,425,000         82
    MEDFORD, MA..................................       1,665,000         88
    MEDFORD, MA..................................       3,500,000         94
    MEDFORD, MA..................................       1,100,000         95
    MEDINA, NY...................................         790,000         97
    MEDINA, NY...................................       1,880,000         98
    MEMPHIS, TN..................................       3,350,000         94
    MEMPHIS, TN..................................       3,000,000         96
    MEMPHIS, TN..................................      12,000,000         98
    MERCED, CA...................................       2,600,000         97
    MERCER COUNTY, PA............................       4,200,000         92
    MIAMI, FL....................................       5,958,400         85
    MIAMI, FL....................................       8,000,000         90
    MIAMI, FL....................................       2,500,000         93
    MIAMI, FL....................................       2,000,000         95
    MIAMI, FL....................................       2,700,000         95
    MIAMI, FL....................................       5,500,000         95
    MIAMI, FL....................................       4,500,000         96
    MIAMI, FL....................................       5,600,000         96
    MIAMI BEACH, FL..............................       3,120,000         85
    MIAMI BEACH, FL..............................      14,870,000         95
    MIDDLETOWN, NY...............................          70,000         95
    MIDDLETOWN, NY...............................         325,000         96
    MIDDLETOWN, NY...............................         355,000         96
    MIDDLETOWN, NY...............................         305,000         96
    MIDDLETOWN, NY...............................         285,000         98
    MIDDLETOWN, NY...............................         225,000         99
    MILLVILLE, NJ................................         725,000         86
    MILLVILLE, NJ................................       1,500,000         99
    MILWAUKEE, WI................................      21,500,000         95
    MINNEAPOLIS, MN..............................         800,000         80
    MISSION, TX..................................       2,010,000         95
    MOBILE, AL...................................       2,000,000         91
    MOBILE, AL...................................       1,000,000         94
    MOBILE, AL...................................       1,380,000         94
    MOBILE, AL...................................       1,200,000         96
    MOBILE, AL...................................       1,325,000         95
    MOBILE, AL...................................       1,470,000         97
    MOBILE, AL...................................       1,450,000         97
    MOLINE, IL...................................       3,000,000         92
    MONROE COUNTY, NY............................       4,000,000         89
    MONROE COUNTY, NY............................       6,345,000         94
    MONTEBELLO, CA...............................       6,840,000         98
    MONTEREY PARK, CA............................       2,225,000         88
    MONTGOMERY COUNTY, PA........................       5,000,000         85
    MONTGOMERY COUNTY, PA........................       4,000,000         85
    MONTGOMERY COUNTY, PA........................         500,000         90
    MONTGOMERY COUNTY, PA........................       3,850,000         97
    MOSS POINT, MS...............................       1,900,000         95
    MOUNT MORRIS, NY.............................         875,000         98
    MUSKEGON, MI.................................         700,000         84
    MUSKEGON, MI.................................         650,000         92
    MUSKEGON, MI.................................       1,500,000         97
    MUSKEGON HEIGHTS, MI.........................         305,000         88
    MYRTLE BEACH, SC.............................       1,475,000         95
    NASHUA, NH...................................         250,000         91
    NASHVILLE, TN................................       2,500,000         82
    NASHVILLE, TN................................       2,500,000         90
    NASHVILLE, TN................................       2,000,000         95
    NASHVILLE, TN................................       6,000,000         98
    NASSAU COUNTY, NY............................       6,025,000         92
    NASSAU COUNTY, NY............................      20,000,000         96
    NASSAU COUNTY, NY............................      10,000,000         96
    NASSAU COUNTY, NY............................       6,000,000         99
    NATIONAL CITY, CA............................         700,000         87
    NEW BRUNSWICK, NJ............................       2,781,000         83
    NEW HAVEN, CT................................       2,000,000         81
    NEW HAVEN, CT................................       5,000,000         91
    NEW HAVEN, CT................................       5,000,000         95
    NEW ORLEANS, LA..............................      12,000,000         86
    NEW ORLEANS, LA..............................       5,200,000         89
    NEW ORLEANS, LA..............................      23,520,000         90
    NEW ORLEANS, LA..............................       5,600,000         91
    NEW ORLEANS, LA..............................       5,000,000         95
    NEW ORLEANS, LA..............................      15,000,000         95
    NEW ORLEANS, LA..............................      10,300,000         98
    NEW ROCHELLE, NY.............................      10,690,000         95
    NEW YORK, NY.................................      15,000,000         95
    NEW YORK, NY.................................       8,000,000         96
    NEWARK, OH...................................         500,000         84
    NEWARK, NJ...................................       1,290,000         95
    NEWARK, NJ...................................       4,000,000         96
    NEWARK, NY...................................         875,000         97
    NEWARK, NY...................................       1,000,000         98
    NEWARK, NY...................................         760,000         99
    NEWBURGH, NY.................................         660,000         82
    NEWBURGH, NY.................................       1,500,000         92
    NEWBURGH, NY.................................         365,000         97
    NEWBURGH, NY.................................       2,125,000         99
    NEWPORT, RI..................................       1,350,000         94
    NEWPORT, RI..................................       3,650,000         95
    NEWPORT BEACH, CA............................       1,200,000         88
    NEWPORT NEWS, VA.............................       6,000,000         82
    NEWPORT NEWS, VA.............................       1,725,000         97
    NIAGARA FALLS, NY............................       3,500,000         80
    NIAGARA FALLS, NY............................       4,500,000         82
    NIAGARA FALLS, NY............................       1,000,000         82
    NORFOLK, VA..................................      32,815,000         95
    NORRISTOWN, PA...............................         550,000         90
    NORTH TONAWANDA, NY..........................          60,000         97
    NORTHAMPTON, MA..............................         750,000         99
    NORTON SHORES, MI............................         250,000         94
    NORWALK, CA..................................       2,500,000         95
    OAKLAND, CA..................................       2,500,000         81
    OAKLAND, CA..................................       2,500,000         82
    OAKLAND, CA..................................       2,500,000         94
    OAKLAND, CA..................................      10,945,000         95
    OAKLAND, CA..................................      27,000,000         95
    OCEAN SHORES, WA.............................       3,600,000         94
    OCEANSIDE, CA................................       2,450,000         88
    OGDEN, UT....................................         644,772         81
    OGDEN, UT....................................       2,600,000         84
    OGDEN, UT....................................         525,000         91
    OGDEN, UT....................................       1,470,000         95
    OGDEN, UT....................................       1,700,000         98
    OKLAHOMA CITY, OK............................       4,000,000         89
    OKLAHOMA CITY, OK............................       3,850,000         89
    OKLAHOMA CITY, OK............................      20,000,000         93
    OKLAHOMA CITY, OK............................       9,000,000         95
    OMAHA, NE....................................         650,000         85
    OMAHA, NE....................................         350,000         85
    ONEIDA COUNTY, NY............................         150,000         97
    ONEIDA COUNTY, NY............................       2,500,000         97
    ONTARIO, CA..................................       1,000,000         97
    ONTARIO, NY..................................         150,000         99
    ONTARIO COUNTY, NY...........................          90,000         97
    OREM, UT.....................................       3,230,000         95
    OSHKOSH, WI..................................       1,300,000         81
    OSWEGO, NY...................................         420,000         97
    OSWEGO, NY...................................         600,000         98
    OSWEGO COUNTY, NY............................         675,000         97
    OWENSBORO, KY................................       1,000,000         82
    OXNARD, CA...................................      14,000,000         95
    PALM BEACH CO., FL...........................       5,000,000         83
    PALM SPRING, CA..............................       2,000,000         95
    PALM SPRINGS, CA.............................         400,000         94
    PALMDALE, CA.................................       5,000,000         98
    PALMYRA, NY..................................         600,000         97
    PALMYRA, NY..................................         500,000         98
    PALMYRA, NY..................................         735,000         99
    PASADENA, CA.................................       3,110,000         84
    PASADENA, CA.................................         710,000         85
    PASADENA, CA.................................       3,725,000         93
    PASCAGOULA, MS...............................       1,173,000         85
    PATERSON, NJ.................................       1,800,000         81
    PATERSON, NJ.................................         350,000         81
    PATERSON, NJ.................................       2,000,000         82
    PEORIA, IL...................................       5,945,000         81
    PHILADELPHIA, PA.............................       5,000,000         79
    PHILADELPHIA, PA.............................      10,000,000         80
    PHILADELPHIA, PA.............................       4,910,000         82
    PHILADELPHIA, PA.............................       3,000,000         88
    PHILADELPHIA, PA.............................       5,000,000         88
    PHILADELPHIA, PA.............................       5,400,000         92
    PHILADELPHIA, PA.............................         800,000         92
    PHILADELPHIA, PA.............................       8,915,000         94
    PHILADELPHIA, PA.............................       3,000,000         94
    PHILADELPHIA, PA.............................      20,000,000         95
    PHILADELPHIA, PA.............................      16,000,000         95
    PHILADELPHIA, PA.............................      30,000,000         95
    PHILADELPHIA, PA.............................      24,000,000         96
    PHILADELPHIA, PA.............................       4,500,000         97
    PHILADELPHIA, PA.............................      15,000,000         97
    PHILADELPHIA, PA.............................      14,000,000         97
    PHILADELPHIA, PA.............................      19,500,000         98
    PHILADELPHIA, PA.............................      20,750,000         98
    PHILADELPHIA, PA.............................      40,875,000         98
    PHILADELPHIA, PA.............................      40,000,000         99
    PHILADELPHIA, PA.............................      20,000,000         99
    PHOENIX, AZ..................................      10,840,000         81
    PHOENIX, NY..................................          40,000         97
    PICO RIVERA, CA..............................       1,850,000         96
    PIERCE COUNTY, WA............................       1,100,000         88
    PIERCE COUNTY, WA............................       1,440,000         89
    PIMA COUNTY, AZ..............................       1,200,000         90
    PITTSBURGH, PA...............................       2,000,000         81
    PITTSBURGH, PA...............................       1,500,000         82
    PITTSBURGH, PA...............................      13,450,000         97
    PITTSFIELD, MA...............................       2,000,000         98
    PITTSFIELD, MA...............................       1,050,000         99
    PLATTSBURGH, NY..............................         450,000         97
    POHATCONG TOWNSHIP, NJ.......................       4,495,000         93
    POMONA, CA...................................       1,500,000         82
    POMONA, CA...................................       5,238,000         85
    POMONA, CA...................................       2,445,000         96
    POMONA, CA...................................         500,000         96
    POMPANO BEACH, FL............................       2,000,000         91
    PONCE, PR....................................       3,500,000         83
    PONCE, PR....................................       6,820,000         85
    PONCE, PR....................................      10,450,000         88
    PONCE, PR....................................      20,600,000         95
    PORT ARTHUR, TX..............................         565,000         94
    PORT HENRY, NY...............................         250,000         97
    PORTERVILLE, CA..............................       3,885,000         96
    PORTLAND, OR.................................      13,750,000         91
    PORTLAND, OR.................................       8,000,000         98
    PORTSMOUTH, NH...............................         820,000         94
    PORTSMOUTH, VA...............................       2,400,000         96
    PRICHARD, AL.................................       1,300,000         96
    PRINCE GEORGE'S CO., MD......................         450,000         81
    PRINCE GEORGE'S CO., MD......................       1,800,000         82
    PRINCE GEORGE'S CO., MD......................       1,600,000         93
    PRINCE GEORGE'S COUNTY, MD...................       6,000,000         95
    PRINCE WILLIAM COUNTY, VA....................         150,000         94
    PRINCE WILLIAM COUNTY, VA....................         300,000         94
    PRINCE WILLIAM COUNTY, VA....................       2,230,000         95
    PRINCE WILLIAM COUNTY, VA....................         500,000         95
    PROVIDENCE, RI...............................       1,000,000         88
    PROVIDENCE, RI...............................         600,000         89
    PROVIDENCE, RI...............................       2,000,000         88
    PROVIDENCE, RI...............................       9,000,000         92
    PROVIDENCE, RI...............................       2,000,000         93
    PROVIDENCE, RI...............................       2,000,000         94
    PROVIDENCE, RI...............................       1,500,000         94
    PROVIDENCE, RI...............................       5,000,000         95
    PROVO, UT....................................       4,500,000         84
    PUEBLO, CO...................................       1,165,000         87
    QUINCY, MA...................................       7,800,000         97
    RAMSEY COUNTY, MN............................       3,000,000         96
    RAYMOND, WA..................................       1,960,000         97
    READING, PA..................................       2,500,000         88
    READING, PA..................................       5,000,000         88
    READING, PA..................................         580,000         92
    READING, PA..................................         920,000         96
    RENO, NV.....................................       1,500,000         97
    RICHMOND, VA.................................       3,500,000         83
    RICHMOND, VA.................................      15,000,000         92
    RINCON, PR...................................       3,500,000         97
    RIVERSIDE, CA................................       3,400,000         88
    RIVERSIDE, CA................................       4,130,000         95
    RIVERSIDE, CA................................       4,800,000         98
    RIVERSIDE COUNTY, CA.........................      25,000,000         94
    ROANOKE, VA..................................       3,015,000         83
    ROANOKE, VA..................................         922,300         85
    ROANOKE, VA..................................       3,470,000         91
    ROANOKE, VA..................................       2,530,000         92
    ROCHESTER, NY................................       2,500,000         82
    ROCHESTER, NY................................       2,500,000         81
    ROCHESTER, NY................................       5,000,000         82
    ROCHESTER, NY................................      15,000,000         85
    ROCHESTER, NY................................       4,000,000         91
    ROCHESTER, NY................................       5,000,000         92
    ROCHESTER, NY................................         500,000         94
    ROCHESTER, NY................................      10,000,000         94
    ROCHESTER, NY................................       2,000,000         94
    ROCHESTER, NY................................       2,000,000         95
    ROCHESTER, NY................................       5,000,000         95
    ROCHESTER, NY................................       1,300,000         97
    ROCHESTER, NY................................         600,000         97
    ROCK HILL, SC................................       1,578,000         85
    ROCKFORD, IL.................................         250,000         94
    ROCKY MOUNT, NC..............................         650,000         99
    ROME, NY.....................................       3,000,000         96
    ROYAL OAK, MI................................       3,097,000         90
    ROYAL OAK, MI................................       2,400,000         92
    SACRAMENTO, CA...............................       1,000,000         85
    SACRAMENTO, CA...............................         750,000         85
    SACRAMENTO, CA...............................         500,000         89
    SACRAMENTO, CA...............................       1,250,000         90
    SACRAMENTO, CA...............................         805,000         93
    SACRAMENTO, CA...............................       1,000,000         93
    SACRAMENTO, CA...............................         400,000         94
    SACRAMENTO, CA...............................       1,000,000         95
    SACRAMENTO, CA...............................       8,000,000         95
    SACRAMENTO, CA...............................       5,445,000         97
    SACRAMENTO COUNTY, CA........................         500,000         81
    SACRAMENTO COUNTY, CA........................       1,500,000         82
    SACRAMENTO COUNTY, CA........................         500,000         84
    SACRAMENTO COUNTY, CA........................         805,302         85
    SACRAMENTO COUNTY, CA........................         500,000         87
    SACRAMENTO COUNTY, CA........................       1,500,000         89
    SACRAMENTO COUNTY, CA........................         360,000         90
    SACRAMENTO COUNTY, CA........................       1,500,000         90
    SACRAMENTO COUNTY, CA........................       2,020,000         93
    SACRAMENTO COUNTY, CA........................       1,000,000         94
    SACRAMENTO COUNTY, CA........................       1,000,000         95
    SAGINAW, MI..................................       1,500,000         84
    SAGINAW, MI..................................       2,000,000         85
    SAGINAW, MI..................................       2,500,000         87
    SAGINAW, MI..................................       1,715,000         93
    SAGINAW, MI..................................       1,500,000         96
    SAGINAW, MI..................................         375,000         98
    SAGINAW, MI..................................         500,000         99
    SAINT PAUL, MN...............................       5,000,000         81
    SAINT PAUL, MN...............................       4,000,000         95
    SALEM, MA....................................         600,000         89
    SALEM, MA....................................         600,000         95
    SALT LAKE CITY, UT...........................       1,825,000         89
    SALT LAKE COUNTY, UT.........................       5,000,000         93
    SAN ANGELO, TX...............................         660,000         97
    SAN ANTONIO, TX..............................       1,000,000         81
    SAN ANTONIO, TX..............................       5,000,000         94
    SAN ANTONIO, TX..............................      38,700,000         98
    SAN BENITO, TX...............................         525,000         89
    SAN BENITO, TX...............................         820,000         90
    SAN BERNARDINO, CA...........................         500,000         94
    SAN BERNARDINO, CA...........................       7,350,000         95
    SAN BERNARDINO, CA...........................       2,295,000         95
    SAN BERNARDINO, CA...........................       7,000,000         98
    SAN BERNARDINO COUNTY, CA....................       1,360,000         96
    SAN BUENAVENTURA, CA.........................       1,000,000         82
    SAN DIEGO, CA................................       7,134,000         80
    SAN DIEGO, CA................................       6,016,900         84
    SAN DIEGO, CA................................       1,215,000         89
    SAN DIEGO, CA................................      20,000,000         94
    SAN DIEGO, CA................................       4,400,000         94
    SAN DIEGO, CA................................         990,000         94
    SAN DIEGO, CA................................       1,760,000         95
    SAN DIEGO, CA................................       7,200,000         95
    SAN DIEGO, CA................................       5,050,000         96
    SAN DIEGO, CA................................       6,835,000         97
    SAN DIEGO, CA................................       3,600,000         98
    SAN FRANCISCO, CA............................       6,000,000         95
    SAN FRANCISCO, CA............................      50,000,000         95
    SAN JOSE, CA.................................       5,200,000         95
    SAN JUAN, PR.................................       4,650,000         79
    SAN JUAN, PR.................................      10,700,000         86
    SAN JUAN, PR.................................       7,040,000         88
    SAN LEANDRO, CA..............................       1,800,000         81
    SAN LUIS OBISPO, CA..........................       1,650,000         98
    SAN MATEO COUNTY, CA.........................       2,000,000         95
    SANDY CITY, UT...............................       2,515,000         95
    SANTA ANA, CA................................      13,500,000         84
    SANTA ANA, CA................................      20,000,000         93
    SANTA ANA, CA................................      13,900,000         95
    SANTA ANA, CA................................      10,000,000         95
    SANTA CLARITA, CA............................       1,385,000         93
    SANTA CLARITA, CA............................       2,300,000         99
    SANTA CRUZ, CA...............................         150,000         87
    SANTA ISABEL, PR.............................       1,700,000         96
    SANTEE, CA...................................       2,000,000         97
    SARASOTA, FL.................................       1,200,000         91
    SAVANNAH, GA.................................         700,000         85
    SAVANNAH, GA.................................       1,855,000         92
    SAVANNAH, GA.................................       3,500,000         94
    SAVANNAH, GA.................................       1,500,000         95
    SCHAUMBURG, IL...............................         550,000         93
    SCHENECTADY, NY..............................       1,500,000         82
    SCHUYLER COUNTY, NY..........................         485,000         97
    SCHUYLER COUNTY, NY..........................         185,000         99
    SCHUYLERVILLE, NY............................         290,000         97
    SCOTTSBORO, AL...............................         615,000         97
    SCOTTSBURG, IN...............................      25,000,000         95
    SCOTTSDALE, AZ...............................       2,220,000         81
    SCRANTON, PA.................................         800,000         87
    SCRANTON, PA.................................       4,000,000         86
    SCRANTON, PA.................................       3,000,000         88
    SCRANTON, PA.................................       9,957,000         91
    SCRANTON, PA.................................       1,000,000         92
    SCRIBA, NY...................................       1,805,000         99
    SEASIDE, CA..................................         833,700         85
    SEASIDE, CA..................................       3,030,000         96
    SEATTLE, WA..................................       2,500,000         85
    SEATTLE, WA..................................      24,200,000         94
    SEATTLE, WA..................................       2,400,000         95
    SEATTLE, WA..................................       6,860,000         96
    SELMA, AL....................................       2,200,000         95
    SELMA, AL....................................         450,000         96
    SENECA COUNTY, NY............................         880,000         97
    SENECA COUNTY, NY............................       1,200,000         98
    SHARON, PA...................................         700,000         92
    SHAWNEE, OK..................................         450,000         95
    SHEBOYGAN, WI................................       1,000,000         99
    SHREVEPORT, LA...............................       1,185,000         97
    SHREVEPORT, LA...............................       2,200,000         98
    SIMI VALLEY, CA..............................       2,000,000         82
    SIMI VALLEY, CA..............................       1,650,000         98
    SIOUX CITY, IA...............................         600,000         92
    SIOUX FALLS, SD..............................         600,000         80
    SIOUX FALLS, SD..............................         700,000         81
    SIOUX FALLS, SD..............................         370,000         81
    SIOUX FALLS, SD..............................       1,275,000         83
    SOMERVILLE, MA...............................       1,000,000         81
    SOMERVILLE, MA...............................       2,229,592         83
    SOMERVILLE, MA...............................       5,580,000         89
    SOMERVILLE, MA...............................       1,500,000         97
    SOUTH BEND, IN...............................       1,920,000         80
    SOUTH BEND, IN...............................       2,590,000         83
    SOUTH BEND, IN...............................         600,000         89
    SOUTH BEND, IN...............................         750,000         90
    SOUTH BEND, IN...............................         450,000         92
    SOUTH BEND, IN...............................       1,050,000         94
    SOUTH BEND, IN...............................       2,400,000         98
    SOUTH GATE, CA...............................       3,625,000         95
    SOUTH GATE, CA...............................       5,000,000         96
    SOUTH SAN FRANCISCO, CA......................       3,785,000         98
    SPOKANE, WA..................................       5,555,000         91
    SPOKANE, WA..................................      22,650,000         97
    SPRINGFIELD, IL..............................       3,000,000         82
    SPRINGFIELD, MA..............................       3,000,000         85
    SPRINGFIELD, MA..............................         350,000         94
    SPRINGFIELD, MA..............................         900,000         94
    SPRINGFIELD, MA..............................       2,000,000         95
    SPRINGFIELD, MA..............................       2,200,000         95
    SPRINGFIELD, MA..............................      12,000,000         96
    ST. CLAIR SHORES, MI.........................         500,000         84
    ST. CLAIR SHORES, MI.........................       1,250,000         91
    ST. JOSEPH, MO...............................       2,400,000         88
    ST. JOSEPH, MO...............................       1,260,000         93
    ST. LOUIS, MO................................       2,175,000         80
    ST. LOUIS, MO................................       2,500,000         81
    ST. LOUIS, MO................................       1,500,000         82
    ST. LOUIS, MO................................         500,000         84
    ST. LOUIS, MO................................      15,000,000         84
    ST. LOUIS, MO................................       2,000,000         88
    ST. LOUIS, MO................................       2,000,000         88
    ST. LOUIS, MO................................      15,000,000         90
    ST. LOUIS, MO................................       1,000,000         95
    ST. PETERSBURG, FL...........................       4,350,000         82
    ST. PETERSBURG, FL...........................       1,600,000         83
    ST. PETERSBURG, FL...........................       2,000,000         89
    ST. PETERSBURG, FL...........................       6,250,000         98
    STOCKTON, CA.................................      10,000,000         99
    STOCKTON, CA.................................       3,000,000         99
    SUFFOLK COUNTY, NY...........................       1,500,000         95
    SULLIVAN, NY.................................          30,000         97
    SUNNYSIDE, WA................................       2,500,000         92
    SUPERIOR, WI.................................         500,000         81
    SYRACUSE, NY.................................       1,200,000         81
    SYRACUSE, NY.................................       1,000,000         82
    SYRACUSE, NY.................................       1,000,000         84
    SYRACUSE, NY.................................       3,000,000         85
    SYRACUSE, NY.................................      10,185,000         89
    SYRACUSE, NY.................................      14,395,000         92
    SYRACUSE, NY.................................       1,290,000         95
    SYRACUSE, NY.................................       3,250,000         95
    SYRACUSE, NY.................................       3,000,000         99
    TACOMA, WA...................................       3,000,000         79
    TACOMA, WA...................................       2,500,000         81
    TACOMA, WA...................................       5,180,000         93
    TACOMA, WA...................................       1,135,000         95
    TACOMA, WA...................................       7,500,000         95
    TAMPA, FL....................................       9,920,000         96
    TAMPA, FL....................................       1,500,000         97
    TAMPA, FL....................................       4,500,000         98
    TAMPA, FL....................................       9,070,000         98
    TEMPE, AZ....................................       1,665,500         81
    TERRE HAUTE, IN..............................       3,500,000         88
    TICONDEROGA, NY..............................         120,000         97
    TICONDEROGA, NY..............................         250,000         99
    TIPTON, IN...................................      25,000,000         95
    TOA BAJA, PR.................................       3,150,000         86
    TOA BAJA, PR.................................       3,000,000         89
    TOA BAJA, PR.................................       7,600,000         92
    TOA BAJA, PR.................................       9,550,000         95
    TOLEDO, OH...................................       6,937,390         79
    TOLEDO, OH...................................       2,000,000         81
    TOLEDO, OH...................................         650,000         95
    TOLEDO, OH...................................         550,000         96
    TOLEDO, OH...................................      40,000,000         99
    TRENTON, NJ..................................       6,000,000         92
    TRENTON, NJ..................................         200,000         97
    TRENTON, NJ..................................         230,000         98
    TROY, NY.....................................       3,610,000         88
    TROY, NY.....................................         500,000         90
    TRUJILLO ALTO, PR............................       1,600,000         90
    TRUMBULL COUNTY, OH..........................       2,000,000         95
    TUCSON, AZ...................................       8,200,000         80
    TULSA, OK....................................      10,053,000         88
    TULSA, OK....................................       2,800,000         95
    TYLER, TX....................................         400,000         90
    ULSTER COUNTY, NY............................       2,000,000         96
    ULSTER COUNTY, NY............................       2,500,000         97
    UNION, NY....................................       2,000,000         95
    UNION CITY, CA...............................       3,900,000         97
    UPLAND, CA...................................       3,200,000         95
    UTICA, NY....................................         504,000         81
    UTICA, NY....................................         740,000         84
    UTICA, NY....................................       1,750,000         86
    UTICA, NY....................................       1,500,000         88
    UTICA, NY....................................       9,000,000         92
    UTICA, NY....................................       6,000,000         95
    VACAVILLE, CA................................         555,000         92
    VACAVILLE, CA................................       1,200,000         98
    VALPARAISO, IN...............................      25,000,000         95
    VEGA BAJA, PR................................       4,500,000         94
    VEGA BAJA, PR................................       6,455,000         95
    VEGA BAJA, PR................................       2,370,000         99
    VERNON, AL...................................       1,785,000         98
    VIEQUES, PR..................................       5,000,000         94
    VILLALBA, PR.................................       2,440,000         95
    VIRGINIA BEACH, VA...........................       2,000,000         93
    VISTA, CA....................................       5,675,000         99
    WALTHAM, MA..................................       2,350,000         95
    WANAQUE, NJ..................................       2,310,000         95
    WARREN, OH...................................       3,000,000         87
    WARREN, OH...................................         650,000         90
    WARREN, OH...................................       1,000,000         95
    WARREN COUNTY, NY............................         130,000         97
    WASHINGTON, DC...............................       4,000,000         89
    WASHINGTON, DC...............................       5,000,000         92
    WASHINGTON, DC...............................      11,500,000         95
    WASHINGTON, DC...............................       5,000,000         97
    WASHINGTON CO., PA...........................       2,500,000         81
    WATERBURY, CT................................      13,000,000         95
    WATERFORD, MI................................         255,000         93
    WATERFORD, NY................................         180,000         97
    WATERFORD, NY................................         500,000         98
    WATERVLIET, NY...............................          40,000         97
    WAUKEGAN, IL.................................       1,500,000         84
    WAUKEGAN, IL.................................         250,000         86
    WAUSAU, WI...................................       2,000,000         95
    WAYNE COUNTY, MI.............................         225,000         88
    WAYNE COUNTY, NY.............................         720,000         97
    WAYNE COUNTY, NY.............................         600,000         98
    WAYNE COUNTY, MI.............................         535,000         98
    WEST PALM BEACH, FL..........................         710,500         85
    WEST PALM BEACH, FL..........................       1,095,000         94
    WEST PALM BEACH, FL..........................         900,000         99
    WEST VALLEY CITY, UT.........................       1,150,000         88
    WEST WINDSOR TOWNSHIP, NJ....................          870,00         96
    WESTFIELD, MA................................       2,200,000         94
    WESTLAND, MI.................................         625,000         85
    WESTLAND, MI.................................         530,000         96
    WESTLAND, MI.................................         300,000         97
    WESTMINSTER, CA..............................       2,900,000         95
    WESTMORELAND CO., PA.........................         750,000         80
    WESTMORELAND COUNTY, PA......................       1,810,000         98
    WESTPORT, NY.................................         190,000         97
    WHEELING, WV.................................       2,000,000         97
    WHITEHALL, NY................................         630,000         97
    WHITEHALL, NY................................       1,295,000         98
    WHITTIER, CA.................................         743,000         79
    WICHITA, KS..................................       3,645,000         96
    WILLIAMSPORT, PA.............................       1,600,000         95
    WILMINGTON, DE...............................       1,000,000         81
    WILMINGTON, NC...............................         215,000         89
    WILMINGTON, NC...............................       1,000,000         95
    WINCHENDON, MA...............................       2,900,000         95
    WINSTON-SALEM, NC............................       2,198,000         85
    WOODLAND, CA.................................         800,000         95
    WOONSOCKET, RI...............................         230,000         85
    WORCESTER, MA................................      23,000,000         93
    WORCESTER, MA................................       5,935,000         95
    YATES COUNTY, NY.............................         300,000         97
    YONKERS, NY..................................       3,947,000         82
    YONKERS, NY..................................      18,000,000         95
    YORK COUNTY, PA..............................         300,000         90
    YOUNGSTOWN, OH...............................         500,000         89
    YOUNGSTOWN, OH...............................       1,250,000         90
    YOUNGSTOWN, OH...............................       1,275,000         90
    YOUNGSTOWN, OH...............................         810,000         92
    YOUNGSTOWN, OH...............................       4,000,000         93
    YOUNGSTOWN, OH...............................       2,500,000         93
    YOUNGSTOWN, OH...............................         850,000         94
    YOUNGSTOWN, OH...............................         650,000         94
    YOUNGSTOWN, OH...............................         300,000         95
    YOUNGSTOWN, OH...............................       2,000,000         95
    YOUNGSTOWN, OH...............................       2,300,000         96
    YOUNGSTOWN, OH...............................         675,000         96
    YOUNGSTOWN, OH...............................       1,500,000         96
    YOUNGSTOWN, OH...............................         200,000         98
    YOUNGSTOWN, OH...............................       1,000,000         99
    YUMA, AZ.....................................       1,500,000         94
    ------------------------------------------------------------------------

                               community builders
        Question. Please identify the number and function of community
    builders by office. Please identify all costs associated with the
    program, including salaries, education expenses, and travel expenses.
    Please provide the legal opinion and the hiring requirements used.
        Answer. As of June 19, 1999, there were 784 Community Builders
    currently employed, which included 376 internal and 408 external hires.
    Of the total external hires, 78 are Community Builder Specialists, who
    are located in select program cylinders.
        The grade levels of Community Builders are: GS-7/12 (Associate
    Community Builders); GS-13/15 (Career Community Builders); and GS-13/15
    (Community Builder Fellows).
        In fiscal year 1998, the Department spent $576,000 in travel funds
    in support of its Community Builder Program. In fiscal year 1999, the
    Department has spent $1,098,785 through June 21, 1999, in travel funds
    to support the program. In fiscal year 2000, approximately $87 million
    is expected to be spent by Community Builders as follows:

    Salaries & Benefits.....................................     $82,620,000
    Travel..................................................       1,800,000
    Training................................................       2,783,500
                        --------------------------------------------------------
                        ____________________________________________________
          Total.............................................      87,203,500

        There are four types of Community Builders: Senior Community
    Builder (GS-14/15--career); Community Builder (GS-13/14/15--career);
    Community Builder Fellow (GS-13/14/15--term appointment); and Associate
    Community Builder (GS 7/9/11/12--career). The Senior Community
    Builders, Community Builders, and Associate Community Builders are all
    career employees. The Community Builder Fellows are all term employees
    with a 2-year term appointment. They are eligible for a second 2-year
    appointment at the discretion of HUD management. The authority and
    duties of Community Builders are as follows:
    General Description
        In the past, HUD employees were asked to be facilitators as well as
    monitors. These dual responsibilities were inconsistent or
    contradictory. As many HUD watchers have noted, the demand that HUD
    employees provide helpful, timely and responsive customer service while
    at the same time acting as tough, detail-oriented regulators, monitors
    and referees was unrealistic and led to increase vulnerability to
    waste, fraud and abuse in HUD programs. A top priority in reforming
    HUD--as suggested by both the GAO and HUD's Inspector General--was to
    focus the attention of HUD employees on monitoring HUD programs to
    ensure that they are well run and on ensuring compliance with HUD
    regulations. Only by removing the customer service functions and giving
    them to Community Builders was HUD able to effectively focus the rest
    of its employees on monitoring and compliance. Thus, the position of
    the Community Builder was created because HUD realizes that both roles
    have a place in the Department, but that they are distinct functions
    which are better performed by different individuals--in different
    divisions--within the HUD organization. With the creation of the
    Community Builder cadre of employees, there is now, for the first time
    at HUD, a separation between customer service and program monitoring/
    enforcement functions. Community Builders provide direct customer
    service which addresses real community needs. All other HUD employees,
    known as Public Trust Officers, are responsible for program monitoring,
    compliance and enforcement. This division of responsibilities, Booz-
    Allen & Hamilton concluded, ``enables HUD to focus its training and
    development efforts on enhancing each group's capacity to more
    effectively perform its assigned role.''
        The primary responsibilities of all Community Builders are to serve
    as HUD's links to communities, assisting them in identifying their
    local needs through HUD programs. Community Builder customers include,
    but are not limited to, taxpayers, homebuyers, renters, homeless
    people, state and local government, housing authorities, lenders,
    mortgage bankers, home builders, realtors, not-for-profit
    organizations, and the faith-based community.
    Senior Community Builder (SCB)
        The Senior Community Builder (SCB) is the head of a field office
    and coordinates the accomplishment of program and management priorities
    included in the office's Business and Operating Plan. The SCB, who
    reports to the Secretary's Representative, has direct line authority
    over the Community Builders), Community Builder Fellows (CBF),
    Associate Community Builders (ACB), and related support staff in the
    area of Labor Relations. In addition, the SCB manages the work of field
    Environmental Specialists, even though these positions are
    organizationally part of the Office of Community Planning and
    Development. The primary duties of the Senior Community Builder are to:
      --represent the Department for all programs within the office's
            geographic jurisdiction;
      --serve as the Department's liaison with state and local officials,
            private sector organizations and public interest groups;
      --coordinate the development and implementation of the Business and
            Operating Plan for their geographic jurisdiction; and
      --evaluate the efficiency and effectiveness of HUD programs within
            their jurisdiction.
    Community Builders
        Community Builders serve as the initial point of contact for all
    elected officials and the critical link for HUD customers to access the
    full range of HUD programs and services. They serve on the staff of the
    Secretary's Representative or Senior Community Builder (SCB). Community
    Builders serve as HUD's outreach arm to communities, and work to
    achieve the goals and objectives contained in the local Business and
    Operating Plan (BOP). Community Builders provide a wide variety of
    services to communities and customers in their jurisdiction, but have
    no role in the preparation, review or approval of applications for HUD
    assistance. Their work is done in collaboration with Public Trust
    Officers (PTOs). The work of Community Builders is guided by the
    Department's new focus on community consulting and collaboration,
    community-focused planning, fostering neighborhood-based empowering
    partnerships, building local capabilities for problem solving, and
    facilitating the development of comprehensive and integrated service
    strategies within the community and at HUD. Community Builders are
    responsible for:
      --representing HUD at public events; educating customer groups and
            the general public on HUD issues and priorities;
      --educating and explaining HUD programs and special initiatives;
      --performing a broad variety of marketing, liaison and related
            community activities on behalf of the Offices of Housing,
            Public and Indian Housing, Community Planning and Development,
            Fair Housing and Equal Opportunity, and the Real Estate
            Assessment Center (REAC), the Departmental Enforcement Center
            (DEC) and the Office of Multifamily Housing Assistance
            Restructuring (OMHAR);
      --assisting in the development of field office BOPs;
      --monitoring the Plan's implementation and promoting timely and
            effective cross-program coordination in carrying out BOP
            implementation at the local level;
      --organizing and marketing all Notice of Fund Availability (NOFA) and
            SuperNOFA training sessions to clients and prospective
            grantees;
      --providing information and consultative services to communities to
            solve problems;
      --identifying community needs and assessing community assets and
            resources to promote HUD's strategic objectives--fight for fair
            housing; increase affordable housing and homeownership; reduce
            homelessness; promoting jobs and economic opportunity and
            empowering people and communities;
      --assisting agencies and community organizations in developing
            comprehensive community development and housing priorities and
            strategies;
      --collaborating with community organizations and providing technical
            assistance to foster local public/private partnerships to
            achieve community goals and to develop local capabilities to
            achieve those goals;
      --providing leadership in responding to natural disasters and
            implementing special Departmental initiatives;
      --consulting and coordinating with other Federal and state agencies
            on housing and community development initiatives;
      --organizing HUD's response to controversial local issues; meeting
            with special interest and advocacy groups to discuss their
            issues and concerns; coordinating and facilitating meetings
            between HUD program specialists and advocacy groups;
      --assessing HUD customer service performance and the impact of
            programs in addressing local needs through regular meetings
            with housing industry, community and government organizations;
            and
      --identifying and addressing customer service and program delivery
            deficiencies through communication and coordination with
            Secretary's Representatives, Senior Community Builders and
            appropriate program office officials.
    Community Builders Fellows
        Community Builder Fellows serve on the staff of the Secretary's
    Representative or Senior Community Builder (SCB). The authority and
    duties of Community Builder Fellows (CBFs), who serve on a 2-year term
    appointment, are identical to those described above for career
    Community Builders. The primary difference is that they bring to the
    job a non-HUD perspective, expertise and experience in solving local
    housing and community development problems. Working collaboratively
    with career Community Builders and Public Trust Officers, the Community
    Builder Fellows will augment the knowledge of community needs and
    resources and enhance the capacity of HUD staff to be more effective
    partners with communities in finding practical solutions to local
    issues. In addition to the general Community Builder Fellows, the
    Department has hired Community Builder Fellows who are Specialists in
    particular program areas or initiatives.
    Associate Community Builders
        Associate Community Builders (ACBs) serve on the staff of the
    Secretary's Representative or Senior Community Builder (SCB) in all HUD
    field offices. They provide a broad-range of administrative and
    clerical support to the SCB, Community Builders and Community Builder
    Fellows assigned to the office. Associate Community Builders are
    responsible for:
      --serving as the initial point of contact for telephone inquiries and
            ``walk-in'' customers and being a source of general information
            on HUD programs and services;
      --providing support in resolving customer complaints and analyzing
            customer service trends;
      --assisting in the development and updating of community profiles;
      --assisting in the preparation of Business and Operating Plan
            progress reports; and
      --supporting the Community Builders and Community Builder Fellows on
            a broad range of tasks related to outreach for HUD programs and
            services.
        Community Builders were hired to meet Departmental human resource
    requirements. Hence, a legal opinion was not required to justify the
    hiring of this staff.
        Attached is a listing of Community Builders, by office.

                           DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT--SALARIES AND EXPENSES
                                           [Staffing Data as of June 19, 1999]
    ----------------------------------------------------------------------------------------------------------------
                                                      Internal Community      Ext. Cmty.
                                                           Builders             Bldrs.
                                                   ----------------------------------------  Total   Public    Total
                    Office location                 Assoc.            Sr.    Cmty.   Cmty.   Cmty.    Trust     S&E
                                                     Cmty.   Cmty.   Cmty.   Bldr.   Bldr.  Bldrs.  Officers   Staff
                                                     Bldr.   Bldr.   Bldr.  Fellow   Spec.
    ----------------------------------------------------------------------------------------------------------------
    Headquarters:
        Departmental Mgmt.........................  ......  ......  ......  ......  ......  ......      100      100
        Admin.(CBs--Special Action)...............  ......  ......  ......  ......      13      13      334      347
        Comm. Plng. & Develop.....................  ......  ......  ......  ......      28      28      226      254
        Real Estate Assess. Center................  ......  ......  ......  ......       3       3      146      149
        Housing...................................  ......  ......  ......  ......      11      11      596      607
        Policy Develop. & Research................  ......  ......  ......  ......       1       1      102      103
        Public & Indian Housing...................  ......  ......  ......  ......      11      11      478      459
        Fair Housing & Eq. Oppor..................  ......  ......  ......  ......  ......  ......      117      117
        Govt. Natl. Mtge. Assn....................  ......  ......  ......  ......  ......  ......       56       56
        Enforcement Center........................  ......  ......  ......  ......  ......  ......      152      152
        Dept. Eq. Employ. Oppor...................  ......  ......  ......  ......  ......  ......       20       20
        Dept. Opers. & Coord......................  ......  ......  ......  ......  ......  ......       27       27
        Lead Hazard Control.......................  ......  ......  ......  ......  ......  ......       23       23
        Chief Financial Offcer....................  ......  ......  ......  ......  ......  ......      222      222
        General Counsel...........................  ......  ......  ......  ......  ......  ......      191      191
        Chief Procurement Offcer..................  ......  ......  ......  ......  ......  ......       42       42
        Chief Information Offcer..................  ......  ......  ......  ......  ......  ......        4        4
        Ofc. M/F Hsg. Assist. Restruc.............  ......  ......  ......  ......  ......  ......       19       19
                                                   -----------------------------------------------------------------
          Subtotal, Headquarters..................  ......  ......  ......  ......      67      67    2,855    2,922
    Field:
        Albany....................................       1       2       1       4  ......       8       52       60
        Albuquerque...............................       2       1       1       2  ......       6       18       24
        Anchorage.................................       1       1       1       1  ......       4       27       31
        Atlanta...................................       7       8  ......       5  ......      20      441      461
        Baltimore.................................       2       3       1       6  ......      12       81       93
        Bangor....................................       1  ......       1       1  ......       3        1        4
        Boise.....................................       1  ......       1       1  ......       3        1        4
        Boston....................................       5       3  ......       8  ......      16      168      184
        Bimmingham................................       1       2       1       4  ......       8       69       77
        Buffalo...................................       3       5  ......       5  ......      13      104      117
        Burlington................................  ......       1       1  ......  ......       2  ........       2
        Camden....................................       2       2       1       3  ......       8        1        9
        Casper....................................       1  ......       1       1  ......       3        2        5
        Charleston................................       1       1       1       2  ......       5       14       19
        Chicago...................................       5       7  ......      14  ......      26      318      344
        Cleveland.................................       2       2       1       8  ......      13       78       91
        Cincinnati................................       4       1       1       3  ......       9        4       13
        Columbia..................................       2       1       1       3  ......       7       61       68
        Columbus..................................       2       3       1       4  ......      10       94      104
        Coral Gables..............................       3       3       1       7  ......      14       51       65
        Dallas....................................       1       2       1       6  ......      10        3       13
        Denver....................................       5       4  ......       6      10      25      536      561
        Des Moines................................       2       4       1       3  ......      10       19       29
        Detroit...................................       2       5       1       6  ......      14      124      138
        Fargo.....................................       2  ......  ......       1  ......       3        1        4
        Flint.....................................       1  ......       1       1  ......       3        1        4
        Fresno....................................       2  ......       1       4  ......       7        1        8
        Ft. Worth.................................       2       7  ......       4  ......      13      285      298
        Greenboro.................................       1  ......       2       9  ......      12      118      130
        Grand Rapids..............................       1       1       1       3  ......       6        7       13
        Hartford..................................       2       1       1       3  ......       7       51       58
        Helena....................................       1       1       1       1  ......       4        1        5
        Honolulu..................................       1       1       1       1  ......       4       18       22
        Houston...................................       3       4       1       5  ......      13       57       70
        Indianapolis..............................       1       3       1       7  ......      12       66       78
        Jacksonville..............................       1       2       1       3  ......       7      110      117
        Jackson...................................       2       2       1       3  ......       8       47       55
        Kansas City...............................       2       2  ......       5       1      10      127      137
        Knoxville.................................       1       1       1       2  ......       5       38       43
        Los Angeles...............................       2       4       1      14  ......      21      136      157
        Las Vegas.................................       2       3       1       5  ......      11        9       20
        Louisville................................       2  ......       1       5  ......       8       59       67
        Little Rock...............................       1       1       1       2  ......       5       47       52
        Lubbock...................................       1  ......       1       2  ......       4        1        5
        Manchester................................       1       1       1       1  ......       4       21       25
        Memphis...................................       3  ......       1       3  ......       7        5       12
        Minneapolis...............................       2       1       1       8  ......      12       72       84
        Milwaukee.................................       1       1       1       4  ......       7       64       71
        Nashville.................................       2       4       1       3  ......      10       43       53
        New Orleans...............................       2       3       1       4  ......      10       80       90
        New York..................................       6       9  ......      11  ......      26      230      256
        Newark....................................       1       4       1       5  ......      11      100      111
        Oklahoma City.............................       1       3       1       2  ......       7       77       84
        Omaha.....................................       1       1       1       2  ......       5       34       39
        Orlando...................................       2  ......       1       3  ......       6        3        9
        Philadelphia..............................       4       3  ......       9  ......      16      335      351
        Phoenix...................................       2       3       1       5  ......      11       59       70
        Pittsburgh................................       1       2       1       5  ......       9       68       77
        Portland..................................       1       2       1       2  ......       6       46       52
        Providence................................       2       1       1       1  ......       5       12       17
        Puerto Rico...............................       1       1       1       8  ......      11       56       67
        Reno......................................       1  ......       1       2  ......       4  ........       4
        Richmond..................................       2       2       1       8  ......      13       50       63
        Sacramento................................       1       1       1       4  ......       7        3       10
        San Diego.................................  ......       1       1       2  ......       4        3        7
        San Francisco.............................       5       6  ......       9  ......      20      195      215
        Seattle...................................       4       5  ......       5  ......      14      139      153
        Shreveport................................       1  ......       1       2  ......       4        2        6
        Sioux Falls...............................       1  ......       1       2  ......       4  ........       4
        Salt Lake City............................       1       2       1       3  ......       7        1        8
        San Antonio...............................       1       2       1       7  ......      11       82       93
        Santa Ana.................................  ......  ......       1       5  ......       6      186      192
        Spokane...................................       1  ......       1       1  ......       3        2        5
        Springfield...............................  ......  ......       1       3  ......       4  ........       4
        St. Louis.................................       1       2       1       3  ......       7       43       50
        Tampa.....................................       1       3       1       3  ......       8        1        9
        Tucson....................................       1  ......       1       1  ......       3  ........       3
        Tulsa.....................................       1  ......       1       2  ......       4        1        5
        Washington, D.C...........................       3       5  ......       8  ......      16       58       74
        Wilmington................................       1  ......       1       1  ......       3  ........       3
                                                   -----------------------------------------------------------------
          Subtotal, Field.........................     146     162      68     330      11     717    5,518    6,235
          Total, S&E Staff........................     146     162      68     330      78     784    8,373    9,157
    ----------------------------------------------------------------------------------------------------------------

                                    staffing
        Question. There are major staffing issues in how HUD has allocated
    resources. Please describe how staff resources have been allocated by
    function and office over the last 3 years as well as a cost-benefit
    analysis for all staff decisions.
        Answer. Recent allocations of staff are done pursuant to the HUD
    2020 plans and other reorganizations within each component
    organization. All staffing actions are reviewed by each Assistant
    Secretary and by the Deputy Secretary's office. These staffing actions
    are reviewed to ensure that the Department maintains and improves its
    current capabilities and is positioned to effectively leverage the
    current workforce to meet changing needs.
        In 1997, HUD announced its plan to implement a Resource Estimation
    and Allocation Process (REAP) that would link resources to results as
    required by the Government Performance and Results Act (GPRA). Congress
    asked the National Academy of Public Administration (NAPA) to conduct a
    study of HUD's procurement activities and practices for estimating
    human resource needs. The scope of the study was later increased to
    include review of HUD's compliance with GPRA. In 1998, the Academy
    developed plans to demonstrate a method which would estimate, allocate
    and validate resources. In 1999, NAPA reviewed the results of pilot
    demonstrations conducted in Housing and Community Planning and
    Development and developed formal recommendations for HUD. The
    Department will begin utilizing the results of the pilot in fiscal year
    2000.
                             emergency cdbg funding
        Question. The fiscal year 1999 supplemental appropriations
    transferred authority for allocating emergency disaster funds for unmet
    disaster needs from HUD to FEMA. Nevertheless, the subcommittee remains
    concerned over HUD's oversight on the use of the emergency funds that
    have already been allocated. Please provide a description of all
    oversight actions taken by the Department. For example, Grand Forks,
    North Dakota received over $200 million in fiscal year 1997 funds.
    There is anecdotal evidence that a large number of houses have been
    built through a buy-out program but remain unoccupied. Please provide a
    status report of all funds allocated in fiscal years 1996 and 1997
    under the emergency CDBG program.
        Answer. HUD carries out oversight of CDBG supplemental disaster
    appropriations principally through review of the grantees' performance
    reporting via HUD's web-based Disaster Recovery Grant Reporting (DRGR)
    system and monitoring visits. In the case of Grand Forks, North Dakota,
    HUD recently completed a month-long monitoring visit and the HUD field
    office staff is in the process of writing a report on that visit. There
    are a number of issues that came up as a result of the monitoring visit
    that are being addressed with the city.
        With respect to the anecdote about a large number of houses being
    built in Grand Forks and remaining unoccupied, this is what HUD's
    oversight found. What is called the Congressional Subdivision includes
    189 newly constructed houses. The houses sell between $90,000 to
    $124,000. New houses in the area sell for a median sales price of
    $130,000.
        Sixty-five of the houses had been sold as of June 17, 1999. Offers
    have been made for an additional 53 of the houses, pending applicant
    approval. The remaining 71 houses are in various stages of
    construction. The city has mounted a vigorous marketing effort to sell
    the remaining houses as quickly as possible, including a radio
    campaign. The location of the development outside of the traditional
    city boundaries (i.e. on the west side of the Interstate, versus the
    traditional location of Grand Forks on the east side) has been somewhat
    of an issue in convincing residents to relocate to the new development.
    This location, however, is further from the Red River and much less
    likely to be affected by flooding.
        Attached is a status report of CDBG disaster grants funded by
    appropriations under the Omnibus Consolidated Rescissions and
    Appropriations Act of 1996 (Public Law 104-134) and by the 1997
    Emergency Supplemental Appropriations Act for Recovery from Natural
    Disasters, and for Overseas Peacekeeping Efforts, Including Those in
    Bosnia (Public Law 105-18).

                                                                      CDBG DISASTER GRANTS
                                                   [Data as of the End of May, 1999--Ordered by Disaster Type]
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                               Appropriated                      Obligated                       Disbursed      Undisbursed       Percent
                                                  amount      Awarded amount      amount      Under contract      amount          amount         disbused
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    1997 Disaster Grants....................    $500,000,000    $488,648,776    $488,648,776    $488,648,776    $238,468,842    $250,179,934            48.8
    1996 Floods.............................      50,000,000      50,000,000      50,000,000      50,000,000      28,346,098      21,653,902            56.7
                                             ---------------------------------------------------------------------------------------------------------------
          Grand Totals......................     550,000,000      538,648,77     538,648,776     538,648,776     266,814,940     271,833,836            49.5
    --------------------------------------------------------------------------------------------------------------------------------------------------------

                                                                   CDBG DISASTER GRANTS--DATA AS OF THE LAST WORKING DAY OF MAY, 1999
                                                                       [Ordered by Disaster Type, Region, State, and Jurisdiction]
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                             Obligated
                                  Grantee                               Appropriation   Obligation     Grant number       Awarded     Obligated      Under      Disbursed   undisbursed    Percent
                                                                             code          date                            amount       amount      contract      amount       amount     disbursed
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                    Disaster Type: 1997 Disaster Grants

                                Region: 01

    Massachusetts:
        STATE OF MASSACHUSETTS........................................     868/00162    10/01/1998     B-98-DU-25-0001    4,297,444    4,297,444    4,297,444  ...........    4,297,444  ...........
        LAWRENCE......................................................     868/00162    03/09/1999     B-98-MU-25-0012      333,300      333,300      333,300  ...........      333,300  ...........
        SALEM.........................................................     868/00162    04/06/1998     B-98-MU-25-0029      505,421      505,421      505,421       20,344      485,077          4.0
    Maine: STATE OF MAINE.............................................     868/00162    07/16/1998     B-98-DU-23-0001      782,332      782,332      782,332       25,239      757,093          3.2
    New Hamshire: STATE OF NEW HAMPSHIRE..............................     868/00162    12/23/1998     B-98-DU-33-0001      557,750      557,750      557,750  ...........      557,750         18.1
    Vermont: STATE OF VERMONT.........................................     868/00162    06/21/1998     B-98-DU-50-0001    1,219,587    1,219,587    1,219,587      220,251      999,336

                                Region: 03

    Maryland: STATE OF MARYLAND.......................................     868/00162    12/01/1998     B-98-DU-24-0001      469,601      469,601      469,601  ...........      469,601  ...........
    Pennsylvania:
        STATE OF PENNSYLVANIA.........................................     868/00162    12/16/1998     B-98-DU-42-0001      287,832      287,832      287,832  ...........      287,832  ...........
        MONTGOMERY COUNTY.............................................     867/00162    03/18/1997     B-97-UU-42-0005      650,797      650,797      650,797      525.362      125,435         80.7
    West Virginia:
        STATE OF WEST VIRGINIA........................................     868/00162    04/21/1998     B-98-DU-54-0001    2,333,420    2,333,420    2,333,420        9,242    2,324,178          0.4
        KANAWHA COUNTY................................................     868/00162    05/08/1998     B-98-NU-54-0001      581,547      581,547      581,547       18,954      562,593          3.3

                                Region: 04

    Alabama:
        MOBILE........................................................     868/00162    03/04/1999     B-98-MU-01-0006      679,777      679,777      679,777  ...........      679,777  ...........
        BALDWIN COUNTY................................................     868/00162    12/07/1998     B-98-NU-01-0002      981,301      981,301      981,301  ...........      981,301  ...........
        MOBILE COUNTY.................................................     868/00162    12/02/1998     B-98-NU-01-0001      935,102      935,102      935,102      208,951      726,151         22.3
    Florida: STATE OF FLORIDA.........................................     868/00162    04/24/1998     B-98-DU-12-0001      512,116      512,116      512,116  ...........      512,116  ...........
    Kentucky:
        STATE OF KENTUCKY.............................................     867/00162    01/29/1998      B-97-DU-21-001    4,484,904    4,484,904    4,484,904    3,694,813      790,091         82.4
        CYNTHIANA/HARRISON COUNTY.....................................     867/00162    02/20/1998     B-97-NU-21-0003      867,560      867,560      867,560      648,501      219,059         74.7
        FALMOUTH......................................................     867/00162    03/02/1998     B-97-NU-21-0001    2,186,005    2,186,005    2,186,005      566,366    1,619,639         25.9
        FRANKFORT/FRANKLIN COUNTY.....................................     867/00162    03/02/1998     B-97-NU-21-0004      717,760      717,760      717,760      286,203      431,557         39.9
        HOPKINSVILLE..................................................     867/00162    01/27/1998     B-97-MU-21-0002      447,174      447,174      447,174      157,632      289,542         35.3
        LOUISVILLE....................................................     867/00162    05/21/1998     B-97-MU-21-0005    2,000,197    2,000,197    2,000,197      472,467    1,527,730         23.6
        OWENSBORO.....................................................     867/00162    01/27/1998     B-97-MU-21-0006      336,116      336,116      336,116      119,473      216,643         35.5
        SHEPHERDSVILLE/BULLITT COUNTY.................................     867/00162    02/26/1998     B-97-NU-21-0006    1,488,753    1,488,753    1,488,753    1,325,482      163,271         89.0
        BOURBON COUNTY................................................     867/00162    05/27/1998     B-97-NU-21-0002      587,852      587,852      587,852      461,000      126,852         78.4
        JEFFERSON COUNTY..............................................     867/00162    01/29/1998      B-97-W-21-0001    2,068,840    2,068,840    2,068,840    1,772,884      295,956         85.7
        PENDLETON COUNTY..............................................     867/00162    05/07/1998     B-97-NJ-21-0005      567,439      567,439      567,439      197,439      370,000         34.8
    North Carolina:
        STATE OF NORTH CAROLINA.......................................     867/00162    12/19/1997     B-97-DU-37-0001    6,569,270    6,569,270    6,569,270    1,660,213    4,909,057         25.3
        FAYETTEVILLE..................................................     868/00162    03/24/1999     B-98-MU-37-0005      320,093      320,093      320,093  ...........      320,093  ...........
        GOLDSBORO.....................................................     868/00162    05/19/1998     B-98-MU-37-0019      648,674      648,674      648,674      456,919      191,755         70.4
        JACKSONVILLE..................................................     868/00162    06/23/1998     B-98-MU-37-0014      308,188      308,188      308,188        1,293      306,895          0.4
        RALEIGH.......................................................     867/00162    12/23/1997     B-97-MU-37-0009    3,002,052    3,002,052    3,002,052      230,672    2,771,380          7.7
        WILMINGTON....................................................     868/00162    06/23/1998     B-98-MU-37-0010      740,794      740,794      740,794  ...........      740,794  ...........
        BEAUFORT COUNTY...............................................     868/00162    04/20/1998     B-98-NU-37-0003    1,421,128    1,421,128    1,421,128      558,742      862,386         39.3
        CRAVEN COUNTY.................................................     868/00162    04/30/1998     B-98-NU-37-0004    1,338,999    1,338,999    1,338,999      127,446    1,211,553          9.5
        JOHNSTON COUNTY...............................................     868/00162    02/17/1999     B-98-NU-37-0006    1,519,812    1,519,812    1,519,812  ...........    1,519,812  ...........
        LENOIR COUNTY.................................................     868/00162    02/04/1998     B-98-NU-37-0001   10,922,932   10,922,932   10,922,932    4,139,149    6,783,783         37.9
        ONSLOW COUNTY.................................................     868/00162    03/03/1998     B-98-NU-37-0002    1,347,205    1,347,205    1,347,205      113,848    1,233,357          8.5
        PENDER COUNTY/SURF CITY.......................................     868/00162    09/28/1998     B-98-NU-37-0005    3,670,386    3,670,386    3,670,386  ...........    3,670,386  ...........
        WAKE COUNTY...................................................     868/00162    02/04/1998      B-98-W-37-0001    1,332,066    1,332,066    1,332,066      302,483    1,029,583         22.7
    Puerto Rico:
        COMMONWEALTH OF PUERTO RICO...................................     868/00162    09/15/1998     B-98-DU-72-0001   15,172,960   15,172,960   15,172,960      373,552   14,799,408          2.5
        BAYAMON MUNICIPIO.............................................     867/00162    01/20/1998     B-97-MU-72-0004    5,404,219    5,404,219    5,404,219    2,991,999    2,412,220         55.4
        CAGUAS MUNICIPIO..............................................     868/00162    07/21/1998     B-98-MU-72-0001      273,646      273,646      273,646  ...........      273,646  ...........
        CAYEY MUNICIPIO...............................................     868/00162    05/21/1998     B-98-MU-72-0015    1,552,491    1,552,491    1,552,491      139,003    1,413,488          9.0
        PONCE MUNICIPIO...............................................     868/00162    12/02/1998     B-98-MU-72-0003    4,590,285    4,590,285    4,590,285        1,990    4,588,295  ...........
        SAN JUAN MUNICIPIO............................................     868/00162    12/07/1998     B-98-MU-72-0007      315,218      315,218      315,218  ...........      315,218  ...........

                                Region: 05

    Illinois:
        STATE OF ILLINOIS.............................................     867/00162    12/03/1997     B-97-DU-17-0001      607,052      607,052      607,052       83,637      523,415         13.8
        CHICAGO.......................................................     868/00162    10/19/1998     B-98-MU-17-0006      900,000      900,000      900,000      900,000  ...........        100.0
    Indiana: STATE OF INDIANA.........................................     868/00162    03/18/1998     B-98-DU-18-0001    6,511,863    6,511,863    6,511,863    1,046,403    5,465,461         16.1
    Michigan:
        STATE OF MICHIGAN.............................................     868/00162   ...........     B-98-DU-26-0001  ...........  ...........  ...........  ...........  ...........  ...........
        DETROIT.......................................................     868/00162    04/30/1998     B-98-MU-26-0006    3,336,146    3,336,146    3,336,146      133,536    3,202,610          4.0
        WAYNE COUNTY..................................................     868/00162    04/17/1998     B-98-UU-26-0003      975,582      975,582      975,582      491,330      484,252         50.4
    Minnesota:
        STATE OF MINNESOTA............................................     867/00162    10/27/1997     B-97-DU-27-0001   71,567,909   71,567,909   71,567,909   46,662,662   24,905,247         65.2
        EAST GRAND FORKS..............................................     868/00162    01/29/1998     B-98-NU-27-0001   20,469,522   20,469,522   20,469,522    3,334,890   17,134,632         16.3
    Ohio:
        STATE OF OHIO.................................................     868/00162    06/18/1998     B-98-DU-39-0001    1,263,631    1,263,631    1,263,631      206,000    1,057,631         16.3
        CINCINNATI....................................................     868/00162    07/02/1998     B-98-MU-39-0003      423,621      423,621      423,621  ...........      423,621  ...........
        SCIOTO COUNTY.................................................     868/00162    07/03/1998     B-98-NU-39-0002      588,670      588,670      588,670       29,338      559,332          5.0
    Wisconsin:
        STATE OF WISCONSIN............................................     867/00162    03/05/1999     B-97-DU-55-0001      171,261      171,261      171,261  ...........      171,261  ...........
        MILWAUKEE.....................................................     868/00162    09/30/1998     B-98-MU-55-0006    1,455,474    1,455,474    1,455,474      458,949      996,525         31.5
        WAUWATOSA.....................................................     868/00162    08/10/1998     B-98-MU-55-0010      831,325      831,325      831,325      430,568      400,757         51.8
        MILWAUKEE COUNTY..............................................     868/00162    02/12/1999      B-98-W-55-0001      936,469      936,469      936,469  ...........      936,469  ...........
        WAUKESHA COUNTY...............................................     868/00162    12/18/1998      B-98-W-55-0002      677,135      677,135      677,135  ...........      677,135  ...........

                                Region: 06

    Arkansas:
        STATE OF ARKANSAS.............................................     867/00162    04/01/1998     B-97-DU-05-0001      686,446      686,446      686,446  ...........      686,446  ...........
        PULASKI COUNTY/COLLEGE STATION................................     867/00162    11/19/1997     B-97-NU-05-0001      687,989      687,989      687,989      461,868      226,121         67.1
    Texas: STATE OF TEXAS.............................................     868/00162    07/02/1998     B-98-DU-48-0001    2,223,138    2,223,138    2,223,138      298,299    1,924,839         13.4

                                Region: 08

    Colorado:
        STATE OF COLORADO.............................................     868/00162    05/18/1998     B-98-DU-08-0001      156,829      156,829      156,829  ...........      156,829  ...........
        FORT COLLINS..................................................     868/00162    10/18/1998     B-98-MU-08-0008      511,740      511,740      511,740       46,740      465,000          9.1
    Montana: STATE OF MONTANA.........................................     868/00162    07/23/1998     B-98-DU-30-0001      863,522      863,522      863,522        2,446      861,076          0.3
    North Dakota:
        STATE OF NORTH DAKOTA.........................................     867/00162    01/13/1998     B-97-DU-38-0001   10,200,140   10,200,140   10,200,140    8,084,803    2,115,337         79.3
        DEVIL'S LAKE/RAMSEY COUNTY....................................     867/00162    12/30/1997     B-97-NU-38-0005    3,500,000    3,500,000    3,500,000    3,500,000  ...........        100.0
        FARGO.........................................................     867/00162    09/26/1997     B-97-MU-38-0001    5,943,963    5,943,963    5,943,963    4,452,482    1,491,481         74.9
        GRAND FORKS...................................................     867/00162    07/08/1997     B-97-MU-38-0002   50,000,000   50,000,000   50,000,000   50,000,000  ...........        100.0
                                                                           868/00162    02/25/1998     B-98-MU-38-0002  121,567,707  121,567,707  121,567,707   60,000,000   61,567,707         49.4
                                                                                                                       -----------------------------------------------------------------------------
          Grantee totals..............................................  .............  ...........  ..................  171,567,707  171,567,707  171,567,707  110,000,000   61,567,707         64.1
                                                                                                                       =============================================================================
        CASS COUNTY...................................................     867/00162    01/06/1998     B-97-NU-38-0001    1,400,000    1,400,000    1,400,000      780,840      619,160         55.8
        GRAND FORKS COUNTY............................................     867/00162    03/19/1998     B-97-NU-38-0009    2,176,049    2,176,049    2,176,049    2,176,049  ...........        100.0
        MERCER COUNTY.................................................     868/00162    09/15/1998     B-98-NU-38-0003      500,000      500,000      500,000      131,227      368,773         26.2
        PEMBINA COUNTY................................................     867/00162    04/13/1998     B-97-NU-38-0004    1,000,000    1,000,000    1,000,000      601,793      398,207         60.2
        RICHLAND COUNTY/WAHPETON......................................     867/00162    03/03/1998     B-97-NU-38-0006    3,470,759    3,470,759    3,470,759    1,920,298    1,550,461         55.3
        TRAILL COUNTY.................................................     868/00162    03/03/1998     B-98-NU-38-0007    1,000,000    1,000,000    1,000,000      253,417      746,583         25.3
        WALSH COUNTY..................................................     867/00162    12/23/1997     B-97-NU-38-0008      504,504      504,504      504,504      369,903      134,601         73.3
    South Dakota:
        STATE OF SOUTH DAKOTA.........................................     867/00162    02/11/1998     B-97-DU-46-0001   57,794,124   57,794,124   57,794,124   25,713,747   32,080,377         44.5
        RAPID CITY....................................................     867/00162    03/03/1998     B-97-MU-46-0002      642,102      642,102      642,102      473,822      168,280         73.8

                                Region: 09

    California:
        STATE OF CALIFORNIA...........................................     867/00162    01/23/1998     B-97-DU-06-0001    5,338,112    5,338,112    5,338,112      592,529    4,745,583         11.1
        MODESTO.......................................................     868/00162    02/13/1998     B-98-MU-06-0002      650,426      650,426      650,426      608,337       42,089         93.5
        SACRAMENTO COUNTY.............................................     868/00162    07/20/1998     B-98-UU-06-0005      400,704      400,704      400,704      317,481       83,223         79.2
        SAN JOAQUIN COUNTY............................................     867/00162    02/03/1998     B-97-UU-06-0009    1,174,098    1,174,098    1,174,098       13,183    1,160,915          1.1
        SONOMA COUNTY.................................................     867/00162    01/07/1998     B-97-UU-06-0008      547,804      547,804      547,804       62,535      485,269         11.4
        STANISLAUS COUNTY.............................................     868/00162    02/19/1998     B-98-UU-06-0109      575,921      575,921      575,921      324,435      251,486         56.3
        YUBA COUNTY...................................................     868/00162    05/21/1998     B-98-NU-06-0030    2,563,780    2,563,780    2,563,780  ...........    2,563,780  ...........
    Nevada:
        STATE OF NEVADA...............................................     868/00162    05/01/1998     B-98-DU-32-0001      386,714      386,714      386,714       28,198      358,516          7.3
        RENO..........................................................     868/00162    05/13/1998     B-98-MU-32-0002      651,733      651,733      651,733  ...........      651,733  ...........
        SPARKS........................................................     867/00162    01/10/1998     B-97-MU-32-0004      988,442      988,442      988,442       48,333      940,109          4.9

                                Region: 10

    Oregon:
        STATE OF OREGON...............................................     868/00162    01/25/1999     B-98-DU-41-0001    3,721,775    3,721,775    3,721,775  ...........    3,721,775  ...........
        ASHLAND.......................................................     868/00162    08/25/1998     B-98-MU-41-0008      573,391      573,391      573,391      573,391  ...........        100.0
    Washington:
        STATE OF WASHINGTON...........................................     868/00162    06/25/1998     B-98-DU-53-0001    2,420,113    2,420,113    2,420,113      407,104    2,013,009         16.8
        YAKIMA........................................................     867/00162    06/26/1998     B-97-MU-53-0008      204,646      204,646      204,646  ...........      204,646  ...........
        KING COUNTY...................................................     868/00162    08/27/1998     B-98-UU-53-0001      613,353      613,353      613,353  ...........      613,353  ...........
        KITSAP COUNTY.................................................     868/00162    05/08/1998     B-98-UU-53-0005      387,225      387,225      387,225       44,835      342,390         11.6
        SNOHOMISH COUNTY..............................................     868/00162    10/05/1998     B-98-UU-53-0003      575,522      575,522      575,522      575,522  ...........        100.0
                                                                                                                       -----------------------------------------------------------------------------
          1997 Disaster Grants........................................  .............  ...........  ..................  488,648,776  488,648,776  488,648,776  238,468,842  250,179,934         48.8
                                                                                                                       =============================================================================

                        Disaster Type: 1996 Floods

                                Region: 03

    Maryland: STATE OF MARYLAND.......................................     866/80162    01/30/1997     B-96-DR-24-0001      988,638      988,638      988,638      607,414      381,224         61.4
    Pennsylvania:
        STATE OF PENNSYLVANIA.........................................     866/80162    01/30/1997     B-96-DR-42-0001    1,849,234    1,849,234    1,849,234    1,302,766      546,468         70.4
        WESTMORELAND COUNTY...........................................     866/80162    01/30/1997     B-96-UR-42-0100      314,436      314,436      314,436      299,911       14,525         95.4
    Virginia: STATE OF VIRGINIA.......................................     866/80162    01/30/1997     B-96-DR-51-0001      760,747      760,747      760,747      395,452      365,295         52.0
    West Virginia: STATE OF WEST VIRGINIA.............................     866/80162    01/30/1997     B-96-DR-54-0001    1,388,201    1,388,201    1,388,201      407,204      980,997         29.3

                                Region: 04

    Florida:
        STATE OF FLORIDA..............................................     866/80162    10/07/1996     B-96-DR-12-0001    6,337,634    6,337,634    6,337,634    3,161,225    3,176,409         49.9
        FORT WALTON BEACH.............................................     866/80162    10/07/1996     B-96-MR-12-0030      388,174      388,174      388,174       27,748      360,426          7.1
        LEE COUNTY....................................................     866/80162    10/07/1996     B-96-UR-12-0013    1,986,965    1,986,965    1,986,965    1,045,965      941,000         52.6
    Georgia: STATE OF GEORGIA.........................................     866/80162    10/07/1996     B-96-DR-13-0001    1,776,156    1,776,156    1,776,156  ...........    1,776,156  ...........
    North Carolina: STATE OF NORTH CAROLINA...........................     866/80162    10/22/1996     B-96-DR-37-0001      636,674      636,674      636,674      611,455       25,219         96.0

                                Region: 05

    Illinois: STATE OF ILLINOIS.......................................     866/80162    09/27/1996     B-96-DR-17-0001    2,522,685    2,522,685    2,522,685      938,267    1,584,418         37.2
    Ohio: STATE OF OHIO...............................................     866/80162    10/18/1996     B-96-DR-39-0001      924,029      924,029      924,029  ...........      924,029  ...........

                                Region: 08

    North Dakota: STATE OF NORTH DAKOTA...............................     866/80162    09/30/1996     B-96-DR-38-0001      267,421      267,421      267,421      267,421  ...........        100.0

                                Region: 10

    Idaho: STATE OF IDAHO.............................................     866/80162    10/04/1996     B-96-DR-16-0001    2,553,110    2,553,110    2,553,110    1,998,201      554,909         78.3
    Oregon:
        STATE OF OREGON...............................................     866/80162    09/30/1996     B-96-DR-41-0001    4,526,401    4,526,401    4,526,401    3,919,565      606,836         86.6
        SALEM.........................................................     866/80162    09/30/1996     B-96-MR-41-0004    1,674,705    1,674,705    1,674,705    1,093,410      581,295         65.3
        CLACKAMAS COUNTY..............................................     866/80162    09/27/1996     B-96-UR-41-0001    1,038,065    1,038,065    1,038,065    1,038,065  ...........        100.0
        MULTNOMAH COUNTY..............................................     866/80162    09/30/1996     B-96-UR-41-0003    2,616,787    2,616,787    2,616,787    1,729,296      887,491         66.1
        WASHINGTON COUNTY.............................................     866/80162    09/30/1996     B-96-UR-41-0002      877,198      877,198      877,198      552,517      324,681         63.0
    Washington:
        STATE OF WASHINGTON...........................................     866/80162    10/29/1996     B-96-DR-53-0001   10,793,566   10,793,566   10,793,566    5,187,741    5,605,825         48.1
        CLARK COUNTY..................................................     866/80162    10/04/1996     B-96-UR-53-0100      308,346      308,346      308,346      294,478       13,868         95.5
        KING COUNTY...................................................     866/80162    10/28/1996     B-96-UR-53-0001    3,001,852    3,001,852    3,001,852    1,253,626    1,748,226         41.8
        PIERCE COUNTY.................................................     866/80162    11/07/1996     B-96-UR-53-0002    1,889,333    1,889,333    1,889,333    1,634,728      254,605         86.5
        SNOHOMISH COUNTY..............................................     866/80162    10/16/1996     B-96-UR-53-0003      579,643      579,643      579,643      579,643  ...........        100.0
                                                                                                                       -----------------------------------------------------------------------------
          Total for 1996 Floods.......................................  .............  ...........  ..................   50,000,000   50,000,000   50,000,000   28,346,098   21,653,902         56.7
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

                                new initiatives
        Question. HUD's budget request for fiscal year 2000 includes over
    19 new programs and initiatives with funding of $731 million. Many of
    these initiatives and activities, such as the redevelopment of
    abandoned programs and Metro Job Links, can be handled under such broad
    programs as the CDBG program. Why not let states and localities decide
    their own funding priorities?
        Also, there are significant concerns about HUD's capacity to
    administer its core programs. Has HUD conducted a staffing evaluation
    on staffing and capacity to ensure that these new initiatives will not
    reduce HUD's ability to meet its own program responsibilities? Please
    provide a review of the staffing needs created by these proposals and
    how HUD plans to address these concern?
        Answer. Although HUD's budget requests increases in virtually every
    existing program, the only funds being requested for new programs are
    for HUD's participation in new administration initiatives--APIC,
    Regional Connections and Abandoned Buildings. Other increases are for
    expansions of initiatives within existing programs or programs we have
    requested previously. In many cases, our initiatives only represent
    refocusing of resources to meet evolving needs within existing
    programs.
        Local development needs are so great that even without set-asides
    the demands for housing and community development funding would exceed
    that which is available under the CDBG and HOME programs. If the set-
    asides proposed in fiscal year 2000 were divided among all CDBG and
    HOME recipients, the additional funding per community would be
    relatively small. Providing set-asides within these broad programs
    enables localities with demonstrated capacity to acquire a sufficient
    amount of extra funding to finance critical targeted activities that
    would otherwise be ``crowded out'' by local demands for more general
    housing and community development activities. This facilitates the
    creation of ``best practices'' and national models. Once the success of
    these activities is proven communities across the country are more
    likely to adopt them as a part of their regularly-funded CDBG and HOME
    activities. Since funding under these programs is awarded
    competitively, it is the communities, not HUD, that determine the
    activities to be a priority.
        By and large, all funding increases are designed to go directly to
    local communities and their partners, thus, they require minimal
    additional staff resources for HUD. The staff resources necessary to
    manage the three new programs, as well as the initiatives embedded or
    connected to existing programs are extremely modest. These staffing
    resources are estimated at less than a quarter of 1 percent of HUD's
    total S&E resources.
        Finally, we want to restate as per our letter of March 11, 1999
    that the Department proposes to redirect funding requested for Metro
    Job Links to remain within the CDBG account but to be used instead to
    fund the successful SHOP program. The Department is also proposing that
    the $25 million earmarked for the Regional Affordable Housing
    Initiative within the HOME program be used for other purposes, with
    $17.5 million of the funding to be provided as regular HOME formula
    funding and $7.5 million of the setaside to provide funding for
    Capacity Building for Habitat for Humanity. The sole intent and impact
    of this change in policy is to provide funding for already proven
    effective housing programs supported in the past by both the Department
    and the Congress.
        The requested funding as set-asides within such programs as
    Community Development Block Grants reflects the priority of these
    efforts, the desire to establish ``best practices'' and national
    models. In addition, programs such as the Community Development Block
    Grant and HOME Program provide funding for housing, economic
    development and other flexible local needs but the available funding is
    far outshipped by the demand. The requested set-asides allow localities
    to address priority efforts that would otherwise be ``crowded out'' by
    the shortfall in funding for more general housing and economic
    development efforts.
                     hud section 8 project-based inventory
        Question. What is the physical status of HUD's Section 8 Project-
    based inventory? How many projects have been reviewed and what is the
    status of these projects? How many projects have failed to meet HUD's
    Housing Quality Standards (HQS)? What are the procedures for projects
    that fail HQS and how many projects have been terminated from section 8
    for failing HQS?
        Answer. HUD Section 8 Project-based inventory includes 22,000
    properties receiving project-based Section 8 rental assistance. Last
    year, utilizing state-of-the art technology and a carefully designed
    system of performance indicators, REAC began the process of conducting
    the first-ever complete inspection and assessment of Federally
    subsidized housing. To date, REAC has inspected over 6,022 multifamily
    properties and is on track to complete the baseline inspection of all
    22,000 project-based section 8 properties by 1999 year-end. The vast
    majority of properties are in good physical condition. Overall, the
    inspection results show that 80 percent of the project-based Section 8
    properties are in acceptable physical condition, 17 percent are in poor
    condition, and 3 percent are in unacceptable condition. The physical
    condition of these projects is summarized below.

                                                                   Number of
            Condition                                               Projects
    Unacceptable Condition--Potential Referral to Enforcement Center..   188
    Poor Condition--Need HUD Monitoring............................... 1,027
    Acceptable Condition.............................................. 4,807

        HUD believes that all its housing, regardless of the subsidy or
    assistance source, should be assessed using uniform physical condition
    standards. The REAC Physical Inspection protocol covers virtually all
    facets of HQS inspection and is both more objective and considerably
    more defined in identifying and classifying deficiencies. It includes
    60 types of items to be inspected and about 400 potential deficiencies.
    With consistent criteria defined for each possible defect, HUD can be
    sure that its grades for housing quality really mean what they say.
        All the section 8 properties with REAC score of 30 or below are
    referred to the Enforcement Center for evaluation. So far, no section 8
    contract has been terminated due to low REAC score. However, they are
    under advisory notice. Projects scoring above 30 but less than 60 are
    required to make needed repairs within 90 days--when feasible--or
    provide the local HUD Multifamily office with a plan for remedial
    action. Field offices then monitor the completion of repair over time.
    Life threatening health and safety violations discovered as part of the
    REAC inspection must be repaired or mitigated within 72 hours. Lastly,
    projects with scores above 60 are considered to be in acceptable
    condition, and no further action is required. There are some exceptions
    such as reports from Community builders, local press articles, results
    of routine , management visits, tenant complaints, or similar
    subsequent events trigger the need to request a reinspection.
                             fannie mae/freddie mac
        Question. How many people currently are employed in HUD's Office of
    Government Sponsored Enterprises? What are their responsibilities? How
    is the $10 million request justified?
        Answer. HUD's Office of Government Sponsored Enterprises Oversight,
    working under the direction of the Assistant Secretary, Office of
    Housing, employs five full-time staff to administer the Secretary's
    programmatic authorities under the Federal Housing Enterprises
    Financial Safety and Soundness Act of 1992 (FHEFSSA) and to coordinate
    the work of an interdisciplinary team of HUD Offices charged with
    carrying out the Secretary's mission oversight responsibilities with
    regard to Fannie Mae and Freddie Mac (the GSEs). In addition to Office
    of Housing staff, this interdisciplinary team is comprised of staff
    from the Office of Policy Development and Research, the Office of
    General Counsel, and the Office of Fair Housing and Equal Opportunity.
    In fiscal year 1998, HUD spent approximately $3.4 million for 16.9
    full-time equivalent inter-Office HUD staff which, collectively, carry
    out mission regulation under FHEFSSA.
        With regard to responsibilities, HUD's inter-Office staff develop
    and implement regulations which establish the GSEs' affordable housing
    goals under FHEFSSA. In addition, to achieve statutorily mandated
    objectives, staff carry out broad oversight functions that include:
    monitoring performance of the GSEs in meeting the housing goals;
    enforcing compliance with the goals; reviewing new GSE programs;
    monitoring the GSEs for consistency with fair lending statutes;
    developing and managing mortgage finance and housing market research
    and analysis to ensure effective targeting of the GSE housing goals;
    monitoring non-mortgage investments for consistency with public
    purposes; and monitoring affordable housing performance trends to
    determine impact of the housing goals on the GSEs' operations and on
    the public. The attached letter to Valerie Baldwin, who is on the staff
    of the House Appropriations Subcommittee on VA, HUD and Independent
    Agencies, contains additional discussion regarding key areas of HUD's
    regulatory responsibilities. Also attached is a budget justification,
    dated January 6, 1999, which sets forth the Department's regulatory
    initiatives relevant to mission oversight and the estimated costs of
    this regulation for fiscal year 2000.
        HUD is proposing this assessment on the GSEs in order to recover
    the cost of regulating these entities. This approach is consistent with
    a long-established and standard practice for the Federal government to
    charge the financial institutions it regulates for the costs of that
    regulation, rather than have the taxpayers bear the cost. For example,
    the Office of the Comptroller of the Currency, the Office of Thrift
    Supervision, and the National Credit Union Administration all assess
    the financial institutions within their purview for the costs of
    regulation. Similar arrangements exist with respect to the GSE
    regulatory work of the Federal Housing Finance Board and the Farm
    Credit Administration. Even within HUD, the Office of Federal Housing
    Enterprises Oversight was granted the authority in 1992 to assess
    Fannie Mae and Freddie Mac for costs of ensuring safety and soundness,
    but the law did not apply the same principle to HUD's mission
    regulation of the GSEs. It is time to eliminate that anomaly.
                   prepared statement from hal c. decell, iii
        I want to take this opportunity to amplify the Department's
    thinking with respect to the proposal contained in the fiscal year 2000
    budget to allow HUD to assess Fannie Mae and Freddie Mac for the costs
    of mission regulation. As you know, the budget proposes that the
    Secretary be granted authority to charge the Government-Sponsored
    Enterprises for these costs, up to an aggregate of $10 million per
    fiscal year. Legislative language to effect this change to the 1992 Act
    has been submitted. Congress has charged HUD with important oversight
    responsibilities which include setting and enforcing GSE housing goals,
    reviewing new GSE programs, monitoring the GSEs for consistency with
    fair lending statutes, and other tasks noted below. HUD's mission
    regulation is needed to ensure that the GSEs offer their benefits
    fairly to all citizens and all areas of the nation.
        First, let me review the philosophy underlying this proposed
    change. It has been a long-established and standard practice for the
    Federal government to charge the financial institutions it regulates
    for the costs of that regulation, rather than have the taxpayers bear
    the cost. For example, the Office of the Comptroller of the Currency,
    the Office of Thrift Supervision, and the National Credit Union
    Administration all assess the financial institutions within their
    purview for the costs of regulation. Similar arrangements exist with
    respect to the GSE regulatory work of the Federal Housing Finance Board
    and the Farm Credit Administration. Even within HUD, the Office of
    Federal Housing Enterprise Oversight was granted the authority in the
    1992 Act to assess Fannie Mae and Freddie Mac for costs of ensuring
    safety and soundness, but the law did not apply the same principle to
    HUD's mission regulation of the GSEs. It is time to eliminate that
    anomaly.
        Secondly, HUD's proposal would allow for a much-needed expansion of
    HUD's capability to meet its mission-related regulatory
    responsibilities. For fiscal year 1999 the Department projects expenses
    of about $3.5 million for mission regulation, a tiny percentage of the
    GSEs' combined annual net income of $5.1 billion in 1998. The expanded
    effort would concentrate on the following key areas:
    Monitoring performance of the GSEs in meeting their affordable housing
            goals
        With new GSE affordable housing goals expected to be in place
    shortly, the Department needs to expand its capability to provide
    accurate and timely review of GSE performance. A key component of this
    effort will be greatly increased monitoring to ensure that the
    transactions properly qualify for goal counting purposes, as well as
    verification of the loan level data provided to HUD by the GSEs.
    Fair lending
        HUD has begun to step up our oversight activities to ensure that
    the GSEs are not discriminating in their mortgage purchases, as
    prohibited under both the 1992 Act and the Fair Housing statutes. We
    aim to ensure that GSE business practices including automated
    underwriting do not discriminate on any unlawful basis. This will be a
    major focus of our attention in fiscal year 2000.
    Mortgage Finance and Housing Market Research and Analysis
        In the rapidly changing environment of mortgage finance, it is
    vital for the Department to keep abreast of new developments, and to
    understand their short and long term implications. Expanded research
    will help the Department exercise its mission regulation authority
    wisely with a view to effectively targeting the GSE housing goals and
    thereby expanding credit availability and housing affordability
    throughout the nation.
    Non-mortgage investments
        We plan to enhance our monitoring of the GSEs' non-mortgage
    investments and activities to ensure that they are consistent with the
    public purposes stated in the GSEs' Congressional charters. The
    Department needs strengthened financial expertise to support its
    mission oversight efforts in this area.
    New Business Activity and Program Reviews
        The Department is responsible for reviewing GSE new program
    requests to ensure that they are in the public interest and consistent
    with the GSEs' Congressional charters. Additional funds will allow the
    Department to strengthen its monitoring of GSE business activities and,
    as appropriate, to review them as new programs in accordance with the
    1992 Act.
        This expansion would apply across the various categories of mission
    regulation expense-staff salaries and benefits, research, and
    contractor support for data analysis. The Office of Housing, the Office
    of Policy Development and Research, the Office of General Counsel, and
    the Office of Fair Housing and Equal Opportunity would all incur
    additional expenses. HUD will establish a separate account which will
    keep track of all amounts spent on GSE oversight.
        In summary, the Department-strongly believes that the GSEs, not the
    taxpayers, should bear the costs for HUD's mission regulation. The
    proposal is consistent with the way in which OFHEO and other Federal
    financial regulators are funded, it is fiscally prudent, and it would,
    for relatively small costs assessed against the GSEs, permit a needed
    strengthening of HUD's capacity to assure that they fulfill their
    charter objectives.
        We would be happy to meet with you at your convenience to provide
    more detail and to answer your questions.
                                   memorandum
    MEMORANDUM TO: Michael Deich, PAD, OMB
    FROM: Richard F. Keevey, CFO HUD
    RE: Justification for Increase in HUD's Budget for Oversight of Fannie
        Mae and Freddie Mac
    DATE: January 6, 1999

        Per your request we have reviewed our current and expected
    expenditures relating to HUD's oversight of the GSEs. What follows
    fully explains and supports the estimated $10 million in fees that will
    be required to carry out our mission in fiscal year 2000.
        In fiscal year 1998, HUD spent approximately $3.4 million,
    involving 16.9 full-time equivalent HUD positions, $1,065 thousand for
    research contracts and, $262 thousand for computer support contracts on
    oversight of Fannie Mae and Freddie Mac. These estimates were included
    in a recent GAO Report ``Federal Housing Enterprises: HUD's Mission
    Oversight Needs to be Strengthened ``As the title suggests, the GAO
    report concluded that HUD implementing its oversight responsibility.
    The Department has indicated in Congressional testimony that it is
    committed to allocating additional resources to enhance its regulation
    of these government-sponsored enterprises (GSEs). In order to fulfill
    that commitment, it is essential that HUD's outlays for GSE--oversight
    be funded by assessments on the GSEs.
        Specific initiatives that the Department will undertake or areas
    where it will expand upon its current oversight activities are listed
    in the following table. Due to the short deadline, we have made
    accurate estimates of the cost to accomplish the individual initiatives
    listed but have not broken out the costs as to whether they would
    involve contract dollars and additional staff resources. Further, the
    estimated additional costs have not been allocated among Housing, PD&R,
    OGC, and FHEO, all of whom are involved in GSE oversight activities and
    participated in developing these activities.

    ------------------------------------------------------------------------
                                                                 Estimated
                           Initiative                           additional
                                                                   cost
    ------------------------------------------------------------------------
    Fair Lending. Increased analysis and oversight of the         $1,500,000
     GSEs underwriting practices from a fair lending
     perspective. This analysis would include assessing the
     impact of underwriting standards (automated and
     traditional), business practices, repurchase
     requirements, pricing, fees and procedures that affect
     the purchase of mortgages to ensure that they do not
     have a disparate impact on protected groups. Also, to
     pursue fair lending investigations with the assistance
     of the GSEs and carry out other fair lending
     requirements of the 1992 GSE Act.......................
    Data Verification. Review and verification of the              1,000,000
     accuracy of the loan level data on mortgages purchased
     by the GSEs that are provided to the Department for
     purposes of monitoring compliance with the housing
     goals..................................................
    New Program Threshold Reviews. Increased monitoring and          600,000
     more proactive evaluation of the GSEs' operations to
     identify and assess new activities as possible new
     programs requiring review; i.e., identifying and
     analyzing individual business activities to determine
     whether they meet the new program criteria.............
    Additional Support for New Program Reviews. Obtain               750,000
     necessary specialized expertise to assist in analyzing
     new programs identified and submitted by the GSEs.
     Additional staff support to conduct new program reviews
    Non-Mortgage Investments. Enhanced monitoring of the             500,000
     GSEs' non-mortgage investments and activities to ensure
     that they are consistent with their public purpose
     missions and charters. This monitoring includes regular
     and on-going analysis of their non-mortgage investment
     policies and portfolios................................
    Affordable Housing Performance Trends. Analyze and               500,000
     monitor performance trends of the GSEs' mortgage loan
     portfolios to determine impact of housing goals on GSEs
     operations.............................................
    Enhanced Goal Performance Monitoring. Increased goal             500,000
     performance monitoring and analysis of trends in GSE
     mortgage purchases Research............................
    Research. Expanded research on the impact of the housing         500,000
     goals on housing affordability.........................
    Special Studies. On-going research on the GSE's trends           500,000
     as they relate to industry trends and issues such as
     subprime lending, multifamily securitizations and
     trends, manufactured housing, rural housing, automation
     in mortgage banking, lending to minorities and impact
     of housing counseling on homeownership.................
    Training and Additional Resources. Training for staff            250,000
     and resources for monitoring GSE and mortgage market
     trends and activities..................................
                                                             ---------------
          Total additional expenditures.....................       6,600,000
          Total current expenditures........................       3,400,000
          Total proposed budget for GSE oversight...........      10,000,000
    ------------------------------------------------------------------------

                                    staffing
        Question. The Secretary has proposed reducing the staffing at HUD
    to 7,500. However, recently staffing has been increasing towards the
    10,000 FTE level without justification or a cost-benefit analysis.
    Please provide a staff needs analysis by office and function.
        Answer. The goal of reducing HUD's S&E staffing level to 7,500 FTE
    by 2000 was announced in 1994 by then Secretary Henry Cisneros. This
    staff level was deemed achievable only if Congress passed proposed
    legislation to consolidate 60 major programs into three performance-
    based accounts--a Community Opportunity Fund, an Affordable Housing
    Fund and the Housing Certificate Fund. It would also require
    transforming the Federal Housing Administration (FHA) into a government
    corporation, streamlining HUD program operations throughout the
    Department and reducing the number of field offices from 81 to 60.
    Congress has not enacted most of these proposals and most of the other
    initiatives are in various stages of development and/or implementation.
    Subsequently, Secretary Cuomo made the decision not to close any of
    HUD's field offices. Also, in May 1998, Secretary Cuomo publicly
    announced to Congress that without Congressional action on HUD's
    legislative proposals for program consolidation, a more appropriate
    staffing level for the Department would be approximately 9,300 FTE.
        The 7,500 FTE level established in 1994 was for Salaries and
    Expenses (S&E) employees only. The referenced 10,000 current staffing
    level appears to include staff from the Office of Inspector General,
    the Office of Federal Housing Enterprise Oversight, and the Working
    Capital Fund. As of July 3, 1999, the S&E staffing level was 9,200.
        It is anticipated that a staff needs analysis by office and
    function will be a product of the new Resource Estimation Allocation
    Process (REAP) which is discussed in further detail in the previous
    staffing response. This type of information will be available upon
    completion of 1 full-year utilizing REAP, i.e., from initial resource
    estimation through allocation and validation.
        The Department's fiscal year 2000 budget justification, submitted
    to the Congress in February 1999, includes the following staffing
    assumptions.

                      FULL-TIME EQUIVALENT (FTE) EMPLOYMENT
                     [Excludes Overtime and Terminal Leave]
    ------------------------------------------------------------------------
                                        Estimate fiscal year
                                     --------------------------  Increase or
                                          1999         2000     decrease \1\
    ------------------------------------------------------------------------
    Salaries and Expenses, HUD......       $9,386       $9,383         -$3
    Other Funds.....................        1,182        1,195         +13
                                     ---------------------------------------
          Total, HUD FTE............       10,568       10,578         +10
    ------------------------------------------------------------------------
    \1\ Fiscal year 2000 vs. fiscal year 1999.

    Note: Other funds include Working Capital Fund, Office of Inspector
      General, and Federal Housing Enterprise Oversight.

        These staffing estimates are consistent with the overall program
    proposed for HUD, and with the detailed budget justifications for
    individual program activities, which were submitted to the Congress as
    part of the fiscal year 2000 budget.
        Moreover, these estimates should be viewed in the context of the
    longer term trend where total HUD staffing has declined significantly.
    The total HUD staffing level of 10,578 FTE for fiscal year 2000 is a
    reduction of 25 percent from the level of 14,073 FTE in fiscal year
    1992. Similarly, the Salaries and Expenses, HUD account staffing level
    of 9,383 FTE for fiscal year 2000 is a reduction of 29 percent from the
    level of 13,167 FTE in fiscal year 1992. For comparison, these staffing
    reductions are taking place while HUD's outlays are projected to
    increase by 33 percent from fiscal year 1992 to fiscal year 2000.
        Also, HUD's staffing can be viewed in the context of broader,
    governmentwide employment trends. HUD's 25 percent staffing reduction
    from fiscal year 1992 to fiscal year 2000 is taking place while, over
    the same time period, Executive Branch civilian employment is
    decreasing by 16 percent and, excluding the Department of Defense,
    total civilian agency employment is decreasing by less than 4 percent.
    (The historical comparisons of HUD outlays, Executive Branch civilian
    employment, and civilian agency employment are found in Historical
    Tables that accompany the Budget of the United States Government,
    fiscal year 2000.)
        HUD's current staffing levels must reflect programmatic needs and
    reflect current policies and programs, as legislated by the Congress.
    Future reductions in HUD's staffing levels will depend on improvements
    in the housing portfolio, with commensurate reductions in the number of
    troubled properties, and will depend on future Congressional
    legislation to modify HUD mandates. HUD will continue to work
    cooperatively with the Congress to consider ways to attain these
    critical prerequisites for making future staffing reductions.
                              public housing costs
        Question. What are the actual costs needed to administer public
    housing as opposed to the current funds provided through formula?
        Answer. The current Performance Funding System (PFS) for public
    housing is based on the operating expenses of a well-managed Public
    Housing Authority (PHA) in 1974, updated to reflect changes in
    inflation, and with additional funding provided for costs of employee
    benefits and insurance. Utility costs are now handled separately with
    actual utility costs forming the basis for HUD subsidy in this area.
    Under this system, HUD provides subsidy to PHAs to make up the
    difference between PHA income, principally tenant rent, and the amount
    of funds needed to bring the PHAs up to their Allowable Expense Levels
    under the PFS and pay for utilities.
        Under this system, most PHAs are operating at a satisfactory or
    higher level of performance and have operating reserves of 40 percent
    or more. Obviously, the system provides a reasonable level of funding
    for most PHAs, and pays for the actual costs PHAs are incurring in
    running their public housing.
        There is interest in the PHA community in exploring a system that
    is based on the actual cost to a PHA of undertaking the range of
    activities associated with operating public housing, including
    administration, maintenance, security and tenant services. This
    approach would call for setting standards for conducting each of the
    activities, input measures, and determining the cost of the activities.
    Standards and costs using this approach have not been established by
    HUD. A long-term study would be needed to develop this information.
        Question. Because of the new flexibility provided to PHAs in the
    fiscal year 1999 Appropriations Bill, how much less funding will PHAs
    need to operate?
        Answer. The fiscal year 1999 Appropriations Bill provides new
    flexibility to PHAs in many areas, including admissions, and rent-
    setting. It encourages admission of families with a wide-range of
    incomes and provides for PHAs to establish incentives to help move
    resident households from welfare to work. Over time this could result
    in higher tenant rents, and thus in lower subsidy needs. At the same
    time, the fiscal year 1999 Appropriations Bill mandates new
    responsibilities on PHAs, so that overall PHA operating costs are not
    expected to decline.
        Question. Please provide a salary analysis of staffing by each PHA?
        Answer. HUD does not collect this information, since HUD does not
    review and approve PHA salaries, believing that would be
    micromanagement of this program.
        Question. How do costs of operating public housing compare with
    privately owned rental housing?
        Answer. It is not possible to directly compare public housing costs
    with the costs of privately owned rental housing for several reasons.
        First, public housing costs include elements not found in the
    private sector, such as the extensive administrative costs associated
    with required functions such as verification of tenant income, rent-
    setting based on income, lease and grievance requirements, planning and
    reporting requirements, and the need to arrange for the provision of
    services to residents. Private housing costs do not usually include
    these requirements, but do include elements not found in public
    housing, such as property taxes and principal and interest on debt
    financing for the housing. Thus, the costs are not comparable, and a
    number of assumptions and adjustments must be made to attempt to
    compare them.
        Second, data for public housing is generally available by PHA, that
    is for the entire aggregate of projects. The private sector data is
    reported on a project-by project basis. To compare the two would
    require the development of a ``synthetic PHA,'' aggregating data for a
    number of projects.
        Third, available private sector data is limited and reported
    voluntarily, and therefore may or may not reflect actual costs in the
    market place.
        Given these constraints, we do not think it is possible to compare
    public housing and private rental housing costs in any meaningful way.
        A fuller discussion of these issues is contained in Chapter 3,
    ``Alternative Funding Systems: A System based on Private Market
    Operating Costs,'' of the HUD report Revised Methods of Providing
    Federal Funds for Public Housing Agencies: Final Report, June 1994.
    (copy attached)
        [Clerk's note.--The HUD report ``Revised Methods of
    Providing Federal Funds for Public Housing Agencies: Final
    Report,'' can be found in the subcommittee files.]
                                 mark-to-market
        Question. I remain concerned about the progress the Office of
    Multifamily Housing and Assistance Restructuring (OMHAR) has made in
    developing and implementing the Mark-to-Market Program. I cannot stress
    enough how important this program is to residents and communities and
    that the implementation of Mark-to-Market will be one standard that
    many in Congress will be measuring the Department's credibility in its
    management reform efforts. What is your expected timeline in completing
    negotiations with the state HFA's?
        Answer. We have made tremendous progress in implementing the Mark-
    to-Market program. As of today, we have agreements with 19 public
    housing finance authorities, including Missouri, and expect to have
    agreements with another 13 within the next month. We have been
    consulting with state and local housing finance authorities for over 6
    months. This consultative process resulted in the development of
    important documents such as the operating guide and a generic contract
    (called a Portfolio Restructuring Agreement, or PRA) for use by public
    entities participating in our program as a PAE (or Participating
    Administrative Entity). A high priority for the past several months has
    been the negotiation and signing of PRAs with individual state and
    local housing authorities and, thereafter, the actual assignment of
    properties for restructuring. We are continuing to make every effort to
    successfully negotiate contracts with interested state and local HFAs.
    No deadline on such discussions exists and none will be established to
    curtail our efforts to sign public PAEs. At the same time, we remain
    cognizant of our responsibility to manage this important program to
    restructure low-income residential properties for the benefit of
    tenants, owners and taxpayers and we will take appropriate and
    necessary actions to assure that properties in our program are
    restructured without inordinate delay.
        As of today, approximately 500 properties are in our portfolio
    available for restructuring. With these actions and with the actions
    detailed below, approximately 400 of these properties will be assigned
    for restructuring.
        Question. Has OMHAR begun discussions with the private sector
    entities that have qualified for the program?
        Answer. With OMHAR's emphasis on signing contracts (PRAs) with
    public entities, it has had only limited discussions with private
    sector entities (including nonprofit organizations). However, we had
    only recently engaged in a formal solicitation to award assets.
    Contracts to three firms were awarded through a competitive bidding
    process.
        There were several reasons for this. Among them, there are states
    in which a housing finance authority decided not to become a PAE. These
    include: Alaska, Arkansas, Hawaii, Kansas, Mississippi, Montana,
    Nebraska, Nevada, and Wyoming.
        OMHAR has also awarded properties for restructuring to private PAEs
    under special circumstances. In two cases, we were told by the state
    that, although they were still interested in being a PAE, their
    organization needed more time to process the contract and receive
    approval from their respective Boards. Here, with the informal assent
    of these states, we awarded a limited number of assets in order to give
    them the time they needed.
        In one other case, OMHAR has awarded a contract to a PAE during
    lengthy but, to date, inconclusive discussions with a potential public
    PAE due to the rapid accumulation of properties eligible for immediate
    restructuring that became a matter of mutual concern to both OMHAR and
    the potential PAE. To address this urgent situation, and faced with the
    prospect of an anticipated deluge of additional properties, OMHAR took
    the measured step of assigning a portion of the backlog of properties
    to a nonprofit organization for immediate restructuring. However, we
    reserved the number of assets which the PAE stated was its quarterly
    capacity in the event an agreement could be reached. The firm that was
    selected was a not-for-profit organization with significant experience
    in restructurings and with a history of valuing tenant and community
    relationships.
        Queston. What is the disposition of these discussions?
        Answer. OMHAR is not involved in general or ongoing contract
    discussions with private sector entities. Our focus remains on signing
    PRAs, wherever possible, with public entities. The use of private
    sector organizations (including nonprofits) to date has been limited to
    the following instances:
      --there is no public PAE in the jurisdiction and eligible properties
            await restructuring;
      --a public entity has declined, or is unable, to participate as a PAE
            (i.e., some state laws operate to prevent potential public PAEs
            from complying with the terms of the contract, or for other
            reasons); or
      --urgent and immediate attention is required, for problems such as
            the high volume of properties already in the pipeline and
            either no contract is in place to allow a public entity to
            provide restructuring services or the restructuring workload
            would strain and perhaps even exceed the resources and
            capabilities of the public entity.
                       single family property disposition
        Question. One of the areas of concern that the recent financial
    statement audit identified in FHA's single family property disposition
    program, Over a year ago, GAO revealed numerous case examples where HUD
    contractors were not securing or repairing foreclosed properties and
    HUD was failing to perform its basic oversight functions over the
    contractors. A recent NBC Nightly News ``Fleecing of America'' feature
    displayed the same problems that GAO had identified.
        Here is a clear example of where HUD is not performing its basic
    functions and is acting as a bad landlord. I believe recent HUD OIG
    testimony illustrated clearly this problem. Instead of meeting HUD's
    REO mission to reduce its foreclosed inventory in a manner that (1)
    expands homeownership, (2) strengthens neighborhoods and communities,
    and (3) ensures maximum return to the mortgage insurance fund, HUD is
    doing the opposite. For example, HUD's foreclosed inventory has
    increased 70 percent from about 24,700 properties in 1996 to over
    43,000 in 1999.
        Because we realized HUD's current system was broken, we passed
    legislation in last year's appropriation to address this problem. What
    is HUD doing currently to address its foreclosed inventory both in
    property disposition and loss mitigation? Does HUD have any evidence
    that problems identified in the NBC feature are being resolved? Has
    FHA's foreclosure inventory and turnover rate gone down? Why or why
    not?
        Answer. HUD's contracts for private sector Marketing and Management
    (M&M) contracts, which became effective in March of 1999, are expected
    to reduce the current problems with property inventories, and to
    mitigate losses by providing greater recoveries. The contractors, who
    receive their remuneration from a percentage of the sales price, have a
    strong economic incentive to secure and maintain the properties, market
    them vigorously, and turn them around as fast as possible for as high a
    price as possible. These contracts are expected to reduce inventories
    by faster sales, and reduce losses to HUD by lower holding costs and by
    higher sales prices. While the number of single family properties in
    inventory increased by about 4,000 properties from the end of fiscal
    year 1998 through March 1999, the inventory is expected to start to
    decline by the end of 1999.
        FHA is strengthening and expanding monitoring of the performance of
    property disposition activities under the M&M contractor. First, the
    M&M contractors have a strong financial incentive to maintain and
    turnover properties, since their fee is based on a bid percentage of
    the sales cost of the properties. Second, other contractors are
    monitoring the M&M contractors performance. Third, the Homeownership
    Centers (HOCs) are required to issue monthly reports on the activity in
    the areas for which they are responsible, including field checks of the
    contractors records, and on-site examination of a portion of the
    properties involved.
                                   year 2000
        Question. In a recent Associated Press news article, issues were
    raised with a number of Federal government agency ``Year 2000'' or Y2K
    efforts. One of the agencies cited was HUD. According to this article,
    in August 1997, the government listed 231 computer systems at HUD as
    ``mission-critical.'' However, since then HUD had dropped from 231
    systems to 62. As a result, Y2K compliance jumped from 22 percent to 73
    percent. Some of the systems reclassified by HUD was the Multifamily
    Data Warehouse, which was phased out last November without a
    replacement, and the Funding and Contracting System, replaced in March
    by the Grants Evaluation Management System. How does the Department
    define ``mission-critical'' in context of the Y2K problem?
        Answer. A HUD application system is assigned Year 2000 ``mission-
    critical'' status if it supports HUD's mission to provide a decent,
    safe, and sanitary home and suitable living environment for every
    American. Specifically it includes the critical application systems
    that support the following strategic objectives:
      --fighting for fair housing;
      --increasing affordable housing and home ownership;
      --reducing homelessness;
      --promoting jobs and economic opportunity;
      --empowering people and communities; and
      --restoring public trust.
        Question. Please explain why HUD dropped 169 formally classified
    ``mission-critical'' systems and what functions these dropped systems
    play in the Department's operations and management. Also, please
    explain if any of the dropped systems are still being used by the
    Department and if there are any plans to address their compliance
    needs.
        Answer. Senator, the Associated Press was in error when making this
    statement. The 231 systems referenced earlier included both ``mission-
    critical'' and ``non mission-critical'' application systems. Since HUD
    established its application inventory in 1997, only 75 HUD systems were
    identified as ``mission-critical.'' The Office of Management and Budget
    (OMB) defines ``mission-critical'' differently than HUD (OMB excludes
    systems that are ``Being Built Compliant'') and that is how the 62
    systems (75-13 ``Being Built Compliant'') mentioned in your question
    were identified. HUD has completed the Renovation, Validation, and
    Implementation of its entire application inventory (mission-critical
    and non mission-critical) on or ahead of all OMB Year 2000 mandated
    goals. In addition, HUD has deactivated all ``mission-critical''
    systems whose disposition was Phase Out-No Replacement or Phase Out-
    With Replacement.
                     fha single family property disposition
        Question. New legislation was included in last year's
    appropriations to improve FHA's single family property disposition
    program. A significant component of the legislation is to enable
    communities to designate areas where a nonprofit or local government
    can negotiate an agreement with HUD for the bulk purchase and sale of
    all FHA foreclosed single family properties. What steps has HUD taken
    to engage nonprofit and government organizations in the process of
    implementing this new legislation?
        Answer. FHA has been dealing with localities and non-profits on
    revitalization areas, and developing asset control areas. Currently,
    these organizations can buy HUD-held properties at a discount, and, by
    bulk purchases with simultaneous closings, qualify for greater savings
    than on individual properties.
        Question. Given the important role of nonprofit organizations in
    the new program, has HUD given any thought to providing technical
    assistance to such entities?
        Answer. HUD has several program areas involved with technical
    assistance, including the new Community Builder positions. FHA, as an
    insurance operation, would not appear to be the organization best
    suited to offer technical assistance.
        Question. Has the Department examined ways that it might cooperate
    to share risk and thereby promote the goal of neighborhood
    stabilization?
        Answer. FHA has tried over several years, without success, to
    achieve feasible risk sharing agreements. The Secondary Market
    Demonstration project, for which FHA is currently evaluating proposals,
    is a risk-sharing program with grants for $10 million. Awards are
    expected to be made in about 60 days.
        Question. The conference report also requested the Department to
    provide any statutory changes necessary to implement a comprehensive
    loss mitigation program. What is the Department's current thinking on
    this matter?
        Answer. Current increases in loss mitigation activity indicate that
    the program is a success and that major legislative changes are not
    necessary. The loss mitigation activity, excluding preforeclosure
    sales, has gone from about 700 cases in 1997, to 4,400 cases in 1998,
    to an estimated 20,000 cases in fiscal year 1999. Fiscal year 1999 loss
    mitigation cases through May total over 13,000--over 20 percent of
    total single family claims to date.
        Question. Will the Department be sending any statutory
    recommendations?
        Answer. The Department is currently examining possible substantive
    legislative proposals, as part of the budget process, and will propose
    changes as needed. A proposal to raise the fiscal year 2000 MMI
    commitment limitation to $140 billion, the same as contained in the
    fiscal year 1999 Emergency Supplemental, is currently under review.
                 fair housing activities re: property insurance
        Question. In our past four Committee Reports on HUD appropriations,
    we have addressed the use of funds for enforcement of the Fair Housing
    Act against property insurers. We have repeatedly pointed out that the
    Fair Housing Act, while expressly applicable to landlords, real estate
    brokers, and mortgage lenders, makes no mention of property insurers or
    their business practices. In light of that, and because the statute's
    legislative history indicates that the law does not apply to insurance,
    we have urged that HUD not spend fair housing funds on activities
    relating to insurers. In particular, with respect to Fair Housing
    Initiatives Program--the ``FHIP''--our Reports have stated that, in
    light of the limited resources available, FHIP funds should ``be used
    only to address such forms of discrimination in the sale, rental, and
    financing of housing as they are explicitly identified and specifically
    described'' in the Fair Housing Act. This statement clearly indicates
    that we intend that FHIP funds not be used for activities relating to
    enforcement of the Fair Housing Act against insurers. What steps has
    HUD taken to ensure compliance with our intent in this regard?
        Answer. We understand the concerns of the Committee and are
    sensitive to them. As you know, however, HUD and the Department of
    Justice believe the Fair Housing Act (FHAct) covers discrimination by
    property insurers. In implementing the Fair Housing Amendments Act of
    1988, HUD issued regulations in 1989 making explicit that such
    insurance discrimination constitutes prohibited conduct. Since issuing
    these regulations, all circuit court decisions have supported the
    application of the FHAct to property insurance discrimination and have
    not found the Department's interpretation inconsistent with the
    McCarran-Ferguson Act. Nationwide Mut. Ins. Co. v. Cisneros, 52 F.3d
    1351 (6th Cir. 1995) (Kennedy, J., dissenting), cert. denied, 516 U.S.
    1140 (1996). As HUD is required to enforce all provisions of the FHAct,
    it must enforce the law with respect to insurance discrimination.
        Moreover, individuals who believe they have suffered insurance
    discrimination continue to seek the assistance of organizations HUD
    funds through its competitive grant program. Requirements for the
    program are highlighted annually in the Notice of Funds Availability
    (NOFA). In light of the Committee's concerns, since 1997, FHIP NOFAs
    have made clear that HUD will not fund activities aimed solely at
    insurance discrimination. Instead, it funds organizations which propose
    enforcement-related activities which are broad-based and full-service.
    Broad-based means projects are not limited to a single fair housing
    issue, i.e., they must cover multiple issues related to housing
    discrimination covered under the FHAct (e.g., insurance, mortgage
    lending, advertising, sales, and rentals). Full-service means they
    cannot be restricted to testing activities, but also must include
    complaint intake, investigation, etc.
        We believe this approach is sensitive to the Committee's
    congressional concerns and is consistent with HUD's statutory
    obligation to enforce the FHAct.
          use of fhip funds for homeowners' insurance-related purposes
        Question. Despite our directive against the use of FHIP funds for
    insurance-related purposes, HUD apparently has failed to inform FHIP
    grant applicants and grantees that they are not to use the grants for
    activities aimed at homeowners' insurers. Moreover, in HUD's most
    recent announcements of FHIP awards, the agency has not provided any
    indication of how the funds will be used whereas such uses previously
    were specifically identified. Why are you not informing the public
    regarding the uses to which FHIP funds will be put, and how are we to
    know whether you are adhering to our intent that they not be used in
    the insurance area?
        Answer. In the past, the Department published in the Federal
    Register an announcement identifying the organizations selected for
    FHIP awards each year. Although the Department did not publish the
    announcement of the 1998 awardees in the Federal Register, the HUD Web
    site did inform the public of the recipients of the 1998 grants, and
    provided a brief description of each project. We believe the utilizing
    the HUD web site is a very effective means of communicating with the
    general public and simultaneously informing our stakeholders. Although,
    the HUD web site have been publicly recognized as singularly effective,
    we will certainly revisit the policy of publishing the awards in the
    Federal Register as well. We also want to state again that we have
    responded to Congressional concerns regarding property insurance issues
    and that since 1997, FHIP NOFA, have made clear that HUD will not fund
    activities aimed solely at insurance discrimination. Instead, we fund
    organizations where enforcement-related activities are broad-based and
    full service. We believe this approach is sensitive to the Committee's
    concerns and is consistent with HUD's statutory obligation to enforce
    the Fair Housing Act.

                       [Press Release, November 24, 1998]

     president clinton announces $11.5 million in grants to help groups in
                 42 cities crack down on housing discrimination

                           (HUD News, HUD No. 98-628)

        WASHINGTON--President Clinton today announced $11.5 million in
    grants to groups in 42 cities to help them carry out his crackdown on
    all types of housing discrimination, including a new focus on reducing
    discrimination against recent immigrants, who are predominantly
    minorities.
        ``Members of every family in America want to be able to live in any
    neighborhood and in any home they can afford, free from
    discrimination,'' President Clinton said. ``The Fair Housing Act gives
    families this legal right, and we are determined to enforce it as part
    of our initiative to create One America of equal opportunity.''
        Housing and Urban Development Secretary Andrew Cuomo said that in
    addition to continuing efforts to wipe out housing discrimination
    against minorities and others born in the United States, many of the
    HUD grants are targeted to groups that have not traditionally sought
    assistance in fighting housing discrimination, particularly new
    immigrants.
        ``The Statue of Liberty doesn't have an inscription saying `Give me
    your tired, your poor, but keep them out of nice white neighborhoods,'
    Cuomo said. ``People who flee persecution elsewhere in search of the
    American Dream shouldn't have to suffer discrimination in our
    country.''
        Cuomo said private, non-profit fair housing groups in the following
    states will get the $11.5 million in grants from HUD to investigate
    allegations of housing discrimination, educate the public and housing
    industry about housing discrimination laws, and work to promote fair
    housing.

    Alabama.......................................................  $294,005
    Arizona.......................................................   200,000
    California.................................................... 1,700,000
    Colorado......................................................   305,158
    Dist. of Columbia.............................................    93,259
    Georgia.......................................................   277,000
    Illinois......................................................   899,966
    Indiana.......................................................   218,366
    Kentucky......................................................   349,995
    Louisiana.....................................................   350,000
    Massachusetts.................................................   243,430
    Michigan......................................................   350,000
    Minnesota.....................................................   337,750
    Missouri......................................................   421,282
    Montana.......................................................   448,626
    Nevada........................................................   204,679
    New Jersey....................................................   350,000
    New York......................................................   616,112
    North Carolina................................................   448,557
    Ohio..........................................................   300,000
    Oregon........................................................   182,847
    Pennsylvania..................................................   810,000
    Tennessee.....................................................   474,493
    Texas.........................................................   932,883
    Virginia......................................................   350,000
    Washington....................................................   350,000

        ``Housing discrimination is illegal, intolerable and un-American''
    Cuomo said. ``The grants we're awarding today will strengthen our
    partnership with local groups around the country working to put a stop
    to this outrageous conduct.''
        The Fair Housing Act bars housing discrimination on the basis of
    race, color, religion, sex, disability, family status and national
    origin. The Act covers the sale, rental, financing and advertising of
    almost all housing in the nation. Fair housing investigations are
    conducted by HUD investigators, state and city agencies working with
    HUD, and private fair housing groups that receive HUD funds.
        Unlike past years, today most immigrants to the United States are
    minorities. While 85 percent of immigrants were white Europeans in
    1900, only 16 percent of immigrants were Europeans in 1996.
        Studies show that minority immigrants experience worse housing
    conditions than European immigrants. In addition, recent immigrants are
    less likely to be homeowners than earlier immigrants, and non-English
    speaking immigrants face special difficulties in understanding their
    fair housing rights.
        Cuomo said all types of housing discrimination are much harder to
    detect today than they were years ago, making it more important than
    ever for HUD to work in partnership with local groups to root out
    illegal acts of discrimination.
        ``Today housing discrimination is subtle, not blatant,'' Cuomo
    said. ``For example, landlords usually don't say openly that they don't
    rent to blacks or Hispanics--they just say there are no vacancies when
    a minority shows up. Then, miraculously, several vacancies suddenly
    appear when a white person walks in five minutes later.''
        The grants, which are funded under HUD's Fair Housing Initiatives
    Program, will address sophisticated and subtle forms of discrimination
    through paired testing as well as other investigative tools.
        During testing, people of different backgrounds--based on their
    race, ethnicity, family status, sex, religion or disability--pose as
    prospective renters or homebuyers. Testers--who state they have similar
    incomes, assets and credit ratings--check to see if they are treated
    differently from one another by landlords, people selling homes,
    lenders making mortgage loans, or companies selling homeowners
    insurance.
        Just last month, a Richmond, VA, fair housing group using HUD funds
    for testing won a record $100 million racial discrimination judgment
    against Nationwide Insurance Co.
        The grants announced today will also be used to investigate housing
    discrimination complaints, to educate members of the public about their
    rights, and to train housing industry groups and local governments on
    their responsibilities under the Fair Housing Act.
        A total of $800,000 of the grant money, which went to five groups,
    was set aside to expand fair housing services to people with
    disabilities.
        Cuomo last week announced the most comprehensive and sophisticated
    nationwide audit ever conducted to test for and evaluate housing
    discrimination in urban, suburban and rural communities around the
    nation. The audit will include 3,000 to 5,000 tests for housing
    discrimination. Testers will examine and evaluate patterns and trends
    in housing sales, rentals, and mortgage lending to minorities.
        Since 1993, HUD has received nearly 44,000 fair housing complaints
    and has helped obtain over $150 million in settlements and court
    judgments in housing discrimination cases. This year HUD has also
    obtained commitments from lenders to make over $3 billion in home
    mortgage loans to minorities and low-income families to settle
    accusations of housing discrimination.
        As part of his One America Initiative, President Clinton directed
    Cuomo to double enforcement efforts brought against perpetrators of
    housing discrimination by the year 2001. HUD has already doubled its
    enforcement actions to a rate of 60 to 70 a month, compared with less
    than 30 enforcement actions per month during the Clinton
    Administration's first term.
        Cuomo said HUD will be able to continue moving aggressively against
    housing discrimination as the result of an increase in the budget of
    its Office of Fair Housing and Equal Opportunity from $30 million in
    the 1998 fiscal year to $40 million in the current fiscal year.
        People who believe they've been harmed by housing discrimination
    can file complaints with HUD by calling 1-800-669-9777 or on the
    Internet at http://www.hud.gov/hdiscrim.html
        Fighting Housing Discrimination fiscal year 1998 Fair Housing
    Initiatives Program (FHIP) Awards
        fighting housing discrimination--fiscal year 1998 fair housing
                       initiatives program (fhip) awards
               (alphabetical by state, and city within the state)
    ALABAMA
        The Fair Housing Agency of Alabama, based in Mobile, received
    $94,718 to continue maintenance and enforcement of fair housing laws in
    Southern Alabama and assist residents to exercise their fair housing
    rights.
        The Mobile Fair Housing Center received $199,287 to provide fair
    housing activities in Southern Alabama. Enforcement action will be
    conducted in both the State's metropolitan and rural areas. The grant
    will enable the organization to expand its capacity to provide fair
    housing enforcement services that address the needs of people with
    disabilities.
    ARIZONA
        The Arizona Center for Disability Law, with offices in both Phoenix
    and Tucson, received $200,000 to enforce fair housing rights for
    persons with disabilities in Arizona.
    CALIFORNIA
        California Rural Legal Assistance, based in San Francisco, received
    $100,000 to develop, implement and coordinate a fair housing public
    education campaign in agricultural regions of the state.
        The Fair Housing Council of Riverside County received $202,357 to
    expand and enhance private enforcement and education outreach
    components of its present fair housing program and to expand services.
        The Fair Housing Council of Fresno received $100,000 for outreach
    and education to consumers, housing providers and government officials
    in the Central Valley of California. The Council will also provide
    individual assistance to consumers.
        The Fair Housing Council of San Gabriel Valley in Pasadena received
    $291,850 to help remove barriers to fair housing.
        Sentinel Fair Housing of Oakland received $349,900 to provide
    technical assistance, recruit and train new rental housing testers,
    provide for complaint intake, and undertake tests for accessibility.
        Community Legal Services, based in San Jose, received $350,000 to
    provide fair housing advocacy for people of various protected classes.
    The organization will also investigate complaints, undertake testing
    and do referrals.
        The Fair Housing Council of Marin, in San Rafael, received $297,485
    to work with traditional civil rights groups located in Sonoma City, an
    area underserved by fair housing organizations.
    COLORADO
        Newsed Community Development Corporation of Denver received
    $305,158 for testing, complaint referral, pre-application tests of non-
    regulated lenders and regulated lenders, and referrals of fair housing/
    fair lending complaints to HUD.
    DISTRICT OF COLUMBIA
        The Judge David L. Bazelon Center for Mental Health Law of
    Washington, DC received $93,259 to conduct an 18-month campaign of
    testing, administrative enforcement and litigation in northern
    Virginia. The Mental Health Center will work with Independent Living
    Centers to assist people with disabilities to exercise their fair
    housing rights.
    GEORGIA
        Metropolitan Fair Housing Services received $277,000 to address all
    discriminatory housing practices against Georgia's Hispanic
    communities.
    ILLINOIS
        Access Living of Metropolitan Chicago received $350,000 for
    disability projects that address the fair housing enforcement needs of
    persons with disabilities.
        The John Marshall Law School received $349,972 to contribute to the
    goal of substantially increasing enforcement actions with vigorous
    testing and enforcement.
        Latinos United of Chicago received $100,000 to develop a
    comprehensive Latino suburban fair housing program.
        St. Clair County received $99,994 to target predominantly African-
    American inner city, low- and moderate-income people for rental, sales,
    and lending education and to provide outreach to the homeless for
    rental education.
    INDIANA
        Northwest Indiana Open Housing received $218,366 to employ rental
    and sales tests in an effort to stamp out housing discrimination.
    KENTUCKY
        The Lexington Fair Housing Council received $349,995 to continue
    enforcement of fair housing laws through testing, filing of complaints,
    complaint processing, enforcement, and analysis of impediments and
    related activities.
    LOUISIANA
        The Greater New Orleans Fair Housing Action Center received
    $350,000 to counteract housing discrimination on behalf of all
    protected classes in all housing markets, through a variety of methods.
    MASSACHUSETTS
        The Housing Demonstration Project in Holyoke received $243,430 to
    work with traditional civil rights groups and the Legal Assistance
    Corporation of Massachusetts, to work on fair housing issues and
    concerns.
    MICHIGAN
        The Fair Housing Center of Metropolitan Detroit received $350,000
    to conduct housing discrimination activities in 11 counties served by
    regional fair housing organizations.
    MINNESOTA
        Southern Minnesota Regional Legal Services received $337,750 for a
    fair housing enforcement project that will extend enforcement services
    to reach all protected classes.
    MISSOURI
        Metropolitan St. Louis Equal Housing Opportunity Council received
    $71,282 to increase work on discrimination complaints from immigrants
    and homebuyers through seminars, focus groups and public forums.
        The Kansas City Fair Housing Center received $350,000 to continue
    its outreach and collaboration with local consortiums and to extend
    partnerships with community education programs.
    MONTANA
        Montana Fair Housing, based in Missoula, received $350,000 to
    conduct education and outreach and perform testing and other
    investigative activities that can lead to the filing of fair housing
    complaints, particularly from Native Americans.
        Billings Community Housing Resource Board received $98,626 to
    provide people with disabilities, Native Americans, women and the
    housing industry with information on fair housing laws and rights.
    NEVADA
        The Nevada Fair Housing Center in Las Vegas received $204,679 to
    conduct private enforcement activities including complaint intake,
    referral, testing, and conciliation of fair housing claims.
    NEW JERSEY
        The Fair Housing Council of Northern New Jersey received $350,000
    to conduct fair housing testing in Northern New Jersey.
    NEW YORK
        Asian Americans for Equality, based in New York City, received
    $213,626 for fair housing efforts targeted to the growing Asian
    American community in New York City.
        The Open Housing Center in New York City received $350,000 for
    testing, to investigate complaints of discrimination, and for education
    efforts.
        Greater Upstate Law Project of Rochester received $52,486 to
    develop a statewide Electronic Center for fair housing; service areas
    in semi-rural New York with its web site and to train social workers in
    fair housing complaint intake and processing.
    NORTH CAROLINA
        The Winston-Salem Human Relations Commission received $100,000 to
    provide education and outreach to African Americans, Hispanics, elderly
    and disabled, and households with children that have unmet fair housing
    needs.
        The North Carolina Fair Housing Center received $348,557 to
    investigate all areas of housing discrimination, refer complaints to
    appropriate enforcement agencies including HUD and to investigate and
    test the nature and level of predatory lending and racial steering.
    OHIO
        The Fair Housing Center of Toledo received $300,000 to enhance its
    fair housing programs, combat illegal housing practices and to
    affirmatively further fair housing. The grant to the Fair Housing
    Center of Toledo will also enable it to enter into partnership with
    private enforcement organizations, local government agencies or
    traditional civil rights organizations and focus on systemic
    investigations of housing discrimination.
    OREGON
        The Oregon Advocacy Center received $182,847 to build on existing
    services of community training, information, referral of fair housing
    complaints and legal representation for victims of housing
    discrimination. The Center will work with the Fair Housing Council of
    Oregon to build upon its existing enforcement services.
    PENNSYLVANIA
        The Tenant's Action Group (TAG) in Philadelphia received $350,000
    to expand regional fair housing activities performed by TAG under four
    previous FHIP grants, which also included a Delaware Valley Fair
    Housing Partnership. This regional partnership consists of five
    agencies that collectively enforced federal, state and local fair
    housing laws in the city of Philadelphia and its suburban counties in
    Delaware and southern New Jersey.
        The Public Interest Law Center of Philadelphia received $300,000
    for fair housing enforcement actions and to conduct investigations of
    systemic housing discrimination.
        The Reading-Berks Human Relations Council of Reading received
    $160,000 to provide community-based fair housing intake,
    investigations, mediation, conciliation, testing and education
    services.
    TENNESSEE
        The Tennessee Fair Housing Council, based in Nashville, received
    $349,875 to continue its efforts of enforcement through testing, filing
    of fair housing complaints, complaint processing and the gathering and
    dissemination of fair housing information and data.
        Memphis Area Legal Services received $124,618 to implement a
    program to identify and take action to remove architectural barriers to
    fair housing for individuals with disabilities.
    TEXAS
        A Fair Housing Center in Houston will be started by the National
    Fair Housing Alliance, which received $399,989 for the project. Houston
    is regarded as an underserved area--one that currently is not served by
    a private or public fair housing enforcement organization. Activities
    being funded under the grant will address the fair housing needs of new
    immigrant groups and those of other underserved populations.
        Hidalgo County received $88,895 to promote equal opportunities and
    to eliminate fair housing barriers through a newly created fair housing
    center for Hildalgo County.
        The San Antonio Fair Housing Council received $350,000 to sustain
    its relatively new organization. Funds will also be used to recruit and
    train testers, conduct 282 tests, investigate fair housing complaints
    and to undertake litigation.
        The Austin Tenant's Council received $93,999 to address a high
    denial rate for minority home mortgage applicants and to address the
    lack of accessible housing in Austin, Texas.
    VIRGINIA
        Housing Opportunities Made Equal of Richmond received $350,000 to
    undertake an enforcement project which covers two thirds of the
    Commonwealth of Virginia. Fair Housing protections will be provided for
    African-Americans, Hispanics and other protected classes under the Fair
    Housing Act.
    WASHINGTON
        The Northwest Fair Housing Alliance (NWFHA) received $350,000 to
    continue its enforcement activities in Spokane and to extend its
    services to immigrants and American Indian citizens.
                              use of fhip funding
        Question. For the hearing record, could you please provide a
    detailed accounting for the agency's expenditures in the past three
    years on any and all activities relating to alleged discrimination by
    homeowners' insurers?
        Answer. HUD does not fund projects which focus solely on property
    insurance discrimination or any other single practice prohibited by the
    Fair Housing Act. The broad-based projects which have been funded over
    the past three years may include property insurance matters among the
    issues they review. Although we are unable to identify the specific
    dollars each project has spent on such activities (and sometimes such
    activity may be as minimal as responding to a telephone call from the
    public seeking information about their rights), we can provide you with
    FHIP dollars assigned to the enforcement-related initiatives for the
    past 3 years. We estimate that less than 1 percent of the funds below
    have supported insurance-related activity in fiscal years 1997 and
    1998.

                            [In millions of dollars]

    Private Enforcement Initiative Funds, by fiscal year:
        1999..........................................................   9.3
        1998..........................................................   9.3
        1997..........................................................  10.5
    Fair Housing Organizations Initiative, by fiscal year:
        1999..........................................................   1.2
        1998..........................................................   1.6
        1997..........................................................  4.05
                              use of fhip funding
        Question. For the hearing record, could you please identify the
    uses to which FHIP grants funded with fiscal year 1998 appropriations
    were put?
        Answer. For fiscal year 1998, HUD awarded a total of $15 million to
    grantees under the FHIP. Of this total, $3.5 million went for the
    National Education and Outreach Program. The objectives of this program
    are to: (1) provide fair housing information to the public and (2)
    develop and implement methods for preventing and responding to the
    community tensions arising from persons exercising their fair housing
    rights.
        The other $11.5 million of the $15 million total went for the
    regional, local, and community based programs. HUD allocated this $11.5
    million as follows:
        (1) $9.3 million for the Private Enforcement Initiative:
      --$7.8 million is the ``General Component,'' used for 24-month
            projects. Each project has a $350,000 cap.
      --$1.5 million went for the ``Joint Enforcement Project Component,''
            used to promote partnerships between private fair housing
            enforcement organizations, FHAP agencies and/or traditional
            civil rights organizations to focus on systemic investigations
            of discrimination. The projects are for 18 month projects, with
            caps of $300,000 per project.
        (2) $1.2 million to the Fair Housing Organizations Initiative:
      --$800,000 went for the ``Continued Development Component,'' which
            enhances the ability of organizations to help persons with
            disabilities pursue their rights under the FHAct.
      --$400,000 went for the ``Establishing New Organizations
            Initiative,'' which funds the creation of a new fair housing
            enforcement organization in an underserved area. This is a 24-
            36 month project.
        (3) $1 million for the ``Education and Outreach Initiative'' which
    supports regional, local and community-based education and outreach
    efforts. The projects run for 18 months. The award cap is $100,000.
                                     ______

                      Questions Submitted by Senator Burns

                       indian housing block grant program
        Question. The population on Indian reservations has been growing
    lately and will continue to grow in the future, especially now with the
    implementation of the ``Welfare to Work'' program. This increase in
    population will, in turn, exacerbate the housing problems on our
    reservations and the demand for housing will grow. The funding for
    Indian housing programs has been flatlined for fiscal year 2000. Why
    isn't there an increase in funding for Indian Housing in fiscal year
    2000? What are your plans to combat the impact of this population
    influx?
        Answer. The President's fiscal year 2000 Budget request continues
    to support budget increases that were provided in fiscal year 1999 for
    the Indian Housing Block Grant (IHBG) program, the Section 184 Indian
    Housing Loan Guarantee Fund and the Indian Community Development Block
    Grant program. Other programs proposed for fiscal year 2000 from which
    Indian Tribes and their Tribally Designated Housing Entities are
    expected to benefit include the Welfare-to-Work (WTW) Section 8 Voucher
    Program (25,000 units), and Service Coordinators for the Elderly,
    proposed to be funded at $50 million.
        As the implementation of IHBG progresses, the Department must
    ensure that tribal management and operational capability exists. Some
    larger tribes now receive significantly more funding post-NAHASDA than
    they received under pre-NAHASDA programs. The Department is confident
    that the funding proposed in the President's fiscal year 2000 budget
    request is the optimum amount that can be prudently managed in Indian
    Country while maintaining the integrity of both the (1) programs and
    (2) Federal funds.
        To date, there is no evidence of any large influx of Indians
    returning to their home reservations due to Welfare-to-Work
    initiatives. Should such a trend develop, however, it is expected that
    Indian tribes and TDHEs would compete favorably with PHAs for the WTW
    housing assistance funds.
                                 rural housing
        Question. How much of HUD's annual budget is dedicated to rural
    housing? What is HUD's record in serving isolated rural communities? Of
    HUD's overall $2.5B increase proposed in the President's budget, what
    percentage of this increase will be going to rural America? I would
    like to see statistics and dollar amounts regarding urban versus rural
    housing.
        Answer. Introduction. Historically, as the Department of Housing
    and Urban Development, urban affairs have been our primary focus for
    most of the agency's existence. While the U.S. Department of
    Agriculture (USDA) continues to have the lead through the Rural
    Development Agency, HUD's involvement in rural affairs has increased in
    recent years. For purposes of this response, the term ``rural'' has
    been interpreted to mean an area outside of a Metropolitan area OR an
    area outside urbanized areas within a Metropolitan area. This response
    does not include Native American Housing programs with the exception of
    Rural Housing. Research showed that our rural customers consist of:
      --26.1 million households occupy units in rural areas; \1\
    ---------------------------------------------------------------------------
        \1\ American Housing Survey, 1995, hereafter referred to AHS.
    ---------------------------------------------------------------------------
      --37.3 million households occupy units outside areas that are not a
            part of central cities (AHS);
      --non-entitlement recipients of CDBG, HOME and Emergency Shelter
            Grants;
      --owners and managers of approximately 1,460 FHA-insured multifamily
            projects in non-metro areas; \2\
    ---------------------------------------------------------------------------
        \2\ Assessment of the HUD-Insured Multifamily Housing Stock Final
    Report, 1993.
    ---------------------------------------------------------------------------
      --over 100 State local and regional PHAs that operate public housing
            (17 percent of the approximately 1.3 million units) and
            administer (with State Housing Finance Agencies) certificates
            and vouchers (19 percent of the approximately 1.35 million
            units).\3\
    ---------------------------------------------------------------------------
        \3\ Characteristics of HUD-Assisted Renters and Their Units in
    1989, March 1992.
    ---------------------------------------------------------------------------
                     i. community and planning development
        The most specific instrument for distribution of funding to rural
    areas within CPD programs is through the Rural Housing and Economic
    Development program. In addition, assistance is provided to rural areas
    through many other of CPD's programs, as discussed below.
        The fiscal year 2000 budget proposes $20 million for the Rural
    Housing Economic Development program to encourage new and innovative
    approaches to addressing the housing and economic development needs of
    the Nation's rural populations. There is a great need to expand the
    supply of affordable housing in our rural communities. In addition,
    because of out-migration and disinvestment, many rural areas suffer
    from severe economic distress, with few employers and limited
    commercial activity. Rural areas must be able to attract and retain
    firms in economic growth sectors--innovative manufacturers, for
    example--to revitalize commercial streets where demand clearly exists
    but infrastructure has aged and capacity building is needed, and to
    carry out flexible micro-lending that supports promising enterprises.
    HUD has significant experience in the funding and development of
    housing and community economic development programs in rural areas-
    through the CDBG and HOME programs and others. The Department has
    special expertise in delivering technical assistance and building
    institutional capacity. The new Office of Rural Housing and Economic
    Development at HUD will effectively integrate the impact of HUD's
    formula grant programs with highly targeted new funding for innovative
    projects. HUD will continue to work closely with USDA, the Department
    of Interior, the Appalachian Regional Commission, other Federal
    agencies, and leading rural development groups to design more effective
    responses to the housing and economic development needs of our Nation's
    rural communities.
        This will include examining our own programs to see if legislative
    and/or regulatory changes may be necessary to make them more responsive
    to rural needs. In addition, HUD plans to devote a number of our new
    Community Builder ``specialists'' to providing coordination and cross-
    state solutions to the problems facing rural areas including people
    living in Colonias, Native Americans, migrant farm workers and others.
        While the population is growing in some rural areas, especially
    those focused on retirement or recreation, and particularly due to the
    foreign immigration and movement of urban/suburban residents away from
    central cities, the population continues to decline in most rural
    areas. This is in part due to the lack of industry relocations to these
    areas and the resulting lack of jobs. While some rural areas are
    benefiting from the strong economy nationwide, many are experiencing
    extremely high unemployment rates. Rural areas need to be able to
    increase the community and economic development funds that flow their
    way, to learn how to attract manufacturing, and to improve the capacity
    of nonprofit and other partners in determining the overall well-being
    of the area.
        HUD has significant and historic experience in managing housing,
    community and economic development programs in rural areas, and
    continues to demonstrate this experience with and commitment to rural
    communities through several of its housing, community and economic
    development programs such as the Community Development Block Grant and
    HOME Investment Partnerships programs. This experience and the
    established partnerships that HUD has with organizations such as the
    Housing Assistance Council provide the basis for creating innovative
    approaches to the particular problems of people and families in the
    Nation's rural areas. Moreover, this new program will allow for the
    effective integration of HUD's formula and other existing community and
    economic development programs with the highly specific and targeted new
    funding. This integration of existing and new efforts will provide a
    strong synergy which will leverage the results of both the existing
    programs as well as the new program.
    Homeless Programs/Continuum of Care
        Between 10 and 15 percent of Homeless Assistance program funding
    goes to rural areas annually. In the 1998 competition, 383 of 2,644
    projects (14 percent) were by applicants from rural areas. Of the $724
    million awarded in the 1998 competition, $83 million (11 percent) were
    awarded to projects serving rural areas. Projects in rural areas fared
    well in the competition. Nationally, 56 percent of all projects were
    awarded funding; 56 percent of all projects serving rural areas were
    awarded funding. Nationally, 57 percent of total dollars requested were
    awarded; 51 percent of dollars requested for rural projects were
    awarded.
    HOPWA
        HOPWA funds are awarded to States and local governments for
    projects in jurisdictions which do not qualify for a formula
    allocation.
        Approximately 10 to 15 percent of funds go to non-metropolitan
    areas. Data from the Center for Disease Control shows that 5.6 percent
    of cumulative AIDS cases are in rural counties. Of the 97 formula
    grants, 34 are for areas outside of qualifying metropolitan areas and
    states in aggregate received $30.862 million out of $200.475 million
    allocated in fiscal year 1999 by formula (15.4 percent). Thus, the $15
    million increase is expected to provide about $2.3 million to $3
    million for expanding HOPWA efforts in non-metropolitan areas.
        For example, in 1998, a HOPWA Special Project of National
    Significance Award for $1,118,150 was given to the AIDS Task Force of
    Alabama, Inc., to operate the Alabama Rural AIDS Project. For very
    detailed information, we recommend going to our web page, www.hud.gov/
    cpd/hopwahon.html, where all HOPWA program descriptions (over 300
    pages) can be found, including all of the State-wide programs that will
    involve activities in rural areas.
    Community Development Block Grants
        CDBG formula funds are split 70-30, with approximately 30 percent
    going to State and small city funding. Therefore, $38.79 million of the
    increase requested under CDBG will go to State and small city funding.
        Based on historical data, about 52 percent of State CDBG money is
    awarded to municipalities with populations of 10,000 or less; about 14
    percent to municipalities of over 10,000 and about 33 percent to
    counties. The 10,000 population cutoff used for CDBG reporting
    approximates the population ceiling for several USDA programs.
        States spend about 50 to 55 percent of their money on public
    facilities with half of this going for water and sewer projects; about
    22 to 26 percent for housing (over \2/3\ of that for housing
    rehabilitation); about 16 to 22 percent is used for economic
    development and about 4 percent goes for planning and administration.
    In addition, the State CDBG program includes a requirement that the
    border States of Texas, New Mexico, Arizona and California use up to 10
    percent of the State CDBG funds for Colonias. The Colonias and Migrant
    Task Force was created in 1995 to better coordinate HUD's efforts to
    serve the Colonias and farmworkers. Key accomplishments of this inter-
    agency working group include: a $1.3 million contract to provide
    technical assistance toward development of 500 units of housing in
    South Texas area and another 500 units in various farm worker locations
    in California; a 1996 internship program for young colonias residents
    interested in learning about the workings of government (10 positions).
    From 1991 to 1994, HUD provided nearly $40 million in CDBG funds
    specifically for colonias matters. These funds went to Texas, New
    Mexico, Arizona and California. The four States budgeted a total of
    $12,683,380 (fiscal year 1995), $13,516,850 (fiscal year 1996),
    $13,471,000 (fiscal year 1997) and $11,815,300 (fiscal year 1998).
    Regional Connections
        The fiscal year 2000 budget proposed $50 million for a Regional
    Connections program to expand capacity and provide incentives for
    ``smart growth.'' Concern about growth, disinvestment, and decline has
    moved far beyond the central cities' borders. Even rural areas, the
    home of small town America, are exhibiting new concern about
    development patterns. Farmland across the country is being sold and
    subdivided into high-cost residential communities. In fact, since 1960,
    outward growth has led to an average loss of 1.5 million acres of
    farmland a year. As this outward expansion reaches rural areas, taxes
    are often driven up from rising real estate values and increased costs
    of services.
        The good news is that across the country, regional leaders are
    joining together to forge strategies to address the concerns discussed
    above. They are attempting to design and implement regional approaches
    to regional problems and opportunities.
    Community Empowerment Fund
        HUD's fiscal year 2000 proposal would fund the Community
    Empowerment Fund (CEF)at $125 million, to substantially increase
    capital for business investment and job creation in underserved inner
    city and rural areas. By combining $125 million in Economic Development
    Initiative (EDI) grants with an estimated $625 million in Section 108
    guaranteed private loans, the CEF will provide a total of $750 million
    in grants and low-cost loans in these communities. The program is thus
    expected to leverage up to five times the guaranteed loan amount in
    additional private sector financing, and this will create an estimated
    100,000 jobs through direct business development and other spill-over
    effects.
        Job creation projects funded through the CEF will include: loans
    for business expansion and modernization; start-up costs for new and
    small medium-sized businesses; preservation and expansion of existing
    industrial facilities; and retail and commercial revitalization
    initiatives, such as grocery stores and neighborhood shopping centers.
    America's Private Investment Companies (APIC)
        The CEF will be complemented by a second major vehicle for
    expanding investment capital for distressed areas, both urban and
    rural. The Administration is proposing a major equity incentive program
    to fill that gap. For fiscal year 2000, HUD has requested $37 million
    in credit subsidy budget authority for $1 billion in privately issued
    investment capital loans that the Federal Government will guarantee to
    go with $500 million in private equity commitments for new investment
    partnerships-for-profit venture capital funds known as America's
    Private Investment Companies (APICs). APICs will, in turn, make equity
    investments in larger businesses that are expanding or relocating in
    inner cities and rural areas. The $37 million in Federal credit subsidy
    would thus leverage an estimated $1.5 billion in private funds,
    creating an estimated 200,000 jobs in distressed areas. Private
    investors' funds would be at risk ahead of Government funds, but the
    individual investment decisions would be approved by Government for
    consistency with the public policy purpose of the program. The APIC
    program will be jointly administered by HUD and the Small Business
    Administration (SBA). Its financing structure will be modeled after the
    current Small Business Investment Company (SBIC) program. Five
    potential organizations will be selected, each with a minimum of $100
    million in private equity capital and each eligible for twice that much
    in additional Federal loan guarantees. The Government leverage will be
    provided by using debenture securities similar to the SBIC debentures
    and funded through the same process. Key targets will be leveraged
    buyouts, corporate divestitures, roll-ups, and focused market expansion
    that could be relocated to serve low- and moderate-income communities
    with the appropriate financial tools.
    HOME Investment Partnerships Program
        The HOME Investment Partnerships Program (HOME) provides assistance
    to State and local governments to address housing needs of low-income
    and very low-income persons. Forty percent of HOME funds are allocated
    by formula to States. Although States may spend these funds anywhere in
    the state, much of their money goes to rural areas.
        HOME, HUD's successful housing rehabilitation and production
    program, is a key tool for increasing the availability of decent, safe
    and affordable housing in both urban and rural America. HUD has found
    that HOME exceeds the program's own affordability targets as well as
    the targets for funding local nonprofit housing organizations and
    creating mixed-income housing opportunities. The program works through
    local governments to finance the construction and rehabilitation of
    multifamily rental housing, improve substandard housing for current
    owners, and assist new home buyers through acquisition, construction
    and rehabilitation. HOME also provides rental-based assistance to
    families. Beyond its impact in bricks and mortar terms, HOME has been
    an important tool for enhancing the capacity and experience of the
    nation's affordable housing producers. In fiscal year 2000, the HOME
    program is requested at $1.610 billion, an increase of $10 million over
    the 1999 enacted level. This program level will provide 85,400
    additional units of decent, safe and affordable housing for both owners
    and renters through the combination of new construction (34 percent),
    rehabilitation (48 percent) and acquisition (15 percent). About 3
    percent will be used for tenant based-assistance.
                     ii. fair housing and equal opportunity
        Fair Housing activities are available in both urban and rural
    areas. Increased funding is in part targeted as expending services to
    both unserved and underserved localities. The Fair Housing Initiatives
    Program (FHIP) will increase by $3.5 million in 2000 to a level of $27
    million. Funds are for three major components. First, ``private
    enforcement'' efforts include testing and other investigative
    activities such as audits of new construction to determine compliance
    with accessibility requirements, and testing in real estate market
    transactions. Second is ``education and outreach'' focusing on national
    campaigns to educate protected classes and to educate the housing
    industry about the Fair Housing Act. The 2000 FHIP budget also includes
    $7.5 million for the second year funding of a national audit of
    discrimination in housing rental and sales. This audit will create the
    first ever report card at both the national and local levels of the
    extent of discrimination against the Nation's major racial and ethnic
    groups. The national audit will include urban, suburban and rural
    areas.
        The budget proposed a joint partnership between FHIP and Fair
    Housing Assistance Program (FHAP). This FHIP/FHAP partnership
    initiative is proposed to focus on new and underserved populations by
    ensuring the full protection of the Fair Housing Act and other civil
    rights laws for persons who face language, cultural, and other barriers
    that currently limit the utility of these laws to address persistent
    housing discrimination. This request includes a $3.5 million set-aside
    that will be added to the FHIP to support a fair housing partnership
    between the private and public fair housing sectors. This fair housing
    partnership effort will be funded equally by the Fair Housing
    Assistance Program (FHAP) through an equal $3.5 million contributions,
    for a combined $7 million set-aside. The Budget will also support other
    fair housing enforcement and education activities.
        An additional $2 million will be used to fund the establishment of
    new fair housing organizations. It is envisioned that the focus of the
    funding for fiscal year 2000 will be on underserved groups. One group
    that has been in dire need of more fair housing activity is the
    residents of non-metropolitan areas, especially rural areas. Another
    group that has been underserved by existing fair housing organizations
    is non-English speaking minorities. It is envisioned that the outreach
    initiative funding could enable the creation of fair housing
    organizations to assist such populations.
        The Private Enforcement Initiative, as a major component of FHIP,
    has a total proposed level of funding of $7.75 million in fiscal year
    2000. Under this component, $6 million is for the following multiyear
    projects: (a) carry out testing and other investigative activities,
    such as regional audits of new construction to determine compliance
    with accessibility requirements; (b) discover and remedy discrimination
    in public and private real estate markets and real estate-related
    transactions through assisting victims to identify practices that
    denied them equal housing opportunity, and; (c) respond to individual
    complaints of discrimination from home seekers.
        FHAP agencies and private groups will jointly engage in strategic
    planning to focus their fair housing enforcement activities. They will
    be required to coordinate their activities with HUD to ensure no
    duplication exists and that the results of their partnerships make a
    maximum contribution to the doubling of enforcement effort.
        The fiscal year 2000 Budget request for FHAP is $20 million. This
    is an increase of $3.5 million over the fiscal year 1999 appropriation
    which will be used to fund an innovative Fair Housing Partnership
    between State and local government fair housing enforcement agencies
    and private fair housing groups. The Department is proposing this
    Partnership focus on underserved populations to ensure that persons who
    face language, cultural, and other barriers have the full protection of
    the Fair Housing Act. The focus is expected to include racial and
    ethnic minorities, rural populations, persons with disabilities, and
    homeless persons. The Department will carry out this initiative through
    the existing FHAP and FHIP programs.
        This Partnership initiative will be funded equally by the FHAP and
    FHIP through a combined $7 million set-aside. Through its support of
    joint efforts by governmental and private entities, the partnership
    initiative will foster substantial and new fair housing results that
    individual organizations could not achieve alone.
        The balance of the $20 million requested for fiscal year 2000 will
    support the activities of approximately 90 substantially equivalent
    fair housing enforcement agencies, an increase of 5 over the 1999
    level. These agencies will process housing discrimination complaints
    based on race, color, religion, sex, familial status, disability, and
    national origin.
        The total funding requested for both FHAP and FHIP programs in
    fiscal year 2000 is $47 million. Together, these two programs form a
    national comprehensive fair housing strategy against housing
    discrimination based upon greater cooperation between the public and
    the private sectors.
                                  iii. housing
        The Section 203(b) program, enacted in the National Housing Act of
    1934, provides mortgage insurance for one- to four-family residences.
    This program has contributed to expanding the opportunities for both
    urban and rural homeownership in the United States and will continue to
    meet the needs of first-time homebuyers, working families, and minority
    families, as well as underserved communities, especially central city
    and rural areas. Under the 203(b) program, any person able to meet the
    cash investment, mortgage payments and credit requirements may obtain
    an FHA-insured loan from a private lending institution to purchase a
    home. Since its inception through September 30, 1998, the MMI Fund has
    insured approximately $988 billion in mortgages for about 22.5 million
    families. There are no statistics on the break-out between urban and
    rural areas.
                         iv. public and indian housing
        Small (sometimes rural) PHAs receive approximately 12 percent,
    which translates into $23.5 million of the Public Housing Operating
    Fund annual appropriation.
        Participation in the Section 8 certificate and voucher program by
    rural residents or persons living in non-metro areas has not been
    examined in recent years. It is not known how much of the overall
    outlay of Section 8 housing funds have gone to rural or non-metro
    areas. What is known though, is that a sizeable proportion of the
    rural/non-metro Section 7 certificate and voucher area administered by
    a small proportion of PHAs. A study undertaken by the Housing
    Assistance Council in 1989 estimated that approximately 283,000 rural
    households have been in some way involved in the Section 8 program, and
    that the state and regional PHAs that serve rural areas administer at
    least 40 percent of certificate and vouchers in rural/non-metro areas.
                        v. policy development & research
        The 2000 research plan will build on the 1999 agenda. It will focus
    PD&R's efforts on current policy topics of significance to the Nation
    while continuing the housing market surveys and other core activities.
    One proposed activity 2000 will be studies of effective and ineffective
    approaches to regional problem-solving that partner cities, suburbs,
    and rural areas.
        In addition to the above information, the Housing Assistance
    Council has produced the following studies with HUD assistance which
    might be of interest:
      -- Welfare Reform and Rural Housing Case Studies
      --Elderly Housing in Rural Areas
      --State of Rural Housing (annual report 97 and 98)
      --Rural Housing and Economic Development in Boomtowns
      --Migrant Farmworker Housing
      --HOME Program Use in Rural Areas
      --State Plan's Coverage of Rural Housing
      --HOME, CDBG, and Farmworker Housing Development
      --Analysis of Fair Housing Discrimination Cases in Rural Areas
      --A Report on Lending Data for Rural Parts of Metro Areas
      --Mobility and Economic Self Sufficiency of Section 8 Participants in
            Rural Areas
      --Non Profit/For Profit Joint Ventures in Rural Affordable Housing:
            Case Studies
      --Updated Guide to Housing Organizations for Rural Areas
      --A Study of Fair Market Rates in Rural Areas stop
                            lead-based paint grants
        Question. In fiscal year 1999, the Missoula Housing Authority
    applied for a lead-based paint grant for low-income housing and was
    told that HUD would be awarding grants in November. HUD did not award
    grants until March. The indecision and lack of communication is
    frustrating to local organizations. HUD needs to honor its commitments
    so that local organizations can honor their commitments to local
    communities. What can be done about this situation? How does HUD intend
    to honor their commitments?
        Answer. We regret any misunderstandings between HUD and the
    Missoula Housing Authority and that they experienced frustration as a
    result. HUD attempts to estimate when grant announcements will be made
    based upon workload and historical experience, but projected grant
    announcement dates are only estimates and are described as such. In the
    future, we will make certain that recipients fully understand that
    announcement dates provided in advance are tentative dates.
                                 rural housing
        Question. HUD now has a new office and $25 million for rural
    housing and economic development. What is the status of this office and
    when does HUD expect to make grant funds available to rural
    development?
        Answer. The Office of Rural Housing and Economic Development is
    located in the Office of Community Planning and Development under the
    Deputy Assistant Secretary for Economic Development. A Rural Housing
    and Economic Development Coordinator will be selected shortly. A
    listing of the awards made pursuant to the March 8, 1999, Notice of
    Funding Availability is attached.

      FISCAL YEAR 1999 RURAL HOUSING AND ECONOMIC DEVELOPMEMT GRANT WINNERS
    ------------------------------------------------------------------------
           Name of organization         Applicant City-State   Grant amount
    ------------------------------------------------------------------------
    Capacity Building:
        Upper Sand Mountain Un. Meth.   Sylvania, AL........         $47,300
         Larger Parish Inc.
        Housing America Corporation...  Somerton, AZ........          75,000
        Bishop Indian Tribal Council..  Bishop, CA..........          88,201
        Coachella Valley Housing        Indio, Ca...........         200,000
         Coalition.
        Yurok Tribe...................  Eureka, CA..........         200,000
        Kentucky Mountain Hsg Dev       Manchester, KY......         200,000
         Corp, Inc.
        Three Rivers Community Action,  Zumbrota, MN........         150,000
         Inc.
        Fort Belknap College..........  Harlem, MT..........         200,000
        Fort Peck Assiniboine & Sioux   Poplar, MT..........         148,633
         Tribes.
        Rocky Mountain Development      Helena, MT..........         109,369
         Council.
        Native Council on Economic and  Walthill, ME........         150,000
         CDC.
        WREN-Women's Rural              Bethlehem, NH.......         150,000
         Enterpreneurial Network.
        Citizens For Affordable Homes,  Carson City, NV.....          69,075
         Inc.
        Adirondack Economic             Saranac Lake, NY....         150,000
         Development Corporation.
        Bishop Sheen Ecumenical         Rochester, NY.......         150,000
         Housing Foundation, Inc.
        Sullivan County Partnership     Monticello, NY......         150,000
         for Economic Development.
        Portage Area Development        Ravenna, OH.........         137,860
         Corporation.
        Kiowa Tribe of Oklahoma.......  Anadarko, OK........         143,660
        Otoe-Missouria Tribe..........  Red Rock, OK........          97,805
        CASA of Oregon................  Newberg, OR.........         200,000
        Technical College of the Low    Beaufort, SC........         193,000
         Country Foundation, Inc.
        Oti Kaga, Inc.................  Eagle Butte, SD.....         188,796
        Virginia Eastern Shore          Nassawadox, VA......         115,000
         Economic Empowerment & Hsgn
         Corp.
        Swinomish Indian Tribal         La Conner, WA.......         150,000
         Community.
        Catholic Charities Bureau, Inc  Superior, WI........         200,000
        Mountain Partners in Community  Elkins, WV..........         151,701
         Development.
    Innovative:
        Alaska Native Village of        Tanacross, AK.......         600,000
         Tanacross.
        Metlakatla Indian Community...  Metlakatia, AK......         500,000
        Community Resource Group, Inc.  Fayetteville, AR....         467,500
        Comite de Bien Estar..........  San Luis, AZ........         600,000
        Coachella Valley Housing        Indio, CA...........         600,000
         Coalition.
        Community Housing Improvement   Chico, CA...........         451,397
         Program, Incorpora-  ted.
        Coyote Valley Band of Pomo      Redwood Valley, CA..          32,345
         Indians.
        I-5 Social Services             Mendota, CA.........         509,500
         Corporation.
        Peoples' Self-Help Housing      San Luis Obispo, CA.         500,000
         Corporation.
        South County Housing            Gilroy, CA..........         500,000
         Corporation.
        Everglades Community            Miami, FL...........         500,000
         Association, Inc.
        Iowa Finance Authority........  Des Moines, IA......         600,000
        MidAmerica Housing Partnership  Cedar Rapids, IA....         500,000
         Inc.
        Lincoln Hills Development       Tell City, IN.......         160,000
         Corporation.
        Federation of Appalachian       Berea, KY...........         482,374
         Housing Enterprises.
        Kentucky Highlands Investments  London, KY..........         461,854
         Corporation.
        Garrett County, Maryland,       Oaklands, MD........         504,000
         Community Action Committee,
         Inc.
        Five C, Inc...................  Scottville, MI......         500,000
        Bi-County Community Action      Bemidji, MN.........         500,000
         Programs, Inc.
        Blackfeet Tribe...............  Browning, MT........         600,000
        The Heriatge Institute........  Poplar, MT..........         501,219
        Housing & Economic Rural        Las Cruces, NM......         165,445
         Opportunities, Inc.
        New Mexico Mortgage Finance     Albuquerque, NM.....         600,000
         Authority.
        Pojoaque Housing Corportation.  NM..................         500,000
        Partnership for Economic        Monticello, NY......         500,000
         Development.
        Rural Opportunities, Inc......  Rochester, NY.......         390,065
        Portage Area Development        Ravenna, OH.........         500,000
         Corporation.
        Catawba Indian Nation.........  Catawba, SC.........         600,000
        Rosebud Sioux Tribe...........  Rosebud, SD.........         500,000
        The Lakota Fund...............  Kyle, SD............         538,266
        ACClON Texas, Inc.............  San Antonio, TX.....         600,000
        Amigos Del Valle, Inc.........  Mission, TX.........         600,000
        Rio Valle Rainbow, Inc........  El Paso, TX.........          44,960
        The Center for Economic         San Juan, TX........         500,000
         Opportunities, Inc.
        Community Health Center La      Pasco, WA...........         600,000
         Clinica.
        Dept. of Community, Trade &     Olympia, WA.........         600,000
         Economic Development.
    Seed Support:
        Design Corps..................  Newbern, AL.........         224,190
        Fereration of Southern          Epes, AL............         207,800
         Cooperatives/Land Assistance
         Fund.
        Community Resource Group, Inc.  Fayetteville, AR....         222,000
        Fort Defiance Housing           Window Rock, AZ.....         200,000
         Corporation.
        White Mountain Apache CDC.....  Mc Nary, AZ.........         250,000
        Rural Communities Housing       Ukiah, CA...........         194,877
         Development Corporation.
        Neighborhood Housing Services,  Boise, ID...........         200,000
         Inc.
        Kentucky Farmworker Programs,   Bowling Green, KY...         209,519
         Inc.
        Pendelton County Industrial     Falmouth, KY........         200,000
         Authority.
        Northlake Community             Hammond, LA.........         176,008
         Development Corp.
        Eastern Maine Development       Bangor, ME..........         129,500
         Corporation.
        Action for Eastern Montana,     Glendive, MT........         126,766
         Inc.
        Blackfeet Tribe...............  Browning, MT........         200,000
        Montana Community Development   Missoula, MT........         199,058
         Corporation.
        Haliwa-Saponi Indian Tribe....  Hollister, NC.......         250,000
        Central Nebraska Community      Loup City, NE.......         195,632
         Services, Inc.
        North Central NE Resource       Bassett, NE.........         237,800
         Conservation Dev. & Plgn
         Council.
        Citizen Potawatomi Nation.....  Shawnee, OK.........         198,928
        Langston Community Development  Langston, OK........         200,000
         Corporation.
        Little Dixie Community Action   Hugo, OK............         199,700
         Agency.
        Wa-Ro-MaTri-County Action       Claremore, OK.......         225,710
         Foundation, lnc.
        Catawba Indian Nation.........  Catawba, SC.........         250,000
        Cangleska, Inc................  Kyle, SD............         211,764
        Rosebud Sioux Tribe...........  Rosebud, SD.........         196,800
        El Paso Collaborative for       El Paso, TX.........         200,000
         Community & Economic Dev.
        VA Eastern Shores Economic      Nassawadox, VA......         175,000
         Empowerment & Housing Corp.
        Institute for Washington's      Renton, WA..........         199,500
         Future.
        Okanogan County Community       Okanogan, WA........         196,665
         Action Council.
        The Jamestown S'Klallam Tribe.  Sequim, WA..........         117,702
    ------------------------------------------------------------------------

                               section 8 housing
        Question. I hear from Montana that the private sector is pulling
    out of the Section 8 housing. Our elderly and handicapped need to feel
    secure where they live. What will be done to keep housing inventory
    stable and reassure the most needy that they will not have to move
    every year?
        Answer. The Department shares your concern over the possible loss
    of quality assisted housing stock. Therefore, the Department took the
    initiative of issuing an emergency renewal policy in June 1999, which
    is designed to target increases in rental subsidy assistance to those
    developments most in risk of opting-out. This effort maximizes the use
    of existing statutory authority and available resources to maintain our
    inventory of valuable multifamily housing stock. Also, the Department
    is pursuing a cooperative effort with Congress to enact a more
    comprehensive solution to the loss of HUD-subsidized multifamily
    housing. Finally, since some owners will chose to opt-out, despite
    improved policies to encourage renewal, the Department is seeking
    authority to offer ``enhanced'' vouchers to all residents in projects
    that opt-out. This will avoid the potential for displacement of
    currently assisted residents when owners raise rents to local market
    levels.
                                welfare to work
        Question. Is HUD thinking about dedicating funding to those folks
    who are trying to break the welfare cycle? What are HUD's housing
    strategies for ``Welfare to Work'' and helping men and women get into
    housing closer and to educational and job opportunities?
        Answer. HUD has dedicated funding for two significant welfare-to-
    work initiatives in the fiscal year 2000 budget, Welfare-to-Work Rental
    Vouchers and the Welfare-to-Work Targeted Job Creation Initiative, a
    component of the Community Empowerment Fund. Also, our public housing
    reform is creating incentives in our existing housing programs to
    encourage residents to make the transition from welfare to work.
    Welfare-to-Work Rental Vouchers
        In fiscal year 1999, Congress appropriated $283 million for 50,000
    new incremental welfare-to-work rental vouchers. Our fiscal year 2000
    budget proposes $144 million for 25,000 additional welfare-to-work
    rental vouchers.
        These new vouchers are targeted to families who are currently
    receiving, are eligible for, or have left welfare within the last 2
    years and for whom the housing assistance is essential to obtaining or
    retaining employment. They will help families overcome a number of
    challenges to self-sufficiency. These vouchers will provide a safe and
    stable housing situation as a platform from which to find and keep a
    job. They will reduce the rent burden for families paying too high a
    percentage of their income for housing. The vouchers will also help
    families overcome the spatial mismatch that separates them from
    educational and job opportunities. Families will be able to move closer
    to those opportunities, or near transportation centers so they can
    easily get to those opportunities.
        The welfare-to-work vouchers are being made available to
    communities on a competitive basis that requires Housing Authorities to
    develop their plans together with welfare and workforce development
    agencies. This will make sure the housing assistance is combined with
    the child care and other services families need for a successful
    transition from welfare to work. It will also ensure that the vouchers
    are provided to the families for whom they will be most critical to a
    successful transition.
        The Welfare-to-Work Targeted Job Creation Initiative, funded with
    up to $75 million in direct Economic Development Initiative grants and
    an estimated $375 million in Section 108 guaranteed private loans, as
    part of the Community Empowerment Fund, is designed to help close the
    ``jobs gap'' facing many communities. HUD's 1998 State of the Cities
    report indicated that despite significant recent increases in job
    growth in many cities, there is still a sizable mismatch between the
    number of low-skilled jobs available and the number of low-skilled
    urban residents who need work-or who will need work over the next few
    years as Temporary Assistance for Needy Families (TANF) time limits
    take effect. This initiative is designed to help close this gap, with
    special emphasis on welfare recipients entering the workforce.
        This targeted job creation initiative will support the expansion of
    businesses that emphasize hiring of those in transition from welfare to
    work--projects like the state-of-the art Learning and Work Complex
    opened by the Cessna company in a long-vacant industrial facility in
    Wichita, Kansas. Funded with a HUD grant and a HUD-guaranteed loan, the
    complex is helping TANF recipients prepare for well-paying
    manufacturing jobs. Of the 237 graduates so far, 200 have moved into
    Cessna jobs that start at more than $10/hour, and 26 are employed at
    other companies. Like the Cessna project, communities competing
    successfully under this targeted job creation initiative will combine
    the HUD incentives for business development with local public and
    private supports--like job training, child care, and--as needed. The
    initiative will ensure that those facing the transition from welfare to
    work get jobs that pay and that employers get the workers they need to
    be competitive. The overall $125 million Community Empowerment Fund is
    projected to support an estimated 100,000 in distressed community with
    welfare related populations.
        The Quality Housing and Work Responsibility Act (QHWRA) of 1998 is
    reforming public housing. Much of the reform has to do with creating
    greater financial and other incentives for public housing residents to
    move from welfare to work. Some of the specific reforms are:
      --Expanding mandatory earnings disregards to a larger pool of people.
            This includes residents who are receiving or have received TANF
            assistance in the past 6 months and residents who have been
            unemployed for over a year. Residents usually pay 30 percent of
            their income for rent, so as their earnings from work increase,
            they pay 30 percent of that increased income as additional
            rent. These new rules disregard 100 percent of the increased
            income from rental calculations for the first year, and 50
            percent for a second year.
      --Permitting flat rents and ceiling rents so that rent will not
            increase with increased earnings.
      --Mandatory hardship exemptions from minimum rent payments for
            families who lose welfare benefits because of time limits.
      --No rent reductions for families who lose welfare benefits for
            failure to comply with TANF work requirements. Previous law
            lowered the rent in such cases. This was at odds with the
            purpose of welfare sanctions.
      --Exemptions from community work requirements for TANF recipients who
            are in compliance with their TANF program.
      --The continuation of the Family Self-Sufficiency (FSS) Program. This
            program provides both case management for supportive services
            and escrow accounts for additional rent due to participants'
            increased work earnings. Rather than going to rent, these
            earnings are deposited into savings accounts. The residents can
            access the money when they complete the program and move to
            unsubsidized housing.
                                     ______

                      Questions Submitted by Senator Craig

                          hud accessibility guidelines
        Question. In April of 1998, your Department finalized and published
    guidelines pertaining to accessibility standards for the disabled.
    Before 1998, regulations issued by HUD contained disclaimers that there
    was ``no guarantee of the accuracy or completeness of the
    information.'' Builders, owners, and other involved parties in Idaho
    are now having complaints filed against them for units built before the
    finalized rules were published. How is it that you can hold people
    liable for following guidelines when HUD did not provide any definite
    requirements?
        Answer. Congress and the Department have provided definitive
    statements of the accessibility requirements of the Fair Housing Act
    since the Fair Housing Amendment Act of 1988 was passed. The Department
    has continued dialogue in the industry and has continued to expand our
    efforts to communicate these legislated accessibility requirements.
        The first guidance provided to the public and the building industry
    regarding the Act's design and construction requirements was contained
    in the Fair Housing Amendments Act of 1988 itself. In the Act, Congress
    defined the coverage of the requirements, in Sections 804 (f)(3)(C) and
    (f)(7) of the Act, and explicitly stated the required design features
    for units covered under the Act. First, the Act required that:
      --1. the public and common use portions of covered dwellings be
            accessible to the disabled;
      --2. all doors be sufficiently wide to permit passage by a person in
            a wheelchair; and
      --3. all premises within the dwelling have an accessible route into
            and through the dwelling unit; light switches, electrical
            outlets, thermostats and other environmental controls in
            accessible locations; reinforcements in bathrooms for later
            installation of grab bars; and usable kitchens and bathrooms.
        The Act also stated that compliance with the American National
    Standard accessible buildings and facilities (ANSI A117.1) satisfied
    the accessibility requirements of the Act. [Section 804 (f)(4)].
        The vast majority of the fair housing complaints filed in the past
    2 years in the State of Idaho contain allegations that these basic
    requirements of the Act have been violated. Many of the properties
    involved in these complaints have such features as: (1) steps up to the
    building, (2) steps at the entrances of the buildings, (3) thresholds
    of 4 inches or higher at the front door of the covered units, (4) no
    curb cuts for persons in wheelchairs in the sidewalks leading to units,
    and (5) bathrooms and kitchens that cannot be entered or used by
    persons in wheelchairs.
        The Department published the Fair Housing Act Accessibility
    Guidelines in the Federal Register on March 6, 1991, with extensive
    participation by and comment from all of the major organizations
    representing the building industry. The Preamble to the Guidelines,
    which have been widely distributed to the building industry and the
    public since they were issued, stated, in part:
        ``The design specification presented in the Fair Housing
    Accessibility Guidelines provide technical guidance to builders and
    developers in complying with the specific accessibility requirements of
    the Fair Housing Amendments Act of 1988. The Guidelines are intended to
    provide a safe harbor for compliance with the accessibility
    requirements of the Fair Housing Amendments Act, as implemented by 24
    CFR 100.205 of the Department's Fair Housing regulations. The
    Guidelines are not mandatory. Additionally, the Guidelines do not
    prescribe specific requirements which must be met, and which, if not
    met, would constitute unlawful discrimination under the Fair Housing
    Amendments Act. Builders and developers may choose to depart from the
    Guidelines, and seek alternate ways to demonstrate that they have met
    the requirements of the Fair Housing Act.'' [emphasis added]
        This statement consistently has been, and remains, the Department's
    position with respect to enforcement of the Fair Housing Act
    accessibility requirements. In the State of Idaho, for example, if
    HUD's investigation of a property indicates that the builder has not
    relied on these guidelines, the builder and architect may present
    evidence that they have satisfied the requirements of the Act through
    alternative means.
        On June 28, 1994, the Department published in the Federal Register
    further official guidance on the accessibility requirements of the Act,
    as ``Supplement to Notice of Fair Housing Accessibility Guidelines:
    Questions and Answers about the Guidelines.''
        In August 1996, the Department published a Fair Housing Act Design
    Manual. The purpose of this Manual, stated in its title, was to provide
    additional means by which designers and builders may meet the
    accessibility requirements of the Fair Housing Act. The Manual
    contained, explained, and illustrated the 1991 Fair Housing Act
    Accessibility Guidelines. Additionally, the Manual contained non-
    binding recommendations about how builders and developers could design
    accessible housing that met and, in some cases, exceeded the
    requirements of the Act.
        In 1998, the Manual was revised to more clearly distinguish between
    the requirements of the Act, on one hand, and design elements that were
    merely recommended, on the other. The disclaimer was eliminated. The
    revisions appear in approximately 25 of the Manual's 350 pages.
                idaho fair housing council accessibility issues
        Question. In addition, it seems that the HUD grantee in Idaho, the
    Idaho Fair Housing Council, is suddenly filing large numbers of
    complaints, when previously there were very few and we still don't have
    a single case of a disabled individual being denied housing. Can you
    explain the process that is used to control and oversee what the HUD
    grantees are doing in the states?
        Answer. The number of complaints may seem large until you consider
    the number of Americans having disabilities. A 1997 Census Bureau
    publication reported that, at the end of 1994, 20.6 percent of the
    population, about 54 million people, had some level of disability, and
    26 million people had a severe disability and 1.8 million Americans
    used a wheelchair. An additional 5 million used a cane, crutches, or a
    walker and had used these assistive devices for 6 months or longer.
        The level of need for accessible units in Idaho is consistent with
    these national statistics. In a 1999 article in the Idaho Statesman,
    Kelly Buckland, Executive Director of the State Independent Living
    Council, states: ``People with disabilities tell us over and over * * *
    that accessible and affordable housing is one of the two top issues for
    them in the state.'' Buckland added:
        ``What you'll hear from owners and builders is that there's not
    that many people with disabilities. But 45 percent of the households in
    Idaho contain someone with a disability.''
        Similarly, a January 24, an 1999 Idaho Statesman article told of
    two retirees who were evicted from their room in a home allegedly
    because the husband's health deteriorated and he needed a ramp or
    handrail to get into the house.
        We see our FHIP grantees as pivotal in protecting the rights of
    these Americans. The control and oversight for the FHIP grantees are
    pretty typical for grantees of any Federal agency.
        To be funded, grantees must demonstrate the need for the proposed
    funding in their communities. HUD awards grants based on the extent to
    which their application demonstrates the need for such funding, among
    meeting other conditions, and then it negotiates a Statement of Work,
    and monitors the performance under that Statement of Work. Please note
    that in addition to the disability cases they brought, they referred to
    HUD numerous cases from people alleging a broad range of discriminatory
    practices, including discrimination on the basis of national origin and
    gender. The 1999 FHIP NOFA has some new requirements, which strengthen
    HUD oversight of the FHIP organizations. With two exceptions, all
    complaints resulting from HUD-funded activities must be filed with HUD.
    The exceptions are:
      --a ``bona fide'' private complainant can opt-out by stating in
            writing (s)he does not want the complaint filed with HUD; and
      --FHIP grantees are not to refer any complaint to HUD unless it is
            fully jurisdictional under the FHAct and supported by credible
            and legitimate evidence.
        HUD will use these standards in negotiations with grant recipients.
    Moreover, HUD's upcoming GTR training in July will help HUD field staff
    better assess the quality of the deliverables, including complaint
    referrals.
       fair housing educational and technical assistance to industry and
                            construction professions
        Question. I also have concern over the educational efforts in this
    area. GAO reports show that between 1989 and 1997, HUD made available
    more than $98 million to private groups through the Fair Housing
    Initiative Program (FHIP) to work on enforcement activities, staff
    training and testing and complaint process. However, less than one
    percent of this funding was targeted to provide educational and
    technical assistance to the industry and construction professions. Can
    you explain how you expect building contractors to comply with HUD
    regulations if you don't educate and provide outreach to them?
        Answer. We agree that education is critically important. In fact,
    if you look closely at the $98 million figure cited in the GAO report,
    you will see that it includes $23.4 million for the education and
    outreach initiative. So in other words, 24 percent of the total FHIP
    expenditures from 1989 to 1999 went to education and outreach. A
    portion of that figure included education and outreach efforts to
    industry and construction professions.
        Ordinarily, education and outreach efforts are open to anyone
    interested, and a full range of affected groups and organizations are
    invited, which includes the various housing industry groups.
        Generally, we would expect the building and construction industry
    to be aware of the accessibility requirements; compliance with the
    American National Standard Institute's standards (ANSI A117.1), which
    have been the standards for the building industry since 1961,
    constitutes compliance with the Fair Housing Act. This has been the
    case since the Act was amended in 1988 to include the accessibility
    standards. It is important to note again that the accessibility
    requirements are embodied in the legislation. HUD issued guidelines
    published in the Federal Register in 1991 and further guidance in the
    Federal Register in 1994. The Department has continued to provide
    additional guidance in a series of publications.
        Looking at Idaho more specifically:
      --HUD began holding seminars for local officials and the building
            industry in Idaho on accessibility requirements in 1994. Other
            seminars were held in 1996 and in 1997. The seminars covered
            both federally assisted housing projects and private housing
            developments. HUD continues to hold these seminars;
      --In 1994, HUD's Idaho State office began distributing accessibility
            brochures for builders and architects;
      --In September 1996, the Idaho Fair Housing Council wrote local
            officials throughout Idaho requesting their assistance in
            advising the affected building industry of the FHAct's
            requirements;
      --Throughout 1997 and 1998, HUD engaged in dialogue with the City of
            Boise and its building department about notifying builders of
            the coverage and accessibility requirements of the Act;
      --HUD awarded a Fair Housing Initiative Program grant to the National
            Association of Home Builders to conduct accessibility seminars
            across the country. One of those sessions was held in Boise,
            Idaho in 1998; and
      --Recently, as an outgrowth of a conciliation agreement, a builder in
            Pocatello, Idaho sponsored a seminar on the accessibility
            requirements for the industry in eastern Idaho. Although 400
            people were notified, fewer than 40 people attended, and most
            of those in attendance were code enforcement people.
               real estate agents accessibility responsibilities
        Question. I have heard from many real estate agents in Idaho who
    are concerned that they will be held liable for facilitating
    transactions of homes that do not meet the accessibility guidelines for
    the disabled. Can you clarify for me what position HUD has taken on
    this issue?
        Answer. The Department's position is that real estate agents are
    not liable under the Fair Housing Act for facilitating transactions of
    homes that do not meet the accessibility guidelines for the disabled.
    The Department would not accept a Fair Housing Act complaint seeking to
    name a real estate agent as a respondent to the complaint based solely
    on the fact that the real estate agent facilitated a real estate
    transaction. Instead, a real estate agent or any other person who
    participated in the design or construction of a covered multifamily
    dwelling unit that does not meet the design and construction
    requirements of the Act, including as an owner of the property or as a
    property manager, however, would be an appropriate respondent to a Fair
    Housing Act complaint. We expect that these instances will be
    exceedingly rare.
         available hud technical assistance on fair housing guidelines
        Question. In addition if a Realtor, or a consumer, were going to
    list a piece of property today, where would they go for technical
    assistance to determine if a property complies with the Fair Housing
    guidelines? Does HUD provide this information? If not, why not?
        Answer. The Realtor or consumer seeking technical assistance on the
    Fair Housing guidelines should come to HUD. The Department will respond
    to telephone and written inquiries. As you can see from the listing
    below, the Department provides a number of documents and technical
    assistance materials that explain these requirements.

    ------------------------------------------------------------------------
                  Item Number                             Title
    ------------------------------------------------------------------------
    2440...................................  24 CFR 1 Fair Housing
                                              Accessibility Reg.-24 CFR,
                                              Chapter 1 Questions and
                                              Answers
    2429...................................  Federal Register--Monday
                                              January 23, 1989 Part III 24
                                              CFR 14 et al. Implementation
                                              of the Fair Housing Amendments
                                              Act of 1988; Final Rule
    4826...................................  June 28, 1994; Fair Housing:
                                              Accessibility Guidelines;
                                              Question and Answers;
                                              Supplement to Notice
    4682...................................  Architects and Builders: Are
                                              You in Compliance with the
                                              Fair Housing Act
    4703...................................  Seven Technical Requirement
                                              Brochure
    4715...................................  Fair Housing Act: Design Manual
                                              (WIRE-PALETTED) (also order
                                              item #4889 with this item)
    4725...................................  Federal Register-March 6, 1991
                                              Part VI-24 CFR Chapter 1 Final
                                              Fair Housing Accessibility
                                              Guidelines
    4734...................................  Cost of Accessible Housing
    4889...................................  Revision Sheets of Fair Housing
                                              Act Design Manual (also order
                                              item #4715 with this item)
    ------------------------------------------------------------------------

        In addition to the above, a 28:09 minute videotape ``Accessible
    Housing: HUD Fair Housing Accessibility Guidelines'' is available.
    Anyone can request any of these materials through:
      -- http://www.hud.gov/ (under ``handbooks/forms'')
      --(202) 708-2313
      --(800) 767-7468
      --(800) 877-8339 TDD
      --U.S. Department of Housing and Urban Development Directives
            Distribution Section Room B-100 451 Seventh Street, S.W.
            Washington, D.C. 20410
        Some items are out of print, but print orders can be placed if
    there is demand for them.
            management and marketing firms for property disposition
        Question. As you know, last year Congress passed legislation that
    allowed HUD to change the process of granting contracts to local REAMs.
    Now HUD gives the contracts to companies known as ``M&M's. These
    Management and Marketing firms were intended to increase the turnaround
    time on reselling the homes. However, I have heard concerns from the
    state that this process is not working. Mr. Secretary, I am interested
    in how your would rate the success of this program so far and your
    opinion on whether it is accomplishing its goals? Additionally, can you
    tell me the current status of how Intown Marketing--the M&M in Idaho--
    is performing?
        Answer. On March 29, 1999, the seven management and marketing
    contractors assumed responsibility for approximately 28,000 HUD-owned
    properties nationwide. Prior to this date, the Department removed
    approximately 16,000 properties from the market for sale to allow for
    the transition to the management and marketing contractors. The
    management and marketing contractors were required to resecure all of
    the transferred properties, reclean the properties and prepare new
    marketing plans for each property. Given this large-scale portfolio
    transfer, the contractors have been able to list approximately 25,000
    properties for sale and sell approximately 15,000 properties in this 3-
    month period. Last fiscal year, the Department sold 64,536 properties.
    This is early in the assessment of the performance of these
    contractors. However, at the current rate of sales by the contractors,
    they have the ability to surpass the Department's sales for a year by
    as much as 12,000 properties. This is a promising trend and this type
    of performance is expected to continue throughout the contract period.
        With regard to the performance of the Intown Management Group in
    Idaho, the Department initially transferred 28 properties to this
    contractor. There are currently 29 properties listed for sale while 21
    properties have been sold since contract inception. The current numbers
    reflect the contractor's ability to list and sell properties in the
    Idaho area.
          hud's fair housing education efforts and measurement of its
                                 effectiveness
        Question. HUD's fiscal year 2000 annual performance plan contains a
    goal to ensure equal opportunity in housing for all Americans. However,
    the objectives and performance indicators are predominantly related to
    managing complaints and enforcement actions. What strategies will HUD
    use to increase awareness of the fair housing provisions?
        Answer. The Department believes strong action is needed to rid this
    nation of housing discrimination. Therefore, the Department is
    stressing enforcement of the Fair Housing Act in its Annual Performance
    Plan (APP).
        As you suggest, however, enforcement actions are not the sole
    method for eliminating housing discrimination. HUD's strategy is to
    educate the housing industry and the public primarily through the FHIP
    program. In fact, $15.75 million of the $27 million total requested for
    FHIP programs in fiscal year 2000 would fund National Education and
    Outreach Grants program.
        The following efforts to educate the building industry in Idaho
    about accessibility requirements exemplify HUD's strategies:
      --HUD began holding seminars for local officials and the building
            industry in Idaho on accessibility requirements in 1994. Other
            seminars were held in 1996 and in 1997. The seminars covered
            both federally assisted housing projects and private housing
            developments. HUD continues to hold these seminars;
      --In 1994, HUD's Idaho State office began distributing accessibility
            brochures for builders and architects;
      --In September 1997, the Idaho Fair Housing Council wrote local
            officials throughout Idaho requesting their assistance in
            advising the affected building industry of the FHAct's
            requirements;
      --Throughout 1997 and 1998, HUD engaged in dialogue with the City of
            Boise and its building department about notifying builders of
            the coverage and accessibility requirements of the Act;
      --HUD awarded a Fair Housing Initiative Program grant to the National
            Association of Home Builders to conduct accessibility seminars
            across the country. One of those sessions was held in Boise,
            Idaho in 1998; and
      --Recently, as an outgrowth of a conciliation agreement, a builder in
            Pocatello, Idaho sponsored a seminar on the accessibility
            requirements for the industry in eastern Idaho. Although 400
            people were notified, fewer than 40 people attended, and most
            of those in attendance were code enforcement people.
        Question. How will HUD measure the effectiveness of these efforts?
        Answer. The APP states that the Department will conduct a survey to
    assess public knowledge of fair housing law. It will take the form of a
    random dialing telephone survey in 2000. The information resulting from
    this survey will form a baseline against which progress in educating
    the public about fair housing will be measured in subsequent surveys.
        Question. Why doesn't the plan cover all these activities?
        Answer. Outcome Indicator 2.1.3 of the APP calls for raising public
    awareness of fair housing law. It states:
        ``Public awareness of the law concerning fair housing reduces
    discriminatory actions, but no nationally available data exist to
    estimate the extent of awareness. This indicator tracks the effect of
    fair housing enforcement activities and of public information campaigns
    such as the National Education and Outreach Grants program on public
    understanding of their rights and responsibilities under the law.''
         hud oversight of state disability related enforcement efforts
        Question. In 1989, the Fair Housing Act was amended to cover
    persons with disabilities. Shortly afterward, HUD delegated enforcement
    authority for these amendments to each state that had a statute that
    was equivalent to the federal law. Subsequently, HUD has issued more
    guidelines that expanded the requirements for building units that would
    comply with the amendments. What efforts has HUD taken to ensure that
    the states to which enforcement authority was delegated comply with the
    more recent guidelines?
        Answer. State and local agencies are bound by their respective
    laws/ordinances/regulations. The Fair Housing Act (FHAct) requires that
    those laws be substantially equivalent--not identical to the FHAct. If
    a difference in interpretation arises between the State/local law and
    the FHAct after substantial equivalency status is awarded, the
    Department may determine the change is of such consequence that the law
    is no longer substantially equivalent or it may, by mutual consent,
    retain jurisdiction over certain categories of claims (i.e., the state
    would not handle certain categories of complaints). The Department
    would become aware of such differences in one of two ways: (1) the
    agency notifies the Department of the change, or (2) in assessing
    complaints processed by the agency for payment.
        The Department provides guidance to substantially equivalent
    agencies in a variety of ways: annual HUD-sponsored training, technical
    assistance from the Government Technical Representative or local HUD
    enforcement office, direct mailings and on the HUD website.
        Question. How does HUD monitor the enforcement activities in these
    states?
        Answer. HUD monitors the activities of the agencies through
    technical assistance, on-site performance evaluations, review of the
    cases submitted by the agencies for payment, and training.
        Question. How does HUD ensure that its enforcement activities in
    states where enforcement authority is not delegated is equivalent to
    the activities in other states?
        Answer. In states that are not substantially equivalent, there is
    no delegation of enforcement authority. The Department maintains
    responsibility for processing all such complaints under the Federal
    Act.
                                     ______

                       Questions Submitted by Senator Kyl

                       violations of the fair housing act
        Question. On October 28, 1998, HUD published a proposed Rule on
    ``Fair Housing Performance Standards for Acceptance of Consolidated
    Plan Certifications and Compliance with Community Development Block
    Grant Performance Criteria.'' It is my understanding that this Rule
    would have denied CDBG funds to any locality that was so much as
    accused of violating the Federal Fair Housing Act. In your view, is it
    fair to penalize communities that are merely accused of being in
    violation of the Fair Housing Act? Does the concept of due process not
    require that an actual violation--not the allegation of one--be found
    before communities are penalized?
        Answer. HUD agrees it is not fair to penalize communities that are
    merely accused of being in violation of the Fair Housing Act and has
    never proposed any such approach. A ``charge'' of a violation of the
    Fair Housing Act by HUD is not mere accusation or allegation. Pursuant
    to the Fair Housing Act regulations, HUD may only issue a charge after
    HUD has:
      --determined that the allegations state a claim under the Fair
            Housing Act;
      --determined that the claim is timely;
      --determined that the complainant has standing to assert the
            violation;
      --notified the respondent of the Fair Housing Act complaint;
      --permitted the person to submit any evidence that responds to the
            allegations;
      --investigated the complaint, including exculpatory evidence;
      --attempted to conciliate the complaint; and
      --based upon its full investigation and all evidence submitted by
            both parties, determined that reasonable cause exists to
            believe a discriminatory housing practice has occurred.
        The issuance of such a charge requires the concurrence of HUD's
    Office of General Counsel.
        The proposed rule does not address or change the existing due
    process requirements in the Consolidated Plan and CDBG program
    regulations. The due process already required by HUD regulations for
    CPD actions would continue to apply to the disapproval of the
    affirmatively furthering fair housing certification in the Consolidated
    Plan and to the imposition of corrective actions to address deficient
    affirmatively furthering fair housing performance under the CDBG
    program. In other words, the fair housing matters would be subject to
    exactly the same due process requirements that apply to CPD concerns.
        Question. I understand that HUD did not adequately consult with
    cities and fair housing advocates before drafting and publishing this
    Rule. Given that the Rule has been withdrawn, does HUD intend to work
    with city leaders and fair housing advocates to draft new fair housing
    guidelines that have the understanding and support of the stakeholders?
        Answer. HUD did not issue a final rule on this; HUD issued a
    proposed rule. The Administrative Procedures Act normally calls for a
    consultation process before an agency issues a final rule. The
    consultation process ordinarily consists of notifying the public of the
    proposed rule through publication in the Federal Register and giving
    the public the opportunity to comment on the proposed rule. The issuing
    agency then examines the comments and considers them.
        HUD fully complied with these Administrative Procedures Act
    requirements. In fact, HUD extended the comment period and invited
    numerous groups (including a briefing with representatives from the
    House Majority staff of the Housing Subcommittee on Housing and
    Community Opportunity) to discuss their views during this comment
    period. As a result of these consultations, HUD withdrew the proposed
    rule. HUD intends to continue the process of consultation with
    interested parties to arrive at a rule which more clearly states HUD's
    policy.
        Question. I understand that many communities never received
    feedback from HUD on the adequacy of proposals to address impediments
    to fair housing in their comprehensive plans. Don't you think there
    should have been some constructive educational action taken before HUD
    attempted to impose punitive measures as proposed in the Rule?
        Answer. While HUD does not require prior submission and approval of
    a jurisdiction's analysis of impediments to fair housing choice, it
    promptly responds to complaints or concerns expressed by local citizens
    and groups. This may involve a review of the analysis and supporting
    documents. In addition, HUD will carefully review the performance
    indicators under the Consolidated Plan to measure the jurisdiction's
    progress toward meeting its fair housing goals.
        To assist communities in implementing their analysis of impediments
    to fair housing choice, HUD conducted 22 training sessions nationwide
    during the summer, fall, and winter of 1997. These sessions were
    attended by over 1,700 people representing CDBG and HOME grantees,
    public housing agencies, fair housing organizations, and housing
    industry groups. These sessions educated participants about the rights
    of their constituents to fair housing planning.
        In 1996, HUD published a Fair Housing Planning Guide which provided
    information on how to conduct an Analysis to Fair Housing Choice,
    undertake activities to correct the identified impediments, and the
    types of documentary records to be maintained.
                fair housing guidelines relating to group homes
        Question. Many communities in Arizona feel that HUD's fair housing
    guidelines do not grant them adequate authority to reasonably regulate
    group homes within their boundaries. For example, minimum spacing
    requirements and occupancy limits are routinely interpreted by the
    federal government as being in violation of the Fair Housing Act. The
    intent of these regulations is not to prevent group homes from being
    able to operate and provide necessary services; rather, the intent is
    to allow group homes to operate in greater harmony with the character
    of the neighborhoods in which they exist. The fiscal year 2000 budget
    proposed for HUD contains $47 million for ``Fair Housing Activities.''
    Can you assure me that HUD will not expend funds to investigate
    citizens who, in protesting the placement of group homes, are merely
    exercising their First Amendment Rights?
        Answer. HUD responsibilities for enforcement of the Fair Housing
    Act are subject to the Constitutional protections of free speech. HUD
    continues to adhere to specific guidelines that ensure that citizens'
    First Amendment rights are protected as HUD processes claims that may
    involve freedom of speech issues. All FHEO staff are bound by these
    guidelines. Moreover, the Department acknowledges the Senate's
    direction in our Appropriations Act for the last several years, which
    states that the Department may not ``investigate or prosecute...any
    otherwise lawful activity...engaged in solely for the purpose of
    achieving or preventing action by a governmental official.''
        Question. Why should the Fair Housing Act not be amended to allow
    communities greater, but reasonable, control over the placement of, and
    the number and type of occupants in, group homes within their
    boundaries?
        Answer. The issues localities raise regarding group homes are not
    best addressed in statute. A cooperative effort among all parties
    involved, including localities, housing provider groups, civil rights
    organizations and federal enforcement agencies, rather than the
    unnecessary restructuring of a historic civil rights statute, is a more
    positive and productive approach.
        A comprehensive, non-legislative approach to the group home issue
    is appropriate because much of the controversy generated on the issue
    involves such non-federal matters as licensing and monitoring. The
    scope of community concerns regarding group homes go beyond Fair
    Housing Act considerations and, in fact, consists mostly of concerns
    regarding licensing, monitoring, and compliance with local ordinances.
        Question. I understand that HUD had planned to release fair housing
    guidelines in October1994 that would clarify for localities what
    actions they could take or not take with respect to group homes. Those
    guidelines were never issued. Why?
        Answer. While HUD has not issued formal policy guidelines regarding
    group homes, on October 4, 1995, HUD responded in detail to questions
    from the League of Cities regarding the role of the Department on
    zoning-related issues. HUD has taken other actions in several areas
    regarding group homes, including:
      --agreeing to coordinate discussion of the group home issue among
            interested parties at the request of the U.S. Conference of
            Mayors;
      --meeting with key Department of Justice (DOJ) staff to discuss
            appropriate, non-legislative responses to group home issues;
      --meeting with representatives of the National League of Cities to
            discuss group home concerns;
      --meeting with representatives of the Coalition to Preserve the Fair
            Housing Act, an ad hoc grouping of civil rights, disability and
            national community organizations, to discuss group home
            concerns;
      --attending, in an ``observer'' capacity, a meeting organized by the
            National League of Cities designed to discuss non-legislative
            responses to issues raised by pending legislation;
      --meeting with the Department of Health and Human Services Assistant
            Secretary for Planning and Evaluation to discuss group homes,
            and obtaining information from HHS on state regulation of group
            homes; and
      --reviewing HUD programs which may involve group homes.
                                     ______

                    Questions Submitted by Senator Campbell

                                    nahasda
        Question. Though you have repeatedly recognized the ``third world
    conditions'' of Indian housing, fiscal year 2000 funding for the Native
    American Housing Assistance and Self-Determination Act (NAHASDA) Block
    Grant did not receive the requested 10 percent increase that the rest
    of HUD and its programs received. If Native American housing represents
    the worst in the nation, why did it not receive a 10 percent increase
    in requested funding?
        Answer. Although the Department's overall Budget request for fiscal
    year 2000 reflects an increase, the increase was not spread evenly
    across all programs. However, the President's fiscal year 2000 Budget
    request continues to support the fiscal year 1999 Budget increases
    provided for the Indian Housing Block Grant (IHBG) program, the Section
    184 Indian Housing Loan Guarantee Fund and the Indian Community
    Development Block Grant program. Other programs proposed for fiscal
    year 2000 from which Indian Tribes and their Tribally Designated
    Housing Entities are expected to benefit include the Welfare-to-Work
    Section 8 Voucher Program (25,000 units requested), and Service
    Coordinators for the Elderly, proposed to be funded at $50 million.
        As the implementation of IHBG progresses, the Department must
    ensure that tribal management and operational capability exists. Some
    larger tribes now receive significantly more funding post-NAHASDA than
    they received under pre-NAHASDA programs. The Department is confident
    that the funding proposed for Indian programs in the President's fiscal
    year 2000 Budget request is the optimum amount that can be prudently
    managed in Indian Country while maintaining the integrity of both the
    programs and Federal funds.
                                    nahasda
        Question. The Committee on Indian Affairs has received complaints
    from tribes regarding the confusion over NAHASDA's environmental review
    process, inadequate consultation, and lack of Title VI implementation.
    Please describe the Department's proposals to address each of these
    matters.
        Answer. The Department's proposals to address (a) environmental,
    (b) consultation and (c) Title VI implementation concerns of the
    Committee on Indian Affairs are as follows:
        a. Environmental Concerns.--The Department has taken a number of
    initiatives to eliminate confusion about the tribal environmental
    review process. Prior to the passage of NAHASDA, HUD maintained the
    lead role in ensuring that affordable housing activities complied with
    the National Environmental Protection Act (NEPA) and related laws.
    Under NAHASDA, tribes may either perform such reviews or request HUD to
    conduct them. While most tribes successfully perform their
    environmental reviews, a few tribes have started projects without
    completing the requisite environmental reviews. Of 27 environmental
    problems discovered recently, virtually all have been resolved
    successfully without any loss of grant funds.
        Basic environmental training has been provided by the Department at
    11 locations throughout the United States to over 300 NAHASDA grantees
    and Office of Native American Programs (ONAP) staff. During the
    remainder of this calendar year, HUD will conduct advanced training for
    grantees and ONAP staff at approximately 12 additional locations. Other
    actions include:
      --1. each ONAP Office has a designated Environmental Liaison Officer
            to provide technical assistance, and provide guidance, as
            requested;
      --2. publication and distribution of an Environmental Guidebook to
            all grantees; and
      --3. a memorandum to be issued shortly to all Area ONAP
            Administrators detailing environmental review requirements,
            along with technical guidance on how to proceed when defects in
            environmental reviews are discovered.
        The Department's primary objectives are twofold: (1) to continue to
    work with tribes until they are capable of assuming the environmental
    requirements, and (2) to monitor and promote environmental regulatory
    compliance.
        b. Consultation Concerns.--The Department strongly supports the
    concepts of Indian self-determination and the government-to-government
    relationship. The Department has had an American Indian and Alaska
    Native Consultation Policy in place since 1994. That document, issued
    in response to the President's Memorandum of April 29, 1994, reaffirmed
    the government-to-government relationship between Federally recognized
    Indian tribal governments and the United States government. The Office
    of Native American Programs subsequently conducted regional
    consultation sessions on the policy throughout Indian Country and
    received input from tribal leaders on how best to implement it.
        On May 14, 1998, the President issued Executive Order 13084, which
    required Federal agencies to develop an effective process for elected
    officials of tribal governments to provide meaningful and timely input
    in the development of regulatory policies that would significantly or
    uniquely affect Native American communities.
        During the March 1999, ``Shared Visions: The Native American
    Homeownership, Legal and Economic Development Summit I,'' in Chicago,
    the Department presented a revised draft consultation policy and
    procedures document to tribal leaders and other participants. At that
    time, Secretary Cuomo met personally with tribal leaders to express the
    Department's commitment to tribal consultation.
        More recently, on June 4, 1999, the Department released a letter to
    all tribal governments inviting them to participate in redrafting the
    Department's consultation policy. The letter explained the Department's
    initiative, included an Action Plan, and requested their active
    participation in developing the final policy.
        c. Title VI Implementation.--The Title VI Tribal Housing Activities
    Loan Guarantee Program was announced on July 23, 1998. To ensure that
    the $6 million loan guarantee program is implemented successfully, the
    Department contracted with a TA and capacity-building provider using a
    $3 million Rural Housing and Economic Development Initiative grant. The
    contractor may work directly with tribes, or act in coordination with
    another Technical Assistance (TA) provider of the applicant's choice.
    In either case, TA will be provided free of charge to applicants. The
    grant is expected to help ensure that proposals are well-conceived, and
    should increase every applicant's chances for success.
        As of June 12, 1999, the contractor, IHA Management Systems,
    reports that they are assisting six tribes/tribally designated housing
    entities develop a Title VI loan project plan. Three additional
    potential participants have taken the required preliminary steps toward
    project development.
                                    nahasda
        Question. Some tribes, including Lower Elwha, Yakima Nation, and
    Coeur d'Alene have experienced situations where HUD has informed the
    tribes that a one page environmental review document was `incomplete'
    and consequently, all NAHASDA money was to be returned to HUD. What
    will HUD do to ensure that the environmental review process is better
    communicated to tribes?
        Answer. In addition to the steps outlined in the above response on
    this issue, the Department has issued guidance to the six Area ONAP
    Administrators that no NAHASDA grant funds will be withdrawn due to
    environmental infractions without a thorough and fair assessment of the
    matter with the grantee.
                                    nahasda
        Question. Tribal leaders have expressed concerns to both the
    Committee on Indian Affairs and HUD regarding the lack of consultation.
    President Clinton has directed, through an Executive Order, that all
    agencies promulgate a written consultation process. Though HUD states
    that it has a written consultation process with American Indians and
    Alaska Natives, obviously, this process has some wrinkles in it. What
    tangible steps have been taken to improve the consultation process
    after the implementation of NAHASDA?
        Answer. The Department strongly supports the concepts of Indian
    self-determination and the government-to-government relationship. The
    Department has had an American Indian and Alaska Native Consultation
    Policy in place since 1994. That document, issued in response to the
    President's Memorandum of April 29, 1994, reaffirmed the government-to-
    government relationship between Federally recognized Indian tribal
    governments and the United States government. The Office of Native
    American Programs subsequently conducted regional consultation sessions
    on the policy throughout Indian Country and received input from tribal
    leaders on how best to implement it.
        On May 14, 1998, the President issued Executive Order 13084, which
    required Federal agencies to develop an effective process for elected
    officials of tribal governments to provide meaningful and timely input
    in the development of regulatory policies that would significantly or
    uniquely affect Native American communities.
        During the March 1999, ``Shared Visions: The Native American
    Homeownership, Legal and Economic Development Summit I,'' in Chicago,
    the Department presented a revised draft consultation policy and
    procedures document to tribal leaders and other participants. At that
    time, Secretary Cuomo met personally with tribal leaders to express the
    Department's commitment to tribal consultation.
        More recently, on June 4, 1999, the Department released a letter to
    all tribal governments inviting them to participate in redrafting the
    Department's consultation policy. The letter explained the Department's
    initiative, included an Action Plan, and requested their active
    participation in developing the final policy.
                                    nahasda
        Question. Why has HUD eliminated funding for the Title VI program
    under NAHASDA?
        Answer. Although not requested as a separate program, the
    President's fiscal year 2000 Budget request does, in fact, propose $5
    million for Title VI within the requested appropriation for the Indian
    Housing Block Grant.
                                     ______

                      Question Submitted by Senator Leahy

                       section 8 project-based contracts
        Question. I have heard from many Vermonters about the affordable
    housing crisis in our state. The number of Vermonters waiting for
    federal housing assistance has steadily grown and the waiting list for
    people seeking Section 8 rental subsidies has been as high as 2\1/2\
    years. I support your efforts at addressing this crisis with the
    addition of 100,000 new rental assistance vouchers.
        However, I did notice in GAO's January report on HUD's Major
    Performance and Management Issues, that there remains a concern
    identified originally in a July 1998 GAO report. The concern is over
    HUD's ability to adequately monitor funds that are no longer needed for
    specific Section 8 project-based contracts. GAO reports that if HUD had
    identified and deobligated these funds, it could have recaptured and
    used them to reduce the Department's request for Section 8 funding.
    Your budget summary mentions that the Department began last year with a
    comprehensive reform of the administration of Section 8 project-based
    contracts. What steps has the Department taken under the 2020 reform
    plan to address this problem? Have you taken steps to recapture these
    deobligated funds.
        Answer. The principal reform proposed by the Department with
    respect to the administration of project-based section 8 contracts is
    our initiative to expand the use of contract administrators. Currently,
    such contract administration is used only for state housing agency
    financed projects. The Department now has issued a solicitation of
    interest to identify potential administrator for the balance of our
    project-based section 8 portfolio. These contracts will be performance-
    based to provide incentives for more effective administration, and will
    free up civil service personnel in our field offices for other pressing
    multifamily management and development responsibilities.
        With respect to the issue of recaptures of remaining balances on
    section 8 contracts that have reached their initial expiration date,
    the Department has focused considerable attention on developing a means
    of identifying such balances available for recapture which minimizes
    staff-intensive effort and avoids the potential for deobligating funds
    needed to satisfy owner claims or adjustments which can occur following
    contract termination. While these procedures are being refined, in
    August, 1998, a total of $412 million was recaptured, and in November,
    another $1.29 billion was identified and recaptured. These amounts are
    being applied against the $1.65 rescission enacted in the fiscal year
    1999 Appropriations Act. The Department is in the process of preparing
    for another round of recaptures this summer which coincides with a
    large number of additional initial contract expirations, particularly
    in the Loan Management Setaside (LMSA) inventory. Initial estimates
    indicate that up to $1.5 billion may be available for recapture from
    these contracts. This recapture was anticipated in the Administration's
    pending budget request for fiscal year 2000, which assumes the use of
    $2 billion from such recaptures to offset the requirement for new
    appropriations to meet program level requirements for contract renewals
    and amendments.

                              subcommittee recess

        Senator Bond. We thank you, Mr. Secretary----
        Secretary Cuomo. Thank you.
        Senator Bond [continuing]. For a worthwhile hearing.
        And rather than ending with a whimper, we will end this
    hearing with a bang. Thank you.
        Secretary Cuomo. Thank you, sir.
        [Whereupon, at 11:40 a.m., Thursday, April 22, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

     DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2000

                                  ----------

                            THURSDAY, APRIL 29, 1999

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:30 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Christopher S. Bond (chairman)
    presiding.
        Present: Senators Bond, Burns, Craig, Kyl, Mikulski, Leahy,
    Lautenberg, Harkin, and Byrd.

                        ENVIRONMENTAL PROTECTION AGENCY

    STATEMENT OF CAROL M. BROWNER, ADMINISTRATOR
    ACCOMPANIED BY:
            SALLYANNE HARPER, CHIEF FINANCIAL OFFICER
            PETER ROBERTSON, ACTING DEPUTY ADMINISTRATOR

                    OPENING STATEMENT OF CHRISTOPHER S. BOND

        Senator Bond. Good morning, the subcommittee will come to
    order. We meet this morning to take testimony from the
    Environmental Protection Agency and the Council on
    Environmental Quality for the Administration's fiscal year 2000
    budget request for these agencies.
        We also have three pieces of testimony for the record from
    the General Accounting Office on EPA information management
    concerns, the Superfund program, and the new Chemical Safety
    and Hazard Investigation Board.
        We welcome EPA Administrator Browner, Deputy Administrator
    Peter Robertson, the Chief Financial Officer Sallyanne Harper
    and the rest of the EPA team. We, also, welcome for the first
    time before the subcommittee CEQ acting chairman George
    Frampton.
        Today marks the last day of hearings for the fiscal year
    2000 cycle for this subcommittee. Our next step will begin to
    craft the fiscal year 2000 VA-HUD bill. This is going to be a
    very difficult task this year because the caps imposed by the
    budget agreement will result in a real reduction of almost $30
    billion in discretionary spending below the current level.
    Within this subcommittee's portfolio there are many critical
    requirements. One of our most significant concerns will be
    veterans' medical care. The President's budget proposes no
    increase for veterans' medical care despite increases in many
    other programs and agencies. Yet VA has identified more than $1
    billion in unbudgeted needs associated with treating patients
    with Hepatitis C, providing emergency care in non-VA hospitals,
    homelessness activities and long-term care for the aging
    veteran population.
        Without some increase in the budget, VA expects to lay off
    about 8,500 personnel in its hospitals. This process has
    already begun and many members of this subcommittee are hearing
    from their constituents about the problems in their VA
    facilities. We, on this subcommittee, are committed to ensuring
    that the quality of care in VA medical facilities does not in
    way deteriorate because of the budget situation, and based on
    my prior experience with this bill, I can assure you that an
    overwhelming bipartisan majority in the United States Congress
    will feel the same way.
        We can also expect FEMA disaster relief requirements for
    fiscal year 2000 of several billion dollars which has not been
    budgeted for. FEMA's annual disaster relief costs are running
    close to $3 billion and we have no reason to believe we won't
    have disaster costs next year in keeping with historical
    averages.
        In fact, there is a laundry list of other concerns I could
    cite. Clearly with an allocation which is expected to be well
    below last year's level, coupled with many critical
    requirements within this subcommittee's portfolio, every
    agency's budget request will be scrutinized closely and we'll
    have a tough time meeting the President's request in many, if
    not, most instances, for additional funding.
        EPA's budget request totals $7.2 billion. This is a
    reduction of $384 million below current levels because EPA has
    cut the State Revolving Fund for clean water infrastructure by
    $550 million as well as other congressional priorities.
    However, many of other activities are slated for significant
    increases and one major new program is proposed. The budget
    includes $3.7 billion for the operating programs, an increase
    of 5.5 percent over current levels; $1.6 billion for the trust
    funds, including $1.5 billion for Superfund; and 1.9 billion
    for air and water and infrastructure financing.
        Unfortunately, once again there is no evidence that the
    budget request is based on priorities which will best protect
    the environment and improve human health. Instead it appears
    that political considerations, pet projects and photo ops may
    be guideposts used in putting this budget proposal together.
    Let me give you one simple example. You proposed a $200 million
    grant program called the Clean Air Partnership Fund for which
    there is no specific authorization, no stated criteria, no
    clearly defined goals. This program has been likened by some
    early analysts to a ``funded unmandate.'' Meanwhile, after
    funding the new unmandate with the catchy slogan, the
    President's budget slashes the Clean Water State Revolving Fund
    by over a half a billion dollars, a program which has a
    specific purpose, a specific authorization and an enormous
    identified unmet need.
        I just do not believe that is right. We all know the Clean
    Water SRF has a proven track record. It helps meet an EPA-
    identified, nationwide need which last year was put at $140
    billion for waste water infrastructure financing and which
    results in demonstrable improvements in water quality of our
    nation's rivers, lakes and streams. The Federal investment in
    capitalization grants to date has been roughly doubled through
    leverage bond proceeds and state matching funds, making this a
    greater Federal state partnership. It is a program which works
    and which is needed.
        And we all understand what EPA's primary responsibilities
    are supposed to be. It's on your Web site. The mission of the
    EPA is to protect human health and safeguard the environment,
    air, water and land upon which life depends. Apparently
    somebody at OMB did not log on to the mission statement. The
    Agency's budget request is only $800 million for clean water
    infrastructure, a cut of some $550 million.
        It's particularly curious that this effective program is
    being cut despite the President's statements that clean water
    is a top environmental priority. And even more astonishing is
    that this cut comes about as your own agency is revising, we
    believe upwards, the actual unmet need. While tremendous
    progress has been made in improving water quality since passage
    of the Clean Water Act 27 years ago, much remains to be done.
    About 40 percent of surface waters today are not clean enough
    to support such basic uses as fishing and swimming. To put it
    plainly, EPA proposes a cut of 41 percent to the Clean Water
    SRF, an effective program designed to meet specific Federal
    water quality mandates.
        Let's understand what we are talking about. Summer is just
    around the corner. More than 46 million school children in this
    country are getting ready for a vacation. The vacation spots of
    their choice will be our nation's beaches, rivers, lakes and
    streams. That is why I call on you and the EPA to get back to
    the basics. Let's revisit the priorities. Let's ensure that our
    children and families are protected, not backpedal on the
    progress we've made. Let me assure everyone that one of the
    highest priorities that I will pursue, to the extent our
    allocation will allow, will be restoring the cut to the Clean
    Water State Revolving Fund.
        The second example I'd cite of concern is the President's
    proposed doubling of the Climate Change Technology Initiative
    to $216 million, again, as far as I can tell, not based on a
    national assessment of rational priorities but seemingly due to
    political considerations. At the same time, EPA proposes to cut
    drinking water research even while the agency acknowledges it
    will have insufficient data to meet the mandate to promulgate
    new drinking water regulations in the next few years. Yet
    compliance costs associated with some of the new regulations
    likely will be great. EPA officials themselves told GAO
    investigators that the new demands cannot be met by shifting
    resources, without sacrificing quality or missing statutory
    deadlines. Initial EPA estimates is that annual funding
    shortfall for research and data collection will be in the range
    of $10 million to $20 million per year for fiscal years 1999
    through 2005. That this activity should be cut while doubling
    the Climate Change Technology Initiative and creating a new
    clean air program seems to defy logic.
        Once again, it looks as though the EPA is more interested
    in channeling money into new programs and questionable pet
    projects while at the same time slashing the vital programs
    that we have for our basic environmental needs. It begs a
    question: Why? Why should we slash these programs when they are
    the ones that are the basic mission and the ones that we know
    work?
        EPA has requested $63-plus million for children's health
    but at the same time the scientific magazine Chemical and
    Engineering News said as of June 1998, because all air
    pollutants have fallen in the past 20 years, trying to
    associate falling air pollution with increasing asthma rates
    flies in the face of logic. We support activities to improve
    the health and well-being of children but we must support
    activities which are grounded in science, not simply what we
    wish science to be.
        The Inspector General has listed ten major management
    concerns at EPA, number one being accountability. We are
    concerned about EPA's forays into land use planning and
    transportation issues. The IG has also raised considerable
    concerns regarding inadequate oversight by EPA in its grants
    and assistance agreements despite the recognition since at
    least 1996 that this was a problem. We intend to hold EPA fully
    accountable.
        We also have concerns regarding EPA's implementation of the
    Government Performance and Results Act. The Results Act needs
    to be focused on effective outcomes, not bean counts.
        One of the items in this accountability list is
    environmental data systems. We have raised this question before
    because we cannot know if environmental goals are being met if
    data is of a questionable quality. Again, the EPA Inspector
    General has cited information systems as a major management
    issue.
        We commend the starts that have been made but I've not seen
    enough progress. We can't be confident about the quality of the
    data. EPA often publicizes data without any stakeholder
    consultation or even advanced notice and without taking any
    responsibility for the accuracy for the data. There is still no
    data correction process. We don't, in some instances, know how
    useful the data is, even if it's accurate. EPA told us last
    year it would be conducting a survey of the needs of American
    households but we have not seen that. There has been a
    suggestion that the number of EPA web site hits is a good
    measure. I don't think that is the best performance measure for
    EPA's right-to-know goals.
        Finally, there still is no data quality action plan. We
    acknowledge that EPA has begun to create the new information
    office to be a one-stop shop. That is a good step but we need
    to see EPA take aggressive action to establish the office
    quickly and make sure it has the authority to see that all EPA
    offices adhere to the standards set forth. We plan to hold the
    head of this office accountable for the quality and integrity
    of the data EPA releases.
        I would, also, note in passing very serious concerns about
    computer security. The Inspector General has said that the
    preliminary results of ongoing work indicate a number of
    significant and pervasive problems with the adequacy of
    existing security plans for EPA's core financial systems and
    regional systems.
        Touching briefly on the Superfund program, I'm pleased that
    EPA is meeting its site cleanup goals but we still have
    significant concerns reflecting the GAO's concerns. And I'm
    disappointed that the administration apparently is not willing
    to engage in an honest, constructive dialogue on legislative
    reforms.
        We are, also, concerned about EPA's reinvention initiatives
    and whether they are languishing. We have made little progress
    on these as these activities continue to operate at the margins
    of EPA.
        Finally, in many agencies reinvention has meant carrying
    out missions in a more cost-effective manner, doing more with
    less. We have seen this in the Veterans Health Administration
    which has lost some 20,000 employees in the past several years
    while increasing the number of patients it treats by more than
    10 percent. We have seen significant reductions at the
    Department of HUD. Yet at EPA there has been a significant
    growth in the workforce, but we don't know whether there has
    been a commensurate increase in work performed. States have
    taken on more and more of the responsibility for environmental
    programs. More than 70 percent of the programs which can be
    delegated are now being run by the States. And according to the
    Environmental Council of the States, between 1993 and 1998 the
    percent of the delegated programs grew from 41 percent to 71
    percent. And in the past decade there has been an increase of
    60 percent in the number of staff in state environmental
    agencies.
        Yet EPA's own workforce has grown tremendously. Since 1990
    the EPA workforce has grown by more than 3,000 and in that time
    we have seen only three new pieces of major environmental
    legislation. In my 4 years as chairman of this subcommittee,
    the number of EPA work-years has grown by about 500.
        Ms. Browner, you have made the workforce your highest
    priority. In the fiscal year 1999 operating plan you cut key
    programs such as NPDES permits and the Reinventing
    Environmental Information Initiative in favor of increasing
    staff above the prior-year level. Given that States are doing
    more and more, this priority raises questions with me. We have
    to ask, what are all these people doing? Only EPA's workforce,
    of all the major agencies' workforces under the jurisdiction of
    this subcommittee, has been growing in the past few years.
        Let me be clear that I believe that much of the work of the
    subcommittee will be to set funding priorities for your agency
    to ensure that our environmental programs work effectively and
    efficiently. Congress has made a commitment to protecting our
    environment both for this generation and for those to come. To
    fulfill that commitment, we have to get back to the basics for
    EPA.

                               prepared statement

        There are many, many issues. Believe it or not, I had a
    much longer opening statement which I ask unanimous consent to
    submit in full in the record. Otherwise I will read it. Hearing
    no objection, it will be so included in the record.
        [The statement follows:]

               Prepared Statement of Senator Christopher S. Bond

        The Subcommittee will come to order. We meet this morning to take
    testimony from the Environmental Protection Agency and the Council on
    Environmental Quality on the administration's fiscal year 2000 budget
    request for these agencies. We will also have 3 pieces of testimony for
    the record from the General Accounting Office on EPA information
    management concerns, the Superfund program, and the new Chemical Safety
    and Hazard Investigation Review Board.
        We welcome EPA Administrator Browner, Deputy Administrator Peter
    Robertson, Chief Financial Officer Sallyanne Harper, and the rest of
    the EPA team. We also welcome for the first time before this
    subcommittee CEQ Acting Chairman George Frampton.
        Today marks the last day of hearings for the fiscal year 2000
    budget cycle for this subcommittee. Our next step will be to begin
    crafting the fiscal year 2000 VA-HUD bill. It will be an arduous task,
    as the caps imposed by the budget agreement will result in a real
    reduction of almost $30 billion in discretionary spending below the
    current level.
        Within this subcommittee's portfolio, there are many critical
    requirements. One of our most significant concerns will be veterans
    medical care. The President's budget proposes no increase for veterans
    medical care, despite increases in many other programs and agencies.
    Yet VA has identified more than $1 billion in unbudgeted needs
    associated with treating patients with hepatitis C, providing emergency
    care in non-VA hospitals, homelessness activities, and long-term care
    for the aging veteran population.
        Without some increase in the budget, VA expects to lay-off about
    8,500 personnel in its hospitals. This process has begun already, and
    many members of this subcommittee are hearing from their constituents
    about problems in their VA facilities. We are committed to ensuring
    that the quality of care in VA medical facilities does not in any way
    deteriorate because of the budget situation.
        We can also expect FEMA disaster relief requirements in fiscal year
    2000 of several billion dollars, which has not been budgeted for.
    FEMA's annual disaster relief costs are running at close to $3 billion,
    and we have no reason to believe we won't have disaster costs next year
    in keeping with historical averages.
        In fact there is a laundry list of other concerns I could cite.
    Clearly, with an allocation which is expected to be well below last
    year's level, coupled with the many critical requirements within this
    subcommittee's portfolio, every agency's budget request will be
    scrutinized closely and we will have a tough time meeting the
    President's request in many--if not most--instances.
        EPA's budget request totals $7.2 billion. This is a reduction of
    $384 million below current levels because EPA has cut the state
    revolving fund for clean water infrastructure by $550 million and other
    Congressional priorities. However, many other activities are slated for
    significant increases, and one major new program is proposed.
        The budget includes $3.7 billion for the operating programs, an
    increase of 5.5 percent over current levels; $1.6 billion for the trust
    funds including $1.5 billion for Superfund; and $1.9 billion for air
    and water infrastructure financing.
        Unfortunately, once again, there is no evidence that the budget
    request is based on priorities which will best protect the environment
    and improve human health. Instead, it appears that political
    considerations, pet projects and photo ops are the guideposts used in
    putting together this budget proposal.
        Let me give you one simple example--your proposed new $200 million
    grant program--called the Clean Air Partnership Fund--for which there
    is no specific authorization, no specific criteria, and no specific
    goals. This program has been likened to a ``funded un-mandate.''
        Meanwhile, after funding the new un-mandate with the catchy slogan
    name, you slash the clean water state revolving fund by over a half
    billion dollars, a program which has a specific purpose, a specific
    authorization, and an enormous identified unmet need. That is just not
    right.
        We all know the clean water SRF has a proven track record, helps
    meet an EPA-identified nationwide need of at least $140 billion for
    water infrastructure financing, and results in demonstrable
    improvements to the water quality of our nation's rivers, lakes and
    streams. The federal investment in capitalization grants to date has
    been roughly doubled through leveraged bond proceeds and state matching
    funds, making this a greater federal-state partnership. It is a program
    which works.
        And we all understand what EPA's primary responsibility is supposed
    to be. It is on your website: the mission of the EPA is to protect
    human health and safeguard the environment--air, water and land--upon
    which life depends. But apparently EPA does not log onto its own
    mission, as Ms. Browner, your agency's budget request is only $800
    million for clean water infrastructure. That's a cut of $550 million
    for water infrastructure in this country.
        It's particularly curious that this effective program is being cut
    despite the President's statements that clean water is a top
    environmental priority. And even more astonishing is that this cut
    comes about as your own agency is revising--upwards--the actual unmet
    need.
        While tremendous progress has been made in improving water quality
    since passage of the Clean Water Act 27 years ago, much remains to be
    done. About 40 percent of surface waters today are not clean enough to
    support such basic uses as fishing and swimming.
        To put it plainly, EPA proposes a cut of 41 percent to the clean
    water SRF, an effective program designed to meet specific federal water
    quality mandates.
        And let's understand what we are talking about. Summer is just
    around the corner. More than 46 million schoolchildren in this country
    are getting ready for vacation. The vacation spot of their choice will
    be our nation's beaches, rivers' lakes and streams. That's why I am
    calling on you, and the EPA, to get back to the basics. Revisit your
    priorities. Let's ensure that our children and families are protected--
    not backpedal on the progress we have made.
        Let me assure everyone, one of our highest priorities to the extent
    our allocation will allow, will be restoring the cut to the clean water
    state revolving fund.
        A second example of concern is the President's proposed doubling of
    the Climate Change Technology Initiative to $216 million, again, not
    based on any rational assessment of priorities, but seemingly due to
    political concerns.
        At the same time, EPA proposes to cut drinking water research even
    while the agency acknowledges it will have insufficient data to meet
    the mandate to promulgate new drinking water regulations in the next
    few years. Yet compliance costs associated with some of the new
    regulations likely will be great.
        EPA officials themselves told GAO investigators that the new
    demands cannot be met by shifting resources without sacrificing quality
    or missing statutory deadlines. Initial EPA estimates are that the
    annual funding shortfall for research and data collection will be in
    the range of $10 million to $20 million per year for fiscal years 1999
    through 2005.
        That this activity should be cut while doubling the climate change
    technology initiative and creating a new clean air program defies all
    logic.
        Once again it looks as though the EPA is more interested in
    channeling money into dubious pet projects and undefined new programs,
    while at the same time slashing the vital programs that ensure we have
    safe and clean water. This not only unacceptable, it begs the question
    WHY? Why would EPA slash these vital programs?
        EPA also requests $63.2 million for its children's health
    initiative, with a major emphasis on childhood asthma, which EPA
    attributes to air pollution. It is interesting to note, however, that
    air quality has steadily improved over the past decade. A June 1998
    article in the scientific magazine Chemical & Engineering News said
    ``because all air pollutants have fallen in the past 20 years, trying
    to tie falling air pollution with increasing asthma rates flies in the
    face of logic ``
        Let me be clear--we support activities to improve the health and
    wellbeing of our children. But we must support activities which are
    grounded in science--not simply what one wished the science to be.
        Another major emphasis in EPA's budget is the Better America Bonds
    Initiative. EPA would have authority to select proposals for $1.9
    billion in bonding authority for projects aimed at creating open spaces
    and restoring urban areas. While no specific request is made in EPA's
    budget, EPA funding would be required for the administrative costs
    associated with running the program.
        There are major concerns with EPA playing a role in local land use
    decisions. This is another example of EPA seeking to pursue new
    activities, without any specific Congressional direction or authority,
    while many other mandated activities go without adequate attention. We
    must remember, local land use decisions are just that, local decisions.
        The Inspector General in its list of 10 major management concerns
    at EPA lists as Number 1, accountability. EPA's forays into land use
    planning and transportation issues would seem to imply EPA does not
    believe it is accountable to the Congress and the specific laws set out
    for it. Before starting up new programs, the agency should consider the
    many critical activities that come from specific statutory mandates
    that seem to be getting short shrift.
        With respect to concerns about the lack of accountability at EPA,
    the I.G. tells us that regional offices are acting largely
    autonomously, often not spending appropriated funds consistent with
    designated purposes; and enforcing regulations inconsistently. These
    are not new concerns, but apparently they have not been deemed
    important enough to be addressed in an aggressive manner by EPA
    leadership.
        The I.G. has also raised considerable concerns regarding inadequate
    oversight by EPA of its grants and assistance agreements. Despite EPA's
    recognition since at least 1996 that this was a problem, it continues
    to be a material management control weakness. We must be able to hold
    EPA fully accountable for the billions of dollars in annual grants,
    assistance agreements and contracts it oversees.
        We also have concerns regarding EPA's implementation of the
    Government Performance and Results Act, which relate closely to our
    concerns about accountability. The Results Act was intended to see that
    agencies be measured based on their performance, not ``bean counts.''
    Yet in EPA's annual plan, only about 40 of the roughly 320 performance
    measures--13 percent--that EPA has set forth are true environmental
    indicators, as opposed to bean counts. EPA continues to focus heavily
    on traditional measures such as the number of permits issued,
    inspections conducted or reports written.
        A significant aspect of EPA's ability to implement fully the
    Results Act is having environmental data systems that are timely,
    accurate and useful. We cannot know whether environmental goals are
    being met if EPA data is of questionable quality. Yet again this year,
    the Inspector General cites environmental data information systems as a
    major management issue. This is an issue this subcommittee focused a
    great deal on in last year's hearing, and while commitments were made,
    I'm afraid not enough progress has been made.
        EPA has 500 data systems, most of which operate with different
    standards and definitions, and often contain data which is out of date
    or simply inaccurate. One of EPA's 10 goals is ``Expansion of
    American's right-to-know about their environment.''
        Yet we can't be confident about the quality of the data. EPA often
    publicizes data without any ``stakeholder'' consultation--or even
    advance notice--and without taking any responsibility for the accuracy
    of the data. There is still no data correction process. And data is
    often put out for purposes other than that for which it was collected,
    leading to possible inappropriate conclusions about the information.
        In many instances, we don't know how useful the data is, even if it
    is accurate. EPA last year told us it would be conducting a survey by
    early this year of environmental information needs of American
    households. Apparently this has become a lower priority as EPA does not
    plan to complete a survey and report until the fall.
        I would suggest that the number of EPA web site ``hits'' is not the
    best performance measure for EPA's right-to-know goal. We need to find
    out how useful the information is to Americans.
        Moreover, there still is no final data quality action plan--which
    was committed to last year; there is no information plan, which GAO
    cites as a critical need; we have seen no actual burden reduction for
    facilities reporting to EPA; and many activities, such as creating
    common facility identifiers, have been in the pipeline for so long we
    wonder whether they are losing momentum and whether there is commitment
    to completing them.
        We acknowledge that EPA has begun to create a new information
    office ostensibly to be the ``one-stop shop'' to provide uniformity in
    the agency's approach to information management, and to address the
    need to ensure that data is accurate, reliable, and consistent. This is
    a good step.
        But we need to see EPA take aggressive action to establish the
    office quickly, and ensure it is vested with the authority it needs to
    see that all EPA offices adhere to the standards it sets forth. We
    don't want to repeat the problem we've seen in the area of peer review,
    where the office which developed the polio,--the R&D Office--followed
    peer review procedures, but other program offices ignored it.
        Let me be clear--We plan to hold the head of this office
    accountable for the quality and integrity of the data EPA releases.
        We also have serious concerns about computer security. The
    Inspector General stated, ``The absence of a centralized validation
    process leaves vast amounts of EPA information vulnerable to
    unauthorized access, manipulation and potential destruction. The
    preliminary results of ongoing work indicate a number of significant
    and pervasive problems with the adequacy of existing security plans for
    EPA's core financial systems and regional systems.''
        While the I.G. recommended in 1997 that EPA implement formal
    firewall technology and implement a Network Security Policy, EPA has
    dragged its feet in responding. According to the I.G., the agency
    firewall is not scheduled for implementation until the spring 2000.
    Protecting sensitive business information and ensuring that appropriate
    fireballs are in place must be an immediate top priority of the new
    information office and top agency leadership.
        Moving on to the Superfund program, I'm pleased EPA is meeting its
    site cleanups goals. However, there remain significant concerns with
    this program. GAO continues to list it as a high-risk program, as it
    has for the past decade, citing concerns with the way its contracts are
    managed, excessive overhead costs, and the cost-recovery program. In
    addition, there remain significant impediments to fair and efficient
    site cleanups, owing to the litigious nature of the program and other
    problems that only legislative reforms can fix.
        For that reason I'm very disappointed to have heard that this
    administration is no longer willing to engage in honest, constructive
    dialog on legislative reforms.
        We also have concerns about EPA's so-called reinvention initiatives
    and whether they are languishing. We have been talking for many years
    now--and there have been scores of reports and studies on the need for
    flexibility and innovative approaches. But it seems we've made very
    little progress as these activities continue to operate at the margins
    of EPA.
        Finally, in many agencies reinvention has meant carrying out
    missions in a more cost-effective manner--doing more with less. We have
    seen this in VA, which has lost some 20,000 employees in the past
    several years while increasing the number of patients it treats by more
    than 10 percent.
        Yet at EPA there has been significant growth in the workforce, but
    I'm not sure we've seen a significant increase in work performed.
    Indeed, in the past decade, states have taken on more and more of the
    responsibility for environmental programs. More than 70 percent of
    programs which can be delegated are now being run by the states.
    According to the Environmental Council of the States, between 1993 and
    1998 the percent of delegated programs grew from 41 percent to 71
    percent. And in the past decade there has been an increase of 60
    percent in the number of staff in state environmental agencies devoted
    to carrying out EPA mandates.
        Yet EPA's own workforce has grown tremendously at the same time.
    Since 1990, EPA workforce has grown by more than 3,000, yet in that
    time we have seen only 3 new pieces of major environmental legislation.
    During my tenure as chairman of this subcommittee, total EPA workyears
    have grown by about 500!
        Ms. Browner, you have made the workforce your highest priority. In
    the fiscal year 1999 operating plan, you cut key programs, such as
    NPDES permits and the reinventing environmental information initiative
    in favor of increasing staff above the prior year level. Given that
    states are doing more and more, this priority seems not to make sense.
    We must ask, what are all these people doing? Of all the major agencies
    under this subcommittee, only EPA's workforce has grown in the past few
    years.
        In conclusion, let me be clear that I believe much of the work of
    this subcommittee will be to set funding priorities for your agency to
    ensure that our environmental protection programs work effectively and
    efficiently. Congress has made a commitment to protecting our
    environment both for this generation and those to come, and to fulfill
    that commitment we must get EPA back to the basics.
        There are clearly many issues we wish to discuss today. Before I
    ask you, Ms. Browner to proceed with your opening statement, I will
    turn to my distinguished ranking member Senator Mikulski for her
    opening statement.

        Senator Bond. And before I ask you to begin, Madam
    Administrator, I will turn to my colleagues and first call on
    the distinguished ranking member of the subcommittee, Senator
    Mikulski.

                     statement of Senator Barbara Mikulski

        Senator Mikulski. Thank you very much, Mr. Chairman. My own
    remarks will be condensed in light of the fact that we have
    many members here as well as a vote at 10:30.
        I want to welcome Administrator Carol Browner and her team.
    This is her seventh appearance before this subcommittee. And I
    want to thank her for her efforts and leadership over the years
    and also her tenacity in surviving this 7 years of attacks on
    EPA. Her tenure has neither been boring nor uneventful. Budget
    cuts, shutdowns and catastrophes have made her job quite
    challenging. In addition, there is often been a kind of
    hostility around protecting the environment. And I would hope,
    as we examine the culture of attack in our society, we need to
    learn more about civility among ourselves. Hopefully, it will
    even start on the Senate floor.
        Today I am going to focus on the issues related to the
    environment because in my own home state, which I believe is a
    cameo for the nation, first of all, good environment is good
    business. Good environment is good business in Maryland because
    of the Chesapeake Bay.
        Whether it is the bounty that comes from the Bay that
    sustains our watermen, our restaurants, our charter fishing and
    our residential development; the Bay has been bountiful and we
    need to protect the Bay and I'm very appreciative in Senator
    Mathias, to myself, to President Reagan to President Clinton to
    focus on the Bay.
        But also, environmental protection has been good business
    for Maryland. I want to get into also the whole issue of
    environmental technology. In my own home state the development
    of new technology to provide the private sector with tools for
    either environmental cleanup, remediation or even detection for
    early warning before it would get to a problem is resulting in
    the fact that there are thousands of jobs being created, export
    jobs that absolutely crucial.
        The other is the issue around the cleanup of the
    environment. And I want to, also, see what efforts and
    progresses are being made in brownfields. From a legislative
    standpoint, we're making very little progress on Superfund but
    brownfields, I believe, offers a cornucopia of opportunity.
    Again, in my own home state, there are 3,000 acres of
    brownfields around the waterfront of three counties.
    Redevelopment of these brownfields could result in commercial,
    cargo, residential and other new types of office park
    development that would really be a cornucopia of economic
    development for my state.
        So those are the kinds of things that we want to focus on.
    But we, also, want to make sure that there continues to be the
    establishment of a very clear link between public health and
    the environment. We want to know about what is happening in
    clean air, what is happening to our children with asthma. The
    epidemiologists at Hopkins in Maryland tell me asthma is
    skyrocketing throughout the nation and is probably one of the
    number one health issues facing America's children.
        In addition to that, again, looking at public health, there
    is the issue of Pfiesteria in the Bay and several other waters.
    So we want to go through the budget. We want to make sure the
    budget does match policy, and policy matches national
    priorities. And I believe our national priority is, we protect
    the environment not only for itself, but because of its linkage
    to public health and economic development.
        So we look forward to hearing your testimony and, of
    course, we want to know you are Y2K-ready. Thank you very much.

                               prepared statement

        I ask you now with your consent that my entire statement go
    into the record.
        Senator Bond. Without objection, it will be.
        [The statement follows:]

               Prepared statement of Senator Barbara A. Mikulski

        Thank you Mr. Chairman. I want to welcome EPA Administrator Carol
    Browner and her team. This is Ms. Browner's seventh appearance before
    the subcommittee. I want to thank her for her efforts and leadership
    over the last seven years.
        Administrator Browner's tenure has not been boring and uneventful.
    Budget cuts and government shutdowns have made Ms. Browner's job--and
    the job of EPA's employees--quite challenging.
        In addition, there has often been a climate of hostility toward
    environmental protection in the Congress as a whole, particularly in
    the authorizing committees.
        This has not made for the most constructive climate within which to
    move our agenda. I believe that EPA has survived these challenges and
    has taken many initiatives to make the long-term changes that are
    necessary to keep up with a changing world.
        As a Senator for Maryland, I have seen the positive results of
    EPA's programs and initiatives on a firsthand basis.
        As a Marylander, I am also well aware of the importance of one of
    our most precious resources--water.
        Water links the lives of all Marylanders--from the north branch of
    the Potomac River, to the southern tip of the Wicomico River, water is
    critical to Maryland's environment and economy. The EPA has been a
    leader in keeping Maryland's Chesapeake Bay and waterways clean.
        I also want to take this opportunity to highlight two sometimes
    overlooked aspects of environmental protection. First, with the help of
    the EPA, I believe we need to make all Americans aware of the strong
    connection between public health and environmental protection.
        Unfortunately, we have seen examples all across the country of the
    negative effects of a poor environment on the health of our citizens.
    We need to ensure that our environment and our people are protected.
        We also need to do all we can to clear up the misconception that
    our economy and our environment cannot prosper together. Nothing could
    be further from the truth. Our economy and our environment can indeed
    coexist. In fact, they must.
        I believe that environmental protection goes hand in hand with
    economic growth and job creation. Protecting our environment creates
    jobs.
        In Maryland, our watermen have always relied on a clean bay for
    their livelihood. A clean bay means more jobs for our watermen.
        But Maryland's economy is benefitting from a new industry--
    environmental technology.
        Environmental laws and regulations create the need for new
    environmental technologies. New technologies means new jobs and new
    markets. The United States sets the standards for many areas in
    environmental protection.
        In Maryland alone, there are 1,700 companies in the environmental
    industry. These companies have created 21,000 jobs in Maryland, and
    have exported $260 million worth of goods and services.
        The demand for these types of businesses will only grow in the
    coming years. According to the EPA, the global market for environmental
    technologies and services is now estimated at $410 billion per year.
    Current growth rates range from 3 to 4 percent a year in most
    industrialized nations to 16 percent in parts of Asia.
        This represents incredible opportunities for jobs in Maryland and
    across the country.
        As we move forward in today's hearing, let me note a few of the
    things that I am pleased to see in EPA's fiscal year 2000 budget
    request. First, I would like to note that the President has requested
    $7.2 billion for EPA for fiscal year 2000.
        I am pleased to see an increase in funding for the President's
    clean water action plan.
        I believe we must ensure the integrity of our core water programs,
    while we seek to broaden our base of knowledge and understanding of
    water issues.
        I was pleased to join the President in my hometown of Baltimore
    when he outlined this plan to ensure clear waterways and safe
    ecosystems.
        The President's clean water action plan will promote water quality
    protection by emphasizing state initiatives and new guidelines for
    regulating animal waste.
        This is a critical issue in my state of Maryland as we wrestle with
    how to respond to the pfiesteria outbreaks that ravaged our waterways--
    waterways which are crucial to the economy of our state.
        Mentioning the topic of pfiesteria leads me to note that I consider
    this year's hearing in many ways a follow-up status check.
        I would like to know what progress EPA has made in working
    internally and with other agencies to address the pfiesteria problem.
        I'd like to know what progress has been made in identifying not
    only the problems, but workable solutions.
        I know you are aware Ms. Browner, just how important the waterways
    are to the Maryland economy. Thousands of Maryland watermen, commercial
    fishermen, merchants and restaurants depend of the great seafood that
    is harvested in our beautiful waters.
        It is imperative that EPA and other relevant agencies work together
    and with the states to continue to find workable solutions to the
    pfiesteria problem--solutions that are based upon sound science.
        This year is also a follow-up year on the brownfields program. I
    know the chairman shares my concern about the need to revitalize our
    nation's brownfields.
        My hometown of Baltimore has over three thousand acres of
    brownfields. This is land that could be cleaned and revitalized to help
    create jobs and rebuild communities.
        I want to hear this morning what progress EPA has made with its
    brownfields initiative and what progress it has made in coordinating
    activities with HUD.
        This program is too important and too necessary to fall victim to
    mismanagement or lack of clear direction.
        I will continue to work with the chairman to stand sentry to ensure
    that we have a brownfields program that works for the taxpayers and
    works for the communities that receive brownfields dollars.
        I am interested to learn what the EPA has done to implement the
    NAPA recommendations. I'd like to know what has been done to date and
    what plans are in place to accomplish those things remaining undone.
        As you know, when I was chair I requested that NAPA do a report on
    how EPA could improve its management and operations. That report became
    the basis for yet another NAPA report that continued evaluating the
    progress EPA had made.
        These reports are not meant to be reports for reports sake. These
    NAPA reports and the recommendations they include are to be blueprints
    for positive, action and results oriented change.
        I know the chairman shares my desire to see EPA use the NAPA
    reports as frameworks for improved performance based management.
        I am also aware of some concerns with the implementation of the
    food quality protection act. I want to make sure that we have a program
    that is open, uses the best science available, and works effectively to
    protect consumers from illnesses and death caused by polluted foods.
        So, Madame Administrator, I know that your plate is full and that
    you are busy. I commend you again for your efforts and look forward to
    working with you and the chairman on making the Environmental
    Protection Agency one that truly fulfills its critical mission.
        Thank you Mr. Chairman.

        Senator Bond. We are very honored to have the ranking
    member of the full committee with us today and I'd ask Senator
    Byrd if he wishes to make some statements.
        Senator Byrd. Mr. Chairman, that's very nice. I will take
    my turn. I do thank you, however, very much.
        Senator Bond. Thank you, Senator.
        Senator Leahy.
        Senator Leahy. Thank you, Mr. Chairman, I'll happy to yield
    to the distinguished Senator.
        Senator Byrd. You overwhelm me with praise. [Laughter.]
        Senator Bond. Would one of you gentleman please proceed?
        Senator Craig. Mr. Chairman, I would be happy----
        Senator Byrd. Mr. Chairman, I am thoroughly enjoying this.
    But I think I will wait. I will learn a lot by listening to my
    peers.

                     statement of Senator Patrick J. Leahy

        Senator Leahy. Thank you, Mr. Chairman.
        Administrator Browner, it is good to have you here. As you
    know, there will always be a lively debate over priorities of
    your agency. Last week Secretary Babbitt was testifying before
    this subcommittee. I think it is a toss-up probably as to who
    has endured more bruises during your tenures, you or he. But I
    see that as a credit to your leadership at EPA and your
    commitment for improving our environment, not just for us but
    for our children. They are the ones that are going to live most
    of their lives in the next century.
        That same perspective has motivated my agenda in the Senate
    trying to improve my own state of Vermont for future
    generations. We have been--we are very grateful for the fact
    that in Vermont, that you have been up there and visited our
    State. You have seen how the funding you have requested for
    Lake Champlain is going to help us achieve this goal. Lake
    Champlain's watershed covers more than half of our state. In
    other words, revitalizing the health of Lake Champlain is
    essential not only to our environment but also to our economy.
    From the funding from your agency we are going to be able to
    meet the challenge of improving both the environment and the
    economy at the same time.
        For example, one project that may seem mundane, but has a
    great effect on the whole lake ecology, is a monitoring program
    to help our dairy farmers choose the most effective way to
    reduce agricultural runoff into Lake Champlain.
        We have another project that I would like to see EPA get
    involved in. I have scraped together some seed money for two
    pilot projects that integrate economic and natural resource
    data into a web-based interactive tool that could help
    communities access everything from the impact of a new gas
    station or shopping center on their watershed. I would like to
    expand the pilot program to cover the entire Lake Champlain
    basin. I hope EPA can be one of the primary Federal partners.
        I want to compliment you also and your staff for your work
    on two very high-profile issues in Vermont, the cleanup of the
    Pownal Superfund site and the Lake Memphremagog partnership
    with the Department of Agriculture.
        My wife was born a hundred yards from the shore of Lake
    Memphremagog on the Vermont side. Had she been born a hundred
    yards further, she would have had the same Canadian citizenship
    her parents had.
        I was very impressed with how quickly and professionally
    your staff developed remediation plans embraced by the
    community and the State's environmental officials. And the Lake
    Memphremagog partnership to reduce agriculture runoff is such a
    success, we are going to try to replicate it for the
    Connecticut River.
        Mr. Frampton is not here. But I was going to thank him,
    also, for his help with the Northern Forest funding. I will put
    the whole statement in the record. Mr. Chairman, we will also
    have a markup at the same time in the Judiciary Committee on a
    constitutional amendment.
        Senator Bond. Senator Lautenberg.

                    statement of Senator Frank R. Lautenberg

        Senator Lautenberg. Thanks, Mr. Chairman. I will try to be
    brief and ask unanimous consent that my full statement be
    included in the record.
        Mr. Chairman, I just briefly want to commend Carol Browner,
    the EPA Administrator, for the great job that she's done. And
    as Senator Mikulski noted that she is not either battle- or
    weather-weary, despite the number of contests and conflicts she
    has had to endure.
        It strikes me as being rather peculiar that we are looking
    at the reduction in funding for EPA that we are, when the
    record of success is greatly astounding. We hear lots of
    criticism and talk about the bureaucratic influence and
    decision making and how tough it is to live with the rules and
    regs. I would like to note, Mr. Chairman, that we have--by the
    end of the fiscal year, that 95 percent of the Superfund sites
    will have had signed records of decision. That 50 percent of
    the contaminants that used to plague our air have been
    eliminated. That 150 million people in this country breathe
    cleaner air as a result of the work that's done at EPA. And we
    are--that thousands of brownfield sites, whether it is those
    that are cleaned up by State or Federal Government or private
    contractors under the supervision of the Federal Government,
    have been released for economic and community use.
        I think the record is pretty darn good. And I must tell you
    I find it discouraging--I know that we have other priorities--
    but I think that we ought to be examining all of our priorities
    in the same fashion. ``Look at the record'' used to be a
    favorite expression. And I want to commend Administrator
    Browner and her team for the great work that they're done,
    again, sometimes under very severe pressure.

                               prepared statement

        I hope, Mr. Chairman, that we are going to be able to find
    of a way take care of the funding to get a Superfund bill. The
    Chairman sits on the same committee that I do, the EPW
    Committee, and I am hoping that we can enact sensible Superfund
    legislation to keep that program going. It will help enormously
    in terms of our financing the programs that we have to.
        Thank you, Mr. Chairman.
        [The statement follows:]

               Prepared statement of Senator Frank R. Lautenberg

        Mr. Chairman, I am pleased to be here to discuss EPA's fiscal year
    2000 Budget with Administrator Browner, and the fiscal year 2000 Budget
    for the Council on Environmental Quality with Acting Chairman George
    Frampton.
        I would like to take this opportunity to commend Ms. Browner for
    the job she is doing at the helm of EPA. I have had the good fortune to
    work with her closely over these last several years, but had the
    distinction of spending even more time with her than usual during the
    Superfund negotiations of the previous Congress.
        She is an outstanding leader for environmental protection.
        As the ranking member of the Budget Committee, I can understand the
    difficulties this Subcommittee faces in trying to adequately fund its
    environmental programs.
        Even though we have erased the deficit, and are expecting large
    surpluses in the next five years, we are still living with the tight
    domestic discretionary caps from the Balanced Budget Agreement.
        Despite this outlook, I hope that this Subcommittee will strongly
    consider proper investment for EPA's environmental protection programs.
        We need to do whatever we can to provide appropriate funding for
    Superfund, the Clean Water Act, the Clean Air Act and other critical
    programs. If not, we will not make enough progress in cleaning up our
    land, water and air.
        Mr. Chairman, I know it will be tough to fund all of the competing
    priorities in this Subcommittee. I know you and the distinguished
    ranking member will do your very best to fund EPA's critical programs
    because environmental cleanup is needed in all states. You did an
    outstanding job with this bill last year, and look forward to no less
    this year.
        But let's face facts, it will be very tough. But we can still work
    together to make the right investments in environmental protection. And
    I look forward to working with members on both sides of the aisle,
    along with Administrator Browner, to make this happen.
        Thank you

        Senator Bond. Thank you, Senator Lautenberg. We will be
    coming forward with some ideas. We will be working with your
    staff on EPW. Now I turn to the distinguished Senator from West
    Virginia.
        Senator Byrd. Mr. Chairman, these two gentlemen who are
    here were here before I was.
        Senator Bond. No, sir. I watch them closely. You do not
    think I actually listen to those statements I am reading, do
    you? I'm watching who is coming into the room.
        Senator Burns. We are not ready anyway, Senator.
        Senator Byrd. I am not ready either, as a matter of fact.
    [Laughter.]
        Just so this time is not counted against me, Mr. Chairman.
        Senator Bond. We are not so foolish as to put the lights
    on.
        Senator Byrd. Is there a vote at 10:30?
        Senator Bond. Yes, sir.
        Senator Byrd. Will we be coming back?
        Senator Bond. I will. I hope that some of my colleagues
    will. It gets lonely up here.

                        transportation partners program

        Senator Byrd. Madam Administrator, you are very senior to
    me in this area. Let me ask you about the EPA program known as
    Transportation Partners. The EPA program known as
    Transportation Partners has recently come to my attention
    through some published reports that make some rather
    disconcerting charges. Primary among those charges is that this
    program is a source of funding for some purely anti-road
    initiatives. I can certainly see the merit in a program that
    helps local communities to help develop volunteer strategies
    for transportation-related emission reductions and that assists
    them in developing transportation alternatives that reduce
    traffic volume and congestion.
        It seems that if EPA is actually helping to underwrite
    activities to block construction authorized, of desired, safer,
    more modern highways, a critical line is being crossed. I have
    no doubt that the public would be dismayed to hear it if, in
    fact, as one Federal agency is spending millions of taxpayer
    dollars to build modern infrastructure, another agency was
    spending additional taxpayer money to help prevent such
    construction.
        The logical result of this kind of mess is that the
    taxpayers end up paying several times over, including footing
    the bill to fight court battles to defend the projects and
    covering the costs of inflation resulting from lengthy
    construction delays. The only beneficiaries from this kind of
    scheme, it would seem, are the lawyers. This scenario simply
    defies fiscal logic. I would like to know more about the
    Transportation Partners program. Does anyone at EPA conduct
    oversight of the program? What is the answer?
        Ms. Browner. Do you want me to answer?
        Yes, we do. It is a grant program and it is subject to all
    of the requirements of our program and the oversights
    associated with our grant programs.
        Senator Byrd. Can you then tell the committee specifically
    how this funding is being spent?
        Ms. Browner. Yes, we can. I would be happy to spend a
    moment to elaborate on the program, if that would be helpful at
    this point.
        Senator Byrd. Well, we have the time if you do.
        Ms. Browner. Yes, certainly. [Laughter.]
        I apologize, Senator Byrd, I had thought the chairman
    wanted to finish with the opening statements. So I apologize.
        Senator Byrd. Perhaps I am mistaken.
        Senator Bond. We did have this time for opening statements,
    Senator Byrd. We were going to go into the question round
    later. This is an area in which I have a great interest. If you
    wish to do that, I will ask the indulgence----
        Senator Byrd. Mr. Chairman, I think it is unfair to the
    other members to proceed with questions.
        Senator Burns. Senator, I am submitting my statement. So
    you may proceed. You are not walking on any toes over here.
        Senator Craig. I concur.
        Senator Byrd. Well, I am glad the Administrator is calling
    my attention to my error.
        Ms. Browner. Senator, that is not my intent. I simply want
    to follow the lead of the Chairman and the subcommittee.
        Senator Burns. We do want to let the Administrator make her
    full statement before getting into full-blown questions. But
    this is a question that I believe, Madam Administrator, you can
    answer because this is of major concern to me and to Senator
    Byrd.
        Senator Byrd. Mr. Chairman, I am embarrassed to feel that,
    being my first occasion to sit on this subcommittee, I have
    misread the tea leaves and am proceeding out of order.
        Senator Burns. No, you are not either.
        Senator Mikulski. There no alligators from the Everglades
    to worry about.
        Ms. Browner. I would be happy to answer the question,
    Senator Byrd.
        Senator Byrd. Since our time is limited, I would prefer to
    wait until the others have had a chance. I've got several
    questions on this.
        Senator Bond. Thank you very much, Senator. I assure you I
    have concerns in this area. We look forward to working with
    you.
        We propose to introduce two pieces of legislation that will
    protect the EPA's role and the Department of Transportation's
    role. Since you and I had a great deal to do with the passage
    of the Clean Air Act, the Byrd-Bond amendment, as it is known
    up here, or the Bond-Byrd amendment as it's known in Missouri,
    enabled to us to develop an emissions trading system which
    facilitated the passage of the Clean Air Act and we want to see
    the goals of clean air and safer highways achieved. So we will
    be having many discussions on that.
        Senator Burns, do you have an opening statement?
        Senator Burns. I would ask that I may submit it in the
    interests of time and protocol.
        Senator Bond. I'd be delighted and without objection.
        Senator Craig, do you have an opening statement?
        Senator Craig. Under those conditions, welcome to the
    committee.
        Senator Bond. With that, Madam Administrator, would you
    like to give your opening statement?
        Ms. Browner. Yes. Before I do that I just want to assure
    the committee that I am more than happy to answer any question,
    but particularly the questions that have been proposed by
    Senator Byrd and by the Chairman----
        Senator Bond. There will be plenty of opportunity.
        Ms. Browner [continuing]. Concerning transportation and
    other important matters.

                         statement of carol m. browner

        It is, indeed, a pleasure to appear again before you, Mr.
    Chairman, Senator Mikulski and the members of this committee,
    and it is a great honor to have Senator Byrd here and showing
    an interest in our programs. We thank you for that.
        I am here today to present the President's fiscal year 2000
    budget request for the Environmental Protection Agency. The
    President's $7.2 billion request for the EPA continues this
    administration's efforts to protect both public health and our
    environment while providing states and communities with new
    innovative funding tools to build these strong, healthy and
    safe communities that we all desire for the 21st century.
        As you noted, Mr. Chairman, accompanying me today are many
    of the senior managers from the Agency, including our Chief
    Financial Officer, Sallyanne Harper, who is beside me at the
    table. If I might, Mr. Chairman, just take a brief moment to
    say a word about Sallyanne Harper. She just won a very, very
    prestigious award from the Joint Financial Management
    Improvement Program. They pick one Federal financial officer a
    year, government-wide, one State officer, and one local
    government officer for this award. Sallyanne Harper was the
    winner this year for the entire Federal Government and she is
    an outstanding public servant and she does a tremendous job for
    us at EPA.
        Senator Bond. Ms. Harper, we congratulate you and commend
    you for your good work. You certainly have challenging
    opportunities ahead of you, and we wish you the best.
        Ms. Browner. We are very proud to have her.
        Mr. Chairman, with the help of the members of this
    subcommittee, you have provided essential funding for important
    environmental programs. With that funding we have made
    significant progress for the people of this country in
    providing a safe and a healthy environment. During this
    administration we have also worked with Congress to pass in a
    bipartisan manner important environmental laws and to implement
    earlier laws to carry out our common goal of stronger
    environmental protections.
        If I might just take a moment to cite a few examples. Over
    the past 6 years we have worked together to pass environmental
    laws such as the Safe Drinking Water Act Amendments of 1996. We
    estimate today that 88 percent of the American population
    receive drinking water from a system that meets all health-
    based standards, 88 percent. That is a truly remarkable
    statement about the commitment of the Congress, the commitment
    of the EPA, to working with local communities to ensure that
    every time their citizens turn on the tap, it is clean,
    healthy, safe water that they receive.
        Thanks to the resources provided by this committee, we have
    also made significant progress in many of the key action items
    in the Clean Water Action Plan which the President announced in
    Maryland almost a year ago. We recently announced a joint
    strategy with the USDA to protect waterways from nonpoint
    source pollution associated with the largest animal feeding
    operations. We have made significant progress to clean up toxic
    waste sites. As of the end of 1998, 585 Superfund toxic waste
    sites have been cleaned up. An additional 85 cleanups will
    occur in 1999.
        In addition, 227 communities have benefited from more than
    $44 million in grants to revitalize brownfields, to see these
    sites cleaned up, to see these sites redeveloped, to see them
    made a productive part of the community. And, finally, because
    of the Clean Air Act approximately 164 million Americans are
    today breathing cleaner air.
        The budget we present today is in the tradition of every
    previous budget submitted by this administration. It is based
    on what the President and Vice President have said time and
    time again, and what we have proven over the last 6 years. We
    do not, as a country, have to choose between our health, our
    environment and our economy. That, in fact, a strong economy
    and a healthy environment are goals in concert, not in
    conflict.
        Today we have some of the toughest environmental and public
    health protections in the world and our economy is also strong.
    It is literally soaring. Building on this record of success,
    the Clinton-Gore 2000 budget request charts a new course to
    meet the environmental challenges of the coming century.
        The budget we put before you today is about communities. It
    is about neighborhoods. It is about protecting where we live
    our lives as Americans. It is about protecting how we live our
    lives. It is about keeping communities healthy, strong and
    prosperous. It is about families. It is about improving their
    quality of life, especially for our children.
        The President in his State of the Union address articulated
    a new livability agenda to help communities grow in ways that
    will ensure a high quality of life and strong sustainable
    economic growth. A key part of this agenda is an innovative
    financing tool called Better America Bonds. This plan offers a
    creative way for states and communities, through zero interest
    bonding authority, to preserve open space, create shared areas
    and parks, clean up brownfields and improve water quality.
        Mr. Chairman, I want to be very clear what this program is
    not. It is not big government. It is not the Federal Government
    owning anything. This is merely another tool for those
    communities who want to preserve their open spaces, who want to
    enhance their water quality. They choose whether or not to take
    advantage of it. They are not required to participate. Across
    the country many communities are looking for financing
    mechanisms so they can provide these kind of open spaces, these
    shared spaces, this enhanced quality of life.
        The President's budget also includes $200 million for the
    Clean Air Partnership Fund, another new tool to help
    communities. You made reference to this, Mr. Chairman, in your
    opening comments. This is a fund to allow those local
    communities who want to look at creative alternative solutions
    to local air pollution problems, with some modest resources so
    they can develop these sorts of local solutions. No one is
    required to participate. We hear from many communities, from
    many mayors who would like to forge public and private sector
    partnerships to develop local air pollution solutions. That is
    what this is designed to do, to provide some modest resources
    for those communities who want to take this approach to
    enhancing their air quality and thereby their quality of life.
        Third, this budget allows EPA to take a leading role in the
    administration's important effort to fight the growing problem
    of childhood asthma. Five million children suffer from this
    debilitating disease, and the incidence is clearly on the rise.
    Senator Mikulski made reference to the very, very good work
    that is done at Johns Hopkins. The budget before you includes
    $22.2 million for education, outreach and monitoring to reduce
    children's exposure to the environmental toxins that can make
    an asthma attack far worse.
        I am aware that this is a concern, Mr. Chairman, that I
    think we both share. Your work on children's issues as both
    Governor and Senator has done much to ensure that our children
    are well prepared for a healthy lifetime of achievement. I hope
    that we can continue to work together as EPA reaches out to
    communities to provide them with the tool to address this very
    real, this growing problem of childhood asthma.
        In addition to these three new initiatives, the President's
    budget also continues our work on the nation's other
    environmental and public health priorities. To implement the
    Clean Water Action Plan $651 million, the national blueprint
    announced last year to finish the job of restoring and
    protecting our nation's rivers, lakes and coastal waters.
        For the State Revolving Funds $1.6 billion, to upgrade
    drinking water systems, and waste water systems. To help
    communities address the very pressing problem of polluted
    runoff, we are asking that this committee allow States to take
    up to 20 percent of their waste water money and turn it into a
    grant program.
        There are many small and medium-sized communities, where
    the next important step to protecting their river or lake is
    addressing polluted runoff. A grant program funded through an
    optimal 20 percent setaside of the Clean Water SRF administered
    by the States, would be a very, very important tool for
    communities.
        To continue the cleanup of toxic waste sites, the budget
    invests $1.5 billion in Superfund, of which almost $92 million
    will go directly to support brownfields communities.
        If I might, just in closing, call the committee's attention
    to something that is a very, very important concern to me and
    to the administration, and that is the agency's operating
    programs. We are seeking an increase in those programs. That is
    where we do almost everything, short of the money for Superfund
    and brownfields and the money that goes to States. Everything
    from setting a drinking water standard to rigorous science, to
    a new information office, to getting an ``A'' on our Y2K
    compliance efforts, all of what we do sits in the operating
    program budget. We are very, very concerned that if we do not
    have the resources in this section of our budget, the work that
    is extremely important to the American people will be delayed
    or in some instances, we will simply have to cease that work.
    We are concerned about this because of the House- and Senate-
    passed budget resolution that includes a 12-percent across-the-
    board-cut in priority domestic programs. We are concerned that
    that magnitude of a cut to our operating program will result in
    a huge delay or stoppage of important efforts that we are
    involved in.
        For example, it would affect our ability to set drinking
    water standards on target with the new law. We have not missed
    a deadline. The budget before you allows us to continue that
    record, but a 12-percent cut would be extremely difficult----
        Senator Bond. Madam Administrator, let me assure you that
    the assumptions in the budget have absolutely nothing to do
    with what kind of 602B allocation EPA will receive or how this
    committee will allocate it.
        Ms. Browner. I appreciate that.
        Senator Bond. I think you can disregard most of the
    assumptions underlining the budget. It is the numbers that
    count and we are the ones that deal with the numbers.
        Ms. Browner. I appreciate that. I take it from your words
    that you recognize the importance of our operating budget.
        Senator Bond. Merely that we are going to have no intention
    of being bound by those assumptions.
        Ms. Browner. In closing, Mr. Chairman, we want to continue
    to work with this committee. We do recognize that congressional
    earmarks are a part of the budgeting process. I think many of
    the projects are extremely worthwhile projects, and are
    important to the local communities. But as the number of those
    earmarks increases, it does function as a reduction in our
    ability to meet our commitments, both to States and local
    communities, and affect our ability to do the kind of work that
    was envisioned by Congress as they passed and reauthorized and
    strengthened the nation's environmental laws.
        In the last 4 years, we have experienced a 300-percent
    increase in congressional earmarks to our budget. I am not
    suggesting that the earmarks are not important projects. I am
    sure they are, but they do affect our ability to do our job.
    Mr. Chairman, they also affect the money that is made available
    to the States for their priorities. We provide a lot of funding
    to the States and they manage it across a set of competing
    needs. An earmark comes at the expense of the dollars we have
    available to provide to the States.
        I raise that concern to the committee. I understand the
    realities. But I hope that we can work together to ensure that
    we do not continue to experience the kind of growth in earmarks
    and to really, if possible, look at the projects and determine
    whether or not they are better funded through an existing set
    of resources that we make available to a State.

                               prepared statement

        In closing, let me thank you for the opportunity to be
    here. Let me thank you for the opportunity to work with you. We
    recognize it is a difficult budget year, and that there will be
    difficult choices to make. We believe we have presented you
    with a budget in keeping with the balanced budget agreement
    that honors the commitment that the Congress and the President
    made to the American people in reaching that balanced budget
    agreement, which was to provide strong public health and
    environmental protections for the American people.
        [The statement follows:]

                     Prepared Statement of Carol M. Browner

        Chairman Bond, Ranking Member Mikulski, and Members of the
    Committee, I am very pleased to be here today to present the
    President's fiscal year 2000 Budget Request for the Environmental
    Protection Agency. The President's $7.2 billion request for the EPA
    continues this Administration's efforts to protect public health and
    the environment and provide states and communities with new, innovative
    funding tools to help build strong, healthy communities for the 21st
    century.
        At the outset, Mr. Chairman, I would like to mention something we
    at EPA are very proud of. Sallyanne Harper, the Agency's Chief
    Financial Officer, has been named the recipient of the Joint Financial
    Management Improvement Program's (JFMIP) 1998 Donald L. Scantlebury
    Memorial Award. She receives this in recognition of sustained
    leadership and a record of accomplishments in financial management at
    EPA. This is an extremely prestigious government-wide award given by
    the JFMIP, to recognize senior financial management executives who,
    through outstanding and continuous leadership in financial management,
    have been principally responsible for significant economies,
    efficiencies, and improvements in federal, state, or local government.
    Sallyanne has done a great job for us at EPA. I just wanted to share
    with you our pride in Sallyanne and ask you to join me in
    congratulating her.
        Mr. Chairman, with the help of this Subcommittee, which has funded
    essential environmental programs, we have made significant progress in
    providing a safe, healthy environment for the American people. During
    this Administration, we have also worked with Congress to pass
    important environmental laws and to implement earlier laws to carry out
    our common goal of stronger environmental protections. To cite just a
    few recent examples:
        This year, as a result of the Safe Drinking Water Amendments of
    1996, we estimate that 88 percent of the American population will
    receive drinking water from community water systems that meet all
    health-based standards in effect since 1994. The Agency has had
    remarkable success in carrying out those Amendments, and, to date, has
    not missed a single deadline that Congress placed in the law. We are
    honoring the commitments you made in passing this legislation, and we
    are meeting the safe drinking water needs of the American people.
        Because of the action of this Subcommittee, and particularly your
    support Mr. Chairman, and that of Senator Mikulski, we have made
    significant progress on many of the 111 key action items in the Clean
    Water Action Plan and will soon announce a joint strategy with USDA to
    protect waterways from non-point source pollution from animal feeding
    operations. I would like to thank this Committee for its support and
    funding for the Clean Water Action Plan, almost all of which goes to
    the states.
        Today, because of the Clean Water State Revolving Fund and
    Construction Grants programs supported by this Committee, more than 176
    million Americans receive the benefit of at least secondary treatment
    of wastewater, keeping pollution out of our rivers, lakes and
    coastlines.
        We are making significant progress cleaning up toxic waste sites.
    As of the end of 1998, 585 Superfund toxic waste sites have been
    cleaned up. An additional 85 construction completions will occur in
    1999. In addition, 227 communities have benefitted from more than $44
    million in grants to revitalize Brownfields. The Brownfields program
    has helped to leverage over $1 billion in private investments which
    have gone a long way toward revitalizing communities.
        Approximately 164 million Americans are breathing cleaner air
    today, because of the Clean Air Act. I would like to thank this
    Committee for providing funding to carry out this legislation which
    provides crucial health protections.
        Our fiscal year 2000 Budget, in the tradition of every previous
    budget submitted by this Administration, is based on what the President
    and Vice President have proved over the past six years--that we don't
    have to choose between environmental protection and economic growth. A
    strong economy and a healthy environment and a healthy economy go hand
    in hand. They are inextricably linked.
        Today, we have some of the toughest environmental and public health
    protections in the world, and our economy is not only strong, it is
    soaring. In 1992, this nation had a record high $290 billion deficit.
    This year, we expect a $79 billion budget surplus. That's progress.
        Building on this record of success, the Clinton-Gore 2000 budget
    request charts a new course to meet the environmental challenges of the
    coming century. This budget recognizes that protecting our environment
    is about more than beautiful vistas and scenic rivers, and it's about
    more than passing new environmental and public health laws. It's about
    protecting our health, our air, our water, our land, our food, and our
    children.
        This budget reflects a new American ideal. It's about
    neighborhoods, protecting where we live and how we live, and what we do
    in the everyday life. It's about communities--and how we keep them
    healthy, strong, and prosperous. It's about improving the quality of
    our lives.
        Three new landmark initiatives in this budget reflect President
    Clinton's and Vice President Gore's commitment to America's
    communities. These initiatives provide significant new, innovative
    financial tools to give communities the flexibility they need to
    address their most pressing environmental and public health needs. They
    tap into our nation's greatest resources--our ingenuity and spirit of
    collaboration. They protect our most precious resource first--our
    children.
        The Better America Bonds program puts the Agency in the forefront
    of support for the President's and Vice President's initiative to build
    livable American communities. This new, innovative, financial tool is
    aimed at helping communities address problems associated with urban
    sprawl--such as, traffic congestion, lost farmland, threatened water
    quality, shrinking parkland and abandoned industrial sites, or
    Brownfields. This is about flexibility. Communities can decide for
    themselves how they will preserve their open spaces, protect their
    water, revitalize their blighted urban areas, and improve their quality
    of life. The Administration proposes federal tax credits that will
    support $9.5 billion in bond authority over five years for investments
    by state, local and tribal governments. Through this initiative, the
    funds invested by local communities to protect the environment could go
    farther. I urge you to give local communities this flexibility to
    address their most urgent environmental needs.
        The President's budget includes $200 million for a new Clean Air
    Partnership Fund--an initiative that is part of the Administration's
    efforts to clean the nation's air and meet the challenge of global
    warming. The Clean Air Partnership Fund will promote innovative
    technology demonstrations to help communities nationwide reduce harmful
    air pollution and greenhouse gases. The Fund finances, through grants,
    the creation of partnerships among local communities, states and
    tribes, the private sector, and the Federal government. There is no
    requirement to participate. These are simply grants designed to finance
    projects that are locally managed and self-supporting and that enable
    communities to achieve their clean air goals sooner. The Fund will
    stimulate cost-effective pollution control strategies, spur
    technological innovation, and leverage substantial non-federal
    investment in improved air quality.
        I am very excited to discuss this next issue: children's health. I
    am aware that this is a concern we both share. Your work on children's
    issues, as both Governor and Senator, has done much to help ensure that
    our children are well prepared for a lifetime of achievement. Reducing
    children's exposure to toxins in our environment, toxins that can
    exacerbate asthma, is a top priority for the budget before you today
    and is a central theme in this Administration's fiscal year 2000
    budget. I look forward to finding opportunities for you and I to work
    together on this very important issue. As a start, I'd like to describe
    the Agency's fiscal year 2000 proposal for fighting childhood asthma.
        The Agency will take a leadership role as part of an
    Administration-wide effort to fight childhood asthma and address this
    growing problem. Five million children suffer from this debilitating
    disease. President Clinton has provided an additional $17 million, for
    a total of $22 million, to reduce children's exposure to toxins in our
    environment that can exacerbate asthma. This funding will implement an
    inter-agency initiative for education, outreach, and air monitoring. An
    additional $12 million, for a total of $40 million, focuses on other
    chronic childhood afflictions, such as cancer and developmental
    disorders. EPA's investment to protect children from environmental
    threats totals $62 million.
        In addition to these three new initiatives, the President's budget
    also continues our work on the nation's other environmental and public
    health priorities.
        Last year, the President announced a national blueprint to restore
    and protect our nation's rivers, lakes, and coastal waters--and we made
    great progress. The President's budget allocates $651 million for the
    Clean Water Action Plan, and related activities, to continue our
    efforts to restore and protect watersheds across the country.
        Because polluted runoff is one of the most serious problems facing
    communities, the President proposes another important flexible funding
    mechanism--this one designed to help communities provide clean water.
    The President's proposal will allow states greater flexibility to
    address their most pressing water quality problems: polluted runoff
    from city streets, suburban lawns and rural areas. The proposal will
    give states for the first time the option to set aside up to 20 percent
    (or as much as $160 million) of their fiscal year 2000 Clean Water
    State Revolving Fund allotment for grants to implement non-point source
    pollution and estuary management projects. We will need the authority
    to allow states to set aside these funds for this state-managed grant
    program. I look forward to working with Congress to provide this
    authority so that we can implement this important, new funding
    mechanism.
        In addition, the President's budget provides a combined $1.625
    billion for the state revolving funds (SRF), of which $800 million
    funds the Clean Water SRF and $825 million funds the Drinking Water
    SRF. The Drinking Water SRF increases from last year, and will help
    achieve the Administration's goal of capitalizing the Drinking Water
    SRF until states can provide an average of $500 million in annual
    financial assistance for drinking water projects.
        The Clean Water SRF request is part of the Administration's overall
    capitalization plan to ensure states can provide an average of $2
    billion a year in financial assistance for water quality projects. We
    plan to continue capitalization of the Clean Water SRF until this goal
    is met. I would like to note that almost $16 billion in Federal
    capitalization grants have been provided so far to the Clean Water SRF,
    or almost 90 percent more than originally authorized.
        The President's budget invests approximately $216 million at EPA,
    and $1.8 billion government-wide, to help reduce the pollution that
    causes global warming. This program will continue the Administration's
    efforts to address the challenge of climate change through innovative,
    cost-effective partnerships with businesses, schools, states and local
    governments that voluntarily lower energy use--and energy bills, for
    everyone. The Climate Change Technology Initiative proposed by the
    President this year also offers tax credits for consumers who purchase
    fuel efficient cars, homes, appliances and other energy-efficient
    products. It also includes increased spending on research to develop
    new, cleaner technologies in areas like the Partnership for a New
    Generation of Vehicles and the Partnership for Advancing Technology in
    Housing.
        The President's budget invests $1.5 billion in Superfund to
    continue cleanup of toxic waste sites. The Agency plans to complete
    clean up construction at 85 sites for a total of 755 construction
    completions by the end of 2000, with a target of 925 through 2002. The
    Budget also invests approximately $92 million in the clean up and
    redevelopment of abandoned industrial sites through our Brownfields
    Program, including $35 million for the Brownfields Revolving Loan Fund
    which helps communities leverage funds for actual cleanup of Brownfield
    sites. Through 2000, the Agency will have funded Brownfields site
    assessment pilots in 350 communities across our great nation.
        Of special importance in this budget proposal is our request to
    increase the Agency's Operating Programs by five percent over the
    fiscal year 1999 Enacted level. This budget provides $3.7 billion for
    the Operating Programs, which include most of the Agency's research,
    regulatory and enforcement programs and funds our partnership programs
    with states, tribes, and local governments. The Operating Programs,
    which have grown 33 percent during this Administration, represent the
    backbone of the nation's efforts to protect public health and the
    environment through sound science, standard setting, and enforcement.
    It is through these programs that the Agency works to ensure that our
    water is pure, our air is clean and our food is safe. I cannot
    emphasize enough the important contribution the Operating Programs make
    to the Agency's ability to meet the expectations of the American public
    for a safe, healthy environment.
        As part of these important Operating Programs, the President
    requests $19 million for the Chemical Right-To-Know Program. This
    includes $14.4 million for the Chemical Right-to-Know Initiative to
    focus on accelerating the screening and testing of the 2,800 highest
    production volume chemicals used in the U.S. We will conduct this
    initiative through a voluntary industry challenge program and a series
    of test rules for those data not obtained through the voluntary
    program. Information on these chemicals, many that we use daily in
    virtually every aspect of our lives, will be broadly disseminated to
    the public. The President's budget also provides $18 million for
    Environmental Monitoring for Public Access and Community Tracking
    (EMPACT) to provide citizens with access to real-time information about
    the health of the air, land and water in their communities.
        The President's budget supports sound science with $681 million for
    developing and applying the best available science for addressing
    current and future environmental hazards, as well as new approaches
    toward improving environmental protection. The Agency will focus its
    research efforts on areas such as Particulate Matter, Global Change,
    Mercury and the Coastal Research Initiative.
        The Air Toxics program increases by almost $18 million in new
    funding, for a total of approximately $109 million. This program will
    focus on urban air toxics to develop tools and data that will move the
    air toxics program from an almost exclusively technology-based program
    to a risk-based program. The program is geared to reduce risks for poor
    and minority groups, who are more prevalent in urban areas, and will
    increase protection to a larger number of more sensitive populations,
    such as children and the elderly.
        The budget request for the Mexican Border is $100 million, a $50
    million increase, for projects there. The Agency will use these
    resources for direct grant assistance intended to address the
    environmental and public health problems associated with untreated
    industrial and municipal sewage on the border.
        These are the highlights of our fiscal year 2000 Request. Mr.
    Chairman, I appreciate that this Subcommittee balances different
    priorities which are all important to our nation, and that you do so
    with the responsibility of stewardship over the taxpayers' dollars. I
    look forward to discussing with you, as the year progresses, the
    initiatives and innovative financing mechanisms in our budget request.
    I believe they embody a common-sense, cost-effective approach to
    environmental protection. I would be happy to answer your questions at
    this time.

                            Environmental Protection

         status of epa's efforts to create a central information office
        Mr. Chairman and Members of the Subcommittee: We appreciate the
    opportunity to present this statement for the record, which discusses
    our preliminary observations based on our ongoing work for this
    Subcommittee concerning the Environmental Protection Agency's (EPA)
    information management initiatives. Specifically, this statement
    provides information on (1) the status of EPA's efforts to create a
    central office responsible for information management, policy, and
    technology issues and (2) the major challenges that the new office
    needs to address in order to achieve success in collecting, using, and
    disseminating environmental information. Our final report will be
    provided in August 1999.
        EPA estimates that its central information office will be
    operational by the end of August 1999 and will have a staff of about
    350 employees. The office will address a broad range of information
    policy and technology issues, such as improving the accuracy of EPA's
    data, protecting the security of information that EPA disseminates over
    the Internet, developing better measures to assess environmental
    conditions, and reducing information collection and reporting burdens.
    EPA recognizes the importance of developing an information plan showing
    the goals of the new office and the means by which they will be
    achieved but has not yet established milestones or target dates for
    completing such a plan. Although EPA has made progress in determining
    the organizational structure for the new office, it has not yet
    finalized decisions on the office's authorities, responsibilities, and
    budgetary needs. Nor has the agency performed an analysis to determine
    the types and the skills of employees that will be needed to carry out
    the office's functions. EPA officials told us that decisions on the
    office's authorities, responsibilities, budget, and staff will be made
    before the office is established in August 1999.
        On the basis of our prior and ongoing reviews of EPA's information
    management problems, we believe that the success of the new office
    depends on the agency's addressing several key challenges as it
    develops an information plan, budget, and organizational structure for
    that office. Most importantly, EPA needs to (1) provide the office with
    the resources and the expertise necessary to solve the complex
    information management, policy, and technology problems facing the
    agency; (2) empower the office to overcome organizational challenges to
    adopting agencywide information policies and procedures; (3) balance
    the agency's need for data on health, the environment, and program
    outcomes with the call from the states and regulated industries to
    reduce their reporting burdens; and (4) work closely with its state
    partners to design and implement improved information management
    systems.
                                   background
        In October 1998, the EPA Administrator announced plans to create an
    office with responsibility for information management, policy, and
    technology. This announcement came after many previous efforts by EPA
    to improve information management and after a long history of concerns
    that we, the EPA Inspector General, and others have expressed about the
    agency's information management activities. Such concerns involve the
    accuracy and completeness of EPA's environmental data, the
    fragmentation of the data across many incompatible databases, and the
    need for improved measures of program outcomes and environmental
    quality.
        The EPA Administrator described the new office as being responsible
    for improving the quality of information used within EPA and provided
    to the public and for developing and implementing the goals, standards,
    and accountability systems needed to bring about these improvements. To
    this end, the information office would (1) ensure that the quality of
    data collected and used by EPA is known and appropriate for its
    intended uses, (2) reduce the burden of the states and regulated
    industries to collect and report data, (3) fill significant data gaps,
    and (4) provide the public with integrated information and statistics
    on issues related to the environment and public health. The office
    would also have the authority to implement standards and policies for
    information resources management and be responsible for purchasing and
    operating information technology and systems.
     progress is being made, but key questions on resources and strategies
                               remain unresolved
        Under a general framework for the new office that has been approved
    by the EPA Administrator, EPA officials have been working for the past
    several months to develop recommendations for organizing existing EPA
    personnel and resources into the central information office.
    Nonetheless, EPA has not yet developed an information plan that
    identifies the office's goals, objectives, and outcomes. Although
    agency officials acknowledge the importance of developing such a plan,
    they have not established any milestones for doing so. While EPA has
    made progress in determining the organizational structure of the
    office, final decisions have not been made and EPA has not yet
    identified the employees and the resources that will be needed. Setting
    up the organizational structure prior to developing an information plan
    runs the risk that the organization will not contain the resources or
    structure needed to accomplish its goals.
                           information plan is needed
        Although EPA has articulated both a vision as well as key goals for
    its new information office, it has not yet developed an information
    plan to show how the agency intends to achieve its vision and goals.
    Given the many important and complex issues on information management,
    policy, and technology that face the new office, it will be extremely
    important for EPA to establish a clear set of priorities and resources
    needed to accomplish them. Such information is also essential for EPA
    to develop realistic budgetary estimates for the office.
        EPA has indicated that it intends to develop an information plan
    for the agency that will provide a better mechanism to effectively and
    efficiently plan its information and technology investments on a
    multiyear basis. This plan will be coordinated with EPA's agencywide
    strategic plan, prepared under the Government Performance and Results
    Act. EPA intends for the plan to reflect the results of its initiative
    to improve coordination among the agency's major activities relating to
    information on environment and program outcomes. It has not yet,
    however, developed any milestones or target dates for initiating or
    completing either the plan or the coordination initiative.
                 organizational structure is not yet determined
        In early December 1998, the EPA Administrator approved a broad
    framework for the new information office and set a goal of completing
    the reorganization during the summer of 1999. Under the framework
    approved by the EPA Administrator, the new office will have three
    organizational units responsible for (1) information policy and
    collection, (2) information technology and services, and (3)
    information analysis and access, respectively. In addition, three
    smaller units will provide support in areas such as data quality and
    strategic planning.
        A transition team of EPA staff has been tasked with developing
    recommendations for the new office's mission and priorities as well as
    its detailed organizational and reporting structure. In developing
    these recommendations, the transition team has consulted with the
    states, regulated industries, and other stakeholders to exchange views
    regarding the vision, goals, priorities, and initial projects for the
    office.
        One of the transition team's key responsibilities is to make
    recommendations concerning which EPA units should move into the
    information office and in which of the three major organizational units
    they should go. To date, the transition team has not finalized its
    recommendations on these issues or on how the new office will operate
    and the staff it will need.
                       needed resources are still unknown
        Even though EPA has not yet determined which staff will be moved to
    the central information office, the transition team's director told us
    that it is expected that the office will have about 350 employees. She
    said that the staffing needs of the office will be met by moving
    existing employees in EPA units affected by the reorganization. The
    director said that, once the transition team recommends which EPA units
    will become part of the central office, the agency will determine which
    staff will be assigned to the office. She added that staffing decisions
    will be completed by July 1999 and the office will begin functioning
    sometime in August 1999.
        The funding needs of the new office were not specified in EPA's
    fiscal year 2000 budget request to the Congress because the agency did
    not have sufficient information on them when the request was submitted
    in February 1999. The director of the transition team told us that in
    June 1999 the agency will identify the anticipated resources that will
    transfer to the new office from various parts of EPA. The agency plans
    to prepare the fiscal year 2000 operating plan for the office in
    October 1999, when EPA has a better idea of the resources needed to
    accomplish the responsibilities that the office will be tasked with
    during its first year of operation. The transition team's director told
    us that decisions on budget allocations are particularly difficult to
    make at the present time due to the sensitive nature of notifying
    managers of EPA's various components that they may lose funds and staff
    to the new office.
        Furthermore, EPA will soon need to prepare its budget for fiscal
    year 2001. According to EPA officials, the Office of the Chief
    Financial Officer will coordinate a planning strategy this spring that
    will lead to the fiscal year 2001 annual performance plan and proposed
    budget, which will be submitted to the Office of Management and Budget
    by September 1999.
         epa's new information office will face significant challenges
        The idea of a centralized information office within EPA has been
    met with enthusiasm in many corners not only by state regulators, but
    also by representatives of regulated industries, environmental advocacy
    groups, and others. Although the establishment of this office is seen
    as an important step in improving how EPA collects, manages, and
    disseminates information, the office will face many challenges, some of
    which have thwarted previous efforts by EPA to improve its information
    management activities. On the basis of our prior and ongoing work, we
    believe that the agency must address these challenges for the
    reorganization to significantly improve EPA's information management
    activities. Among the most important of these challenges are (1)
    obtaining sufficient resources and expertise to address the complex
    information management issues facing the agency; (2) overcoming
    problems associated with EPA's decentralized organizational structure,
    such as the lack of agencywide information dissemination policies; (3)
    balancing the demand for more data with calls from the states and
    regulated industries to reduce reporting burdens; and (4) working
    effectively with EPA's counterparts in state government.
                  obtaining sufficient resources and expertise
        The new organizational structure will offer EPA an opportunity to
    better coordinate and prioritize its information initiatives. The EPA
    Administrator and the senior-level officials charged with creating the
    new office have expressed their intentions to make fundamental
    improvements in how the agency uses information to carry out its
    mission to protect human health and the environment. They likewise
    recognize that the reorganization will raise a variety of complex
    information policy and technology issues.
        To address the significant challenges facing EPA, the new office
    will need significant resources and expertise. EPA anticipates that the
    new office will substantially improve the agency's information
    management activities, rather than merely centralize existing efforts
    to address information management issues. Senior EPA officials
    responsible for creating the new office anticipate that the information
    office will need ``purse strings control'' over the agency's resources
    for information management expenditures in order to implement its
    policies, data standards, procedures, and other decisions agencywide.
    For example, one official told us that the new office should be given
    veto authority over the development or modernization of data systems
    throughout EPA.
        To date, the focus of efforts to create the office has been on what
    the agency sees as the more pressing task of determining which
    organizational components and staff members should be transferred into
    the new office. While such decisions are clearly important, EPA also
    needs to determine whether its current information management
    resources, including staff expertise, are sufficient to enable the new
    office to achieve its goals.
    overcoming problems associated with epa's decentralized organizational
                                   structure
        EPA will need to provide the new office with sufficient authority
    to overcome organizational obstacles to adopt agencywide information
    policies and procedures. As we reported last September, EPA has not yet
    developed policies and procedures to govern key aspects of its projects
    to disseminate information, nor has it developed standards to assess
    the data's accuracy and mechanisms to determine and correct errors.\1\
    ---------------------------------------------------------------------------
        \1\ ``Environmental Information: Agencywide Policies and Procedures
    Are Needed for EPA's Information Dissemination'' (GAO/RCED-98-245,
    Sept. 24, 1998).
    ---------------------------------------------------------------------------
        Because EPA does not have agencywide polices regarding the
    dissemination of information, program offices have been making their
    own, sometimes conflicting decisions about the types of information to
    be released and the extent of explanations needed about how data should
    be interpreted. Likewise, although the agency has a quality assurance
    program, there is not yet a common understanding across the agency of
    what data quality means and how EPA and its state partners can most
    effectively ensure that the data used for decision-making and/or
    disseminated to the public is of high quality. To address such issues,
    EPA plans to create a Quality Board of senior managers within the new
    office in the summer of 1999.
        Although EPA acknowledges its need for agencywide policies
    governing information collection, management, and dissemination, it
    continues to operate in a decentralized fashion that heightens the
    difficulty of developing and implementing agencywide procedures. EPA's
    offices have been given the responsibility and authority to develop and
    manage their own data systems for the nearly 30 years since the
    agency's creation. Given this history, overcoming the potential
    resistance to centralized policies may be a serious challenge to the
    new information office.
    balancing the need to collect more data and efforts to reduce reporting
                                    burdens
        EPA and its state partners in implementing environmental programs
    have collected a wealth of environmental data under various statutory
    and regulatory authorities. However, important gaps in the data exist.
    For example, EPA has limited data that are based on (1) the monitoring
    of environmental conditions and (2) the exposures of humans to toxic
    pollutants. Furthermore, the human health and ecological effects of
    many pollutants are not well understood. EPA also needs comprehensive
    information on environmental conditions and their changes over time to
    identify problem areas that are emerging or that need additional
    regulatory action or other attention.
        In contrast to the need for more and better data is a call from
    states and regulated industries to reduce data management and reporting
    burdens. EPA has recently initiated some efforts in this regard. For
    example, an EPA/state information management workgroup looking into
    this issue has proposed an approach to assess environmental information
    and data reporting requirements based on the value of the information
    compared to the cost of collecting, managing, and reporting it. EPA has
    announced that in the coming months, its regional offices and the
    states will be exploring possibilities for reducing paperwork
    requirements for EPA's programs, testing specific initiatives in
    consultation with EPA's program offices, and establishing a
    clearinghouse of successful initiatives and pilot projects.
        However, overall reductions in reporting burdens have proved
    difficult to achieve. For example, in March 1996, we reported that
    while EPA was pursuing a paperwork reduction of 20 million hours, its
    overall paperwork burden was actually increasing because of changes in
    programs and other factors.\2\ The states and regulated industries have
    indicated that they will look to EPA's new office to reduce the burden
    of reporting requirements.
    ---------------------------------------------------------------------------
        \2\ ``Environmental Protection: Assessing EPA's Progress in
    Paperwork Reduction'' (GAO/T-RCED-96-107, March 21, 1996).
    ---------------------------------------------------------------------------
                working more effectively with state counterparts
        Although both EPA and the states have recognized the value in
    fostering a strong partnership concerning information management, they
    also recognize that this will be a challenging task both in terms of
    policy and technical issues. For example, the states vary significantly
    in terms of the data they need to manage their environmental programs,
    and such differences have complicated the efforts of EPA and the states
    to develop common standards to facilitate data sharing. The task is
    even more challenging given that EPA's various information systems do
    not use common data standards. For example, an individual facility is
    not identified by the same code in different systems.
        Given that EPA depends on state regulatory agencies to collect much
    of the data it needs and to help ensure the quality of that data, EPA
    recognizes the need to work in a close partnership with the states on a
    wide variety of information management activities, including the
    creation of its new information office. Some partnerships have already
    been created. For example, EPA and the states are reviewing reporting
    burdens to identify areas in which the burden can be reduced or
    eliminated. Under another EPA initiative, the agency is working with
    states to create data standards so that environmental information from
    various EPA and state databases can be more readily shared.
    Representatives of state environmental agencies and the Environmental
    Council of the States have expressed their ideas and concerns about the
    role of EPA's new information office and have frequently reminded EPA
    that they expect to share with EPA the responsibility for setting that
    office's goals, priorities, and strategies. According to a Council
    official, the states have had more input to the development of the new
    EPA office than they typically have had in other major policy issues
    and the states view this change as an improvement in their relationship
    with EPA.
                                  observations
        Collecting and managing the data that EPA requires to manage its
    programs have been major long-term challenges for the agency. The EPA
    Administrator's recent decision to create a central information office
    to make fundamental agencywide improvements in data management
    activities is a step in the right direction. However, creating such an
    organization from disparate parts of the agency is a complex process
    and substantially improving and integrating EPA's information systems
    will be difficult and likely require several years. To fully achieve
    EPA's goals will require high priority within the agency, including the
    long-term appropriate resources and commitment of senior management.
                                     ______

                  [General Accounting Office, April 29, 1999]

       Hazardous Waste: Observations on EPA's Cleanup Program and Budget
                              Management Practices

                             (By Peter F. Guerrero)

        Mr. Chairman and Members of the Subcommittee: We are pleased to
    provide you with information on the Environmental Protection Agency's
    (EPA) hazardous waste cleanup programs to assist in your deliberations
    on the agency's budget request for fiscal year 2000. Our work has
    determined that EPA faces several management challenges in implementing
    two of its hazardous waste cleanup programs--the Superfund program,
    under the Comprehensive Environmental Response, Compensation, and
    Liability Act, commonly known as CERCLA, and the Corrective Action
    program, under the Resource Conservation and Recovery Act, commonly
    known as RCRA. For the Superfund program, we found that the agency
    needs to better control cleanup costs, especially contractors' costs.
    For the Corrective Action program, we found that four key factors are
    hampering the progress of cleanups, including companies' reluctance to
    begin cleanups without an economic incentive and EPA's lack of
    resources to direct more companies to conduct cleanups. These
    management challenges demonstrate that the agency could more cost-
    effectively implement the Superfund program but needs more resources
    for the Corrective Action program--findings that are relevant to your
    decisions on the levels of new funding for these programs.
        More specifically, you asked us to provide information on three
    management issues confronting these cleanup programs: (1) the amount of
    contracts that EPA has awarded to private companies that conduct
    Superfund cleanup activities for the agency, (2) the extent to which
    EPA is using its ``Contracts 2000'' initiative as a vehicle to improve
    the agency's Superfund contract management practices, and (3) our
    perspective on the potential effects of transferring $25 million from
    the Superfund program's budget to the Corrective Action program's
    budget as a means of increasing the number of cleanups under RCRA. Our
    observations are based predominantly on two reports. In October 1997,
    we reported on the progress of cleanups under the Corrective Action
    program. Today, we are issuing a report discussing the progress that
    EPA and other federal agencies have made in resolving Superfund program
    management issues.\1\
    ---------------------------------------------------------------------------
        \1\ Superfund: Progress Made by EPA and Other Federal Agencies to
    Resolve Program Management Issues (GAO/RCED-99-111, Apr. 30, 1999) and
    Hazardous Waste: Progress Under the Corrective Action Program is
    Limited, but New Initiatives May Accelerate Cleanups (GAO/RCED-98-3,
    Oct. 21, 1997).
    ---------------------------------------------------------------------------
        In summary, we observed the following:
        EPA may be retaining more contractors than it needs to conduct its
    Superfund cleanup work. As a result, contractors often have low levels
    of work and high program support costs, such as those for rent and
    managers' salaries. Given that EPA expects its future Superfund
    workload to decrease as states take on more cleanups that the agency
    would otherwise have managed under Superfund and as cleanup
    construction is completed at more sites, contractors will continue to
    incur high program support costs unless EPA makes adjustments in the
    number of contracts it awards.
        EPA could use the team that is managing its Contracts 2000
    initiative--an effort designed to help the agency put in place the
    Superfund cleanup contracts it needs and assess its contract management
    practices--to address some of the recurring contract management issues
    we have identified, such as high program support cost rates. However,
    the agency could not provide us with documentation describing the (1)
    overall plan that the team would use to determine what options it would
    recommend that the agency adopt for improving Superfund contract
    management practices, and (2) time frames for implementing these
    improvements.
        Transferring $25 million from Superfund to the Corrective Action
    program could help EPA achieve more RCRA cleanups; however, we cannot
    determine with certainty what impact this transfer would have on
    Superfund. When we assessed the progress of cleanups under the
    Corrective Action program, we found that it was slow, in part because
    companies responsible for conducting cleanups at their facilities did
    not begin the cleanups unless they had a business incentive to do so,
    such as wanting to sell or redevelop the property, or until EPA
    directed them to do so. At the same time, we found that EPA lacked the
    resources it needs to direct more companies to begin cleanups.
    Therefore, providing more funds for corrective actions could increase
    cleanup activities. In our report on Superfund program management
    issues, we observed that for fiscal year 1998, EPA had more sites ready
    to begin the construction of a cleanup method than funds available.
    Thus, reducing the program's budget could further delay cleanups.
    Nevertheless, EPA has the flexibility to propose how it will use the
    funds it receives for Superfund, such as the relative amounts it would
    like to use for remedial work and enforcement actions. Therefore, EPA
    might be able to manage a reduction in its budget by cutting its
    administrative costs rather than performing fewer cleanup activities.
                                   background
        When EPA awards a Superfund contract, it specifies that the
    contractor will obtain up to a certain dollar amount of cleanup work
    over a given time period. As the contractor conducts the work, it
    incurs costs--both direct costs that can be attributed to an individual
    site and indirect costs that are not site specific. EPA pays the
    contractor for both types of costs. EPA tracks the amount of non-site-
    specific costs it pays as a percentage, or rate, of the total contract
    costs that it covers. One subset of these indirect costs is the
    contractor's program support costs, for items such as rent and
    managers' salaries. Since the mid-1990s, EPA has used 11 percent as its
    target for program support costs.
        Within the Superfund program, EPA established a long-term
    contracting strategy to identify and implement needed contract
    management improvements. An outgrowth of this strategy is EPA's
    Contracts 2000 initiative. Under this initiative, a team of EPA staff
    are helping the agency put in place the contracts it will need to
    manage its future cleanup workload and to assess and update its
    Superfund contract management practices. One of the issues that the
    team has identified as needing resolution is the type and number of
    contracts to use in the program. How EPA resolves this issue could
    affect the program support cost rate that it pays.
     contractors' superfund program support costs are still high, in part,
          because epa has too many contracts for its cleanup workload
        In a 1997 report on contract management issues,\2\ we stated that
    the percentage of funds EPA was paying contractors for program support
    costs (e.g., rent and salaries) was high relative to the percentage it
    was paying for cleanup costs. Specifically, the program support costs
    ranged from 21 to 38 percent of the total costs for some of the new
    Superfund contracts that EPA was awarding as its old contracts expired.
    These amounts exceeded EPA's target of 11 percent. In August 1998, we
    further reported that, overall, contractors' program support costs
    averaged about 29 percent of total contract costs.\3\ For our report on
    contract management issues, we reviewed the 15 new Response Action
    Contracts that EPA had awarded and determined that the program support
    cost rates for 5 of them were below EPA's target and the rates for 10
    of them exceeded EPA's target, ranging from 16 to 76 percent with a
    median of 28 percent.\4\ According to several EPA contracting officers,
    the agency expects such high rates for new contracts until it has had
    time to award enough work to all of the contractors. The officials
    predict that as EPA awards more work assignments, these program support
    cost rates should decrease.
    ---------------------------------------------------------------------------
        \2\ Superfund Program Management (GAO/HR-97-14, Feb. 1997).
        \3\ Superfund: Analysis of Contractor Cleanup Spending (GAO/RCED-
    98-221, Aug. 4, 1998).
        \4\ Five of these 15 contracts were less than a year old and two
    additional ones were just awarded at the time of our review. EPA plans
    to eventually award a total of 19 contracts nationwide.
    ---------------------------------------------------------------------------
        However, the uncertain future of the program may make such a
    decrease difficult to achieve. When EPA began replacing its expiring
    contracts with new contracts, it had to decide how many contracts to
    award. In September 1992, it used the number of work assignments under
    its 45 expiring contracts to project the number of work assignments it
    would have in the future. Because the agency expected the number of
    work assignments to remain steady, it believed that if it reduced the
    number of contracts it awarded, it could give its contractors more work
    and their program support cost rates would decrease. Initially, EPA
    decided to reduce the number of contracts from 45 to 22; later, it
    further reduced the number to 19 because it no longer expects to have
    the workload it originally predicted. However, EPA may still have more
    contracts in place than it needs. For example, EPA has been enrolling
    fewer sites in the program in recent years. In addition, the four EPA
    regions with the highest Superfund workload indicated that, as the
    states take on greater cleanup responsibilities, fewer sites will enter
    the program. With fewer sites, contractors will have less work and EPA
    will have less chance to reduce its program support cost rates.
        EPA will soon have an opportunity to review the number of contracts
    it should have in place and to try to better control program support
    costs. EPA designed the current Superfund contracts to last 5 years,
    with an option to renew them for another 5 years. The 5-year base
    period will be up for 11 of the current contracts within about 2 years
    and EPA will have to determine whether to exercise its option to renew
    them.
    recurring problems raise broader questions about superfund contracting
        that could be addressed through epa's contracts 2000 initiative
        While reviewing EPA's progress in resolving Superfund program
    management issues, including contractors' high program support cost
    rates, we determined that these problems may be symptoms of more
    systemic issues associated with EPA's Superfund contracting. EPA could
    use its Contracts 2000 initiative to address some of the following
    issues we identified:
        Could the agency more quickly and aggressively test and implement
    alternative types of contracts, such as fixed-price or performance-
    based contracts, in addition to or instead of using cost-reimbursable
    contracts as it now does? A cost-reimbursable contract, under which EPA
    agrees to pay all of a contractor's allowable costs, places most of the
    financial risk on the government because the work to be performed at a
    site is uncertain in nature and extent and EPA therefore cannot
    accurately predict its costs. A fixed-price contract, used for clearly
    defined and more routine cleanup actions, reduces the financial risk to
    the government because the parties agree on a price for the
    contractor's activities and the contractor bears the risk of performing
    at the agreed price. The Office of Management and Budget has also been
    urging EPA to make more use of performance-based contracts, which
    establish a price structure for a contractor's services that rewards
    the contractor for superior performance, allowing the government to
    better ensure the receipt of high-quality goods and services at the
    best price. EPA has begun to use both fixed-price and performance-based
    contracts on a limited basis at pilot sites.
        Is it cost-effective for EPA to duplicate the infrastructure
    necessary to manage contracts in each of its 10 regional offices as it
    is now doing?
        Are there new and more effective ways to build more competition
    into EPA's contracting process? Allowing multiple contractors to bid on
    portions of cleanup work could help to control costs.
        Has EPA lowered its contract management costs through its recent
    use of the U. S. Army Corps of Engineers to manage a portion of its
    cleanup work? Because the Corps specializes in and conducts a
    significant amount of construction contracting for the federal
    government, it may be better equipped than EPA to manage Superfund
    construction contracts. If using the Corps has been cost efficient for
    EPA, should it give the Corps additional cleanup work to manage?
        Our reviews over the years have consistently shown that without the
    sustained attention of high-level management, EPA has not always
    succeeded in implementing and sustaining contracting reforms. Because
    of this history, we were concerned when the agency could not provide
    documentation describing the (1) overall plan that the Contracts 2000
    team would use for determining what options it would recommend that the
    agency adopt to improve Superfund contracting practices and (2) the
    time frames for implementing these improvements. As a result, we do not
    know whether EPA will move quickly enough to put improvements in place
    before it decides whether to exercise the option to review its
    Superfund contracts for another 5 years.
     while shifting funds could accelerate corrective action cleanups, the
                        impact on superfund is uncertain
        Our work has demonstrated that limited resources have delayed the
    progress of cleanups under the Corrective Action program; therefore,
    moving more funds into the program from the Superfund program could
    help accelerate RCRA cleanups. While we are uncertain how such a shift
    would affect the Superfund program, EPA may have the flexibility to
    minimize the impact of a reduction in funds on Superfund cleanups.
    Lack of Resources Hampers EPA's Ability to Perform Corrective Action
            Cleanups
        In 1997, we assessed the status of EPA's RCRA Corrective Action
    program. This program was designed for currently operating facilities
    that must clean up contamination at their sites, whereas the Superfund
    program was intended to address contamination at abandoned sites. At
    the time of our review, we found that only about 8 percent of the
    approximately 3,700 nonfederal facilities nationwide that treat, store,
    or dispose of hazardous waste--including only about 5 percent of the
    approximately 1,300 facilities EPA considers to pose the highest
    risks--had completed cleanup actions under the Corrective Action
    program, according to EPA's data. About 56 percent of the remaining
    facilities--including about 35 percent of those posing the highest
    risks--had yet to begin the formal cleanup process. While some
    facilities had undertaken cleanup actions outside the program, the
    extent of such actions is unknown because the actions are not reflected
    in EPA's program data.
        Contributing to this slow rate of progress was that, without a
    business incentive, companies were reluctant to initiate cleanups until
    EPA, or a state implementing the program for EPA, directed them to do
    so. According to several cleanup managers we spoke with, companies will
    generally ensure that the contamination at their facilities does not
    pose an immediate danger to public health or the environment, whether
    or not EPA or a state has directed the facility to enter the Corrective
    Action program. However, the companies in our survey appeared to
    undertake more comprehensive cleanup actions only when they had an
    economic incentive to do so because the corrective action process can
    be costly and time-consuming. According to one cleanup manager at a
    large corporation, the company may not be anxious to pursue a cleanup
    if the contamination is not posing an immediate threat, the facility is
    not losing revenue, or the company is not incurring a financial
    liability by delaying the cleanup.
        Although EPA is aware that cleanups are progressing slowly, we
    found that the agency could not direct more facilities to begin
    cleanups because it lacked the necessary resources. In fiscal year
    1997, EPA expected to direct cleanups at less than 2 percent (46) of
    the 1,886 facilities--427 of which were high priorities--that had not
    yet begun cleanup. For example, program managers in one region
    projected that they would have enough resources that fiscal year to
    direct companies to begin cleanups at only 4 of their 69 high-priority
    facilities awaiting cleanup. Likewise, another region had 82 high-
    priority facilities that were eligible for and awaiting corrective
    action but expected to be able to enforce such action at only three of
    the facilities during that fiscal year because of resource constraints.
    Furthermore, several of EPA's program managers in headquarters and the
    two regions noted that they may never have the resources to get to the
    1,459 lower-priority facilities that were in EPA's corrective action
    workload at that time. According to EPA Corrective Action program
    managers, the program's budget did not increase for fiscal years 1998
    or 1999. Therefore, the problems we identified in our earlier review
    remain.
    Effect of Moving Funds Out of the Superfund Program Is Difficult to
            Predict
        EPA officials have stated that the agency has serious concerns
    about transferring funds out of the Superfund program and is evaluating
    the effect of such a transfer on the agency's Superfund cleanup goals.
    As we stated in our report on Superfund program management issues, in
    fiscal year 1998, EPA had 50 sites that were ready to start
    constructing the cleanup method but funded 38 of them, at a cost of
    $200 million, or about 13 percent, of its $1.5 billion overall
    Superfund budget.\5\ Given that EPA did not provide funds for all 50
    sites, additional cuts to the program's budget could reduce the number
    of future construction activities the agency could fund.
    ---------------------------------------------------------------------------
        \5\ In addition to these new construction projects, EPA continued
    to fund ongoing longer-term construction projects and shorter-term
    cleanup actions at numerous sites.
    ---------------------------------------------------------------------------
        However, EPA has some flexibility to determine the amount of funds
    it plans to spend on its various Superfund program activities. Our
    ongoing work reviewing EPA's total Superfund expenditures demonstrated
    that for fiscal years 1996 through 1998, EPA spent about 60 percent of
    its Superfund budget on its own site-specific and contractors' cleanup
    costs and 40 percent on non-site-specific costs, including its own
    program management and administrative activities.
        Furthermore, we found that over these same 3 years, the amount of
    funds going to contractors for cleanup work and to other site-specific
    work was declining. Given that the Superfund program is now almost 20
    years old and most sites are in construction and moving toward
    completion, we would expect to see more spending for cleanups and less
    for administrative costs. Such a shift in spending would be consistent
    with changes in the types of work needed and with efficiencies gained
    through experience. Since such a shift has not yet occurred, EPA may
    have opportunities to achieve more administrative efficiencies, which
    it can use instead of cuts in actual cleanup work to offset a reduction
    in funding for the Superfund program.

        Senator Bond. Thank you, Madam Administrator. I will ask
    that we set the timer at 5 minutes to try and get as many
    rounds in as possible. I had asked Senator Burns if he would
    not mind voting early and coming back to----
        Senator Burns. And often?
        Senator Bond. Yes, two or three times--and will take the
    gavel when I leave.
        Senator Burns. Mr. Chairman, might I suggest something
    here. We have got a little time set aside, floor time to sort
    of describe and set the stage of where we think agriculture is
    today, on the floor under the leadership of Senator Coverdell.
    If you want to go vote, then I will chair, and then when you
    come back, I will just go over there and vote and stay there.
        Senator Bond. All right. Senator Craig, can you----
        Senator Burns. George Frampton has already had a heart
    attack.
        Senator Bond. Senator Craig, can you come back?
        Senator Craig. I will try to come back.
        Senator Bond. Can you vote early and come back? The vote
    starts at 10:30.
        Senator Craig. I have some questions for Carol Browner.
        Senator Bond. Let me move on and get started.
        Senator Mikulski. Mr. Chairman, just one note of order.
    When we vote, I will not be coming back because I am going to a
    hearing on refugees and the emergency supplemental for Kosovo.
    I thank the Administrator and I will submit my questions for
    the record.

                      gap analysis of water quality needs

        Senator Bond. All right. Madam Administrator, EPA's 1996
    Clean Water Act Needs Survey identified about $140 billion in
    waste water infrastructure financing needs. We understand EPA
    has been updating these estimates in what is being called a GAP
    analysis. What is your revised estimate?
        Ms. Browner. We will have to submit that for the record. We
    are concluding that analysis. As you know, Mr. Chairman, in
    accordance with the desires of both Congress and the States we
    complete Clean Water and Drinking Water Needs Surveys in
    alternate years.
        Senator Bond. I understand from the various sources like
    the AMSA and others that it is estimated at about $200 billion.
        Ms. Browner. Our analysis is not done yet and we will
    submit it when it is done.
        Senator Bond. We have it. It says--from AMSA--it says that
    it is--it has been increased to $200 billion and that does not
    even include waste water treatment replacement costs.
        Ms. Browner. Mr. Chairman, I am more than happy to provide
    it to you. It is not done. We do this by soliciting information
    from the States. I do not doubt that you are right that the
    needs continue and that they are significant. We will get it to
    you the minute we have it done. But we went through a very
    rigorous program with the States to determine how we would
    actually do this. And I think it would be inappropriate for me
    to speak outside of that process.
        Senator Bond. Well, we were looking at the public meeting
    material handed out. I assume this was preliminary information?
        Ms. Browner. That is correct.
        Senator Bond. On Thursday, March 18?
        Ms. Browner. That would be correct.
        Senator Bond. It shows SSO adds--it brings it up to almost
    $200 billion and that there are replacement needs as well.
        Ms. Browner. We do not dispute that there are replacement
    needs.
        Senator Bond. Apparently the SSOs were not included--they
    were included at $10 billion the first time around and that is
    an underestimate. Okay. In view of the significant increased
    cost, and we think from the preliminary analysis, it would be
    at least 43 percent, I want to point out that this chart shows
    the request from OMB, from the President to the EPA. It started
    out for clean water, $1.6 billion in 1996; $1.35 in 1997;
    $1.075 in 1998, the same in 1999. This year, $800 million.
        It is dropping off the chart. We believe that the needs are
    at least $200 billion plus any addition for replacement, which
    is also an SRF-eligible number. And given the magnitude of
    these numbers--and we understand that there are other dollars
    that go into cleaning up our waste water--why has the
    presidential recommendation been slashed in half since 1996,
    when cleaning up the waste water is the one way we can assure
    that our children and families who go to lakes and beaches and
    rivers and streams on summer vacation aren't subject to the
    dangers of water pollution?
        Ms. Browner. Mr. Chairman, the President made a commitment
    to provide to the States a fund that would revolve annually at
    $2 billion by the year 2005. Because of our work with you, and
    because of funding levels and a variety of other reasons, the
    fund will revolve at the promised $2 billion, which goes beyond
    what the Clean Water Act authorizes in the year 2002.
        Mr. Chairman, we do not dispute that water pollution
    continues to be a significant environmental challenge. But when
    you look at the nature of water pollution across this country,
    as you yourself know, polluted runoff is as much a problem in
    many communities as is waste water. What we would suggest to
    Congress is now is the time for all of us to come together and
    to rewrite and strengthen the Clean Water Act so we can meet
    all of the pollution challenges that we face, and to not simply
    continue to focus on one segment of the problem.
        This is a large problem. We agree with you about that. But
    when you go out there and you talk to the States and you talk
    to people who deal with water pollution beyond waste water,
    they are looking at a significant problem. They are looking for
    support and we would encourage the Congress to work with us.

                           nonpoint source pollution

        Senator Bond. Madam Administrator, we have done things on
    the nonpoint source pollution. We have a number of initiatives
    going. There are many things that need to be done there. But
    there is much more than a $200 billion need. The amount that
    the President has proposed for revolving funds for the States
    is, I believe, totally inadequate.
        We cannot, no matter what other problems there are, we
    cannot underfund something that is as important as this. I
    cannot understand the budget prioritization process when we
    have such a clear need to address dealing with waste water and
    the budget is cut. We cannot be setting up new initiatives.
        Let me turn now to Senator Mikulski for her questions.
        Senator Mikulski. Mr. Chairman, in light of the vote and
    also----
        Senator Bond. The good news or bad news, depending on which
    side you sit on, is that the vote on Kosovo doesn't occur until
    11:40. So we will not be interrupted by votes.
        Senator Mikulski. Senator Byrd, in light--may I just
    proceed? Otherwise I am happy to defer to you, sir.
        Senator Byrd. Proceed.

                           waste water: y2k readiness

        Senator Mikulski. Just following up on the waste water
    issue, Madam Administrator. And I had hoped before your tenure
    was over that we could call you Madam Secretary, but I
    understand there were other politics involved. In the Y2K
    readiness report prepared by Senators Bennett and Dodd and also
    a GAO survey, there were flashing yellow lights about the Y2K
    readiness of drinking water plants.
        And I will get to my question. As you know, water plants
    are often automated control systems and, therefore, they are
    automated and in the event of a Y2K glitch, the failure to have
    water could have widespread community and public health, et
    cetera effects. According to GAO, only Colorado and Minnesota
    have taken actions to assess the readiness of their plants.
    Twenty-eight States including Maryland and Virginia are
    beginning to notify--now this is May.
        Could you tell us, number one, your assessment of where we
    are with Y2K readiness in terms of the availability of water
    and, number two, what is EPA's role and what action it has
    taken on this?
        Ms. Browner. Yes. As I said earlier, EPA, in terms of the
    systems we managed, have now gotten a clean bill of health.
    Congressman Horn has given us an ``A.'' Since we have completed
    the work for our Y2K compliance issues, we are now working with
    both the States and local governments. And many of these
    drinking water utilities are privately owned. We are reaching
    out to States and local governments in terms of the readiness
    survey and in terms of what actions will need to be taken. It
    is a mammoth undertaking. We believe, based on what the States
    have shared with us and the trade associations, that the States
    are going to be able to address the drinking water systems
    problems.
        Senator Mikulski. Are you coordinating this for the nation?
    Who is coordinating the readiness of these water plants?
        Ms. Browner. We have worked through the White House office
    on Y2K compliance. We, in fact, brought this to their
    attention. We have been conducting outreach meetings with the
    various stakeholders. The preliminary indications from a survey
    of 4,000 public water systems, which service about 80 percent
    of the population, is that 86 percent of these systems that
    serve 100,000 or more people expect to be Y2K-compliant.
        Senator Mikulski. Madam Secretary, I want to move on--
    excuse me, Madam Administrator. In your work with the White
    House, I think you really need to press them to focus on this
    issue. We had a briefing from the White House on what they were
    doing. And it was so general in so many ways. The meeting was
    helpful, but they really need to feel an urgency on this
    because we are so used to having good water when we want it
    that we are complacent.
        Ms. Browner. We'll provide for the record the various
    studies that have been done and the analysis we have done if
    that would be helpful.
        Senator Mikulski. I think that would.
        [The information follows:]

                   Readiness of Drinking Water Plants for Y2K

        The Agency agrees that the Y2K readiness of drinking water and
    wastewater utilities is of vital national significance. EPA's Office of
    Water has been actively leading the outreach efforts to this sector,
    with substantial assistance and participation by the drinking water and
    wastewater related trade and professional associations, both national
    and local/regional chapters. OW and the EPA regional offices have held
    numerous meetings with trade associations, other stakeholders and state
    agencies. We have disseminated information through our web sites,
    developed written materials, and participated in trade conferences and
    other forums. We have also highlighted this issue through site visits
    by the EPA Assistant Administrator for Water; these visits were
    publicized in major drinking water and wastewater trade association
    journals in a joint effort to raise the level of awareness of this
    problem. We have worked to have Y2K addressed in drinking water and
    wastewater operator training sessions in most states.
        A recent GAO report indicated that few states have assessed the Y2K
    readiness of their drinking water and wastewater utilities and that
    many have not been actively reaching out to inform and work with them.
    During and since the time of the GAO survey, EPA's regional offices
    have been working directly with their states and have indicated that
    state activity has increased on this issue since GAO collected their
    data.
        Many states have sent Y2K information to their drinking water and
    wastewater utilities; held Y2K seminars, conferences and workshops;
    published articles; and provided Y2K training to drinking water and
    wastewater operators. An increasing number of states are conducting Y2K
    readiness surveys and are incorporating Y2K into site visits. Some
    states have been very proactive, providing information and assistance,
    while others have interpreted their regulatory roles and authority as
    applying only to enforcement activity if a utility should violate its
    wastewater permit or be out of compliance with drinking water
    regulations.
        The surveys completed last year of wastewater utilities (conducted
    by the American Metropolitan Sewerage Association) and drinking water
    utilities (conducted by the American Water Works Association, the
    Association of Metropolitan Water Agencies and the National Association
    of Water Companies) indicated that most of the larger systems were
    taking steps to address the issue and were likely to be prepared. The
    surveys provided by the associations are attached.
        These associations have committed to conducting follow-up surveys
    with results available by early July. In addition, EPA's Office of
    Water has agreed to work with the National Rural Water Association
    (NRWA) to design a survey that NRWA will conduct of the small to medium
    drinking water and wastewater systems nationwide. These systems were
    largely unrepresented in the earlier surveys. John Koskinen, Chair of
    the President's Council on Year 2000 Conversion, requested that the
    survey results be available by early July to provide a more complete
    picture of the readiness status of the nations' drinking water and
    wastewater sector.
        EPA continues to work with states, associations and other
    stakeholders to encourage readiness activities, testing, contingency
    planning and communication to the public on the Y2K readiness of
    drinking water and wastewater utilities.
      community public water systems year 2000 preparedness survey summary
    Introduction
        In July and August 1998, the American Water Works Association
    (AWWA), the Association of Metropolitan Water Agencies (AMWA), and the
    National Association of Water Companies (NAWC) conducted a joint survey
    of their member public water utilities to determine the Year 2000
    preparedness of community public water systems to address potential
    computer problems caused by the change of date at the beginning of the
    year 2000.
        The public water utility membership of AWWA, AMWA and NAWC consists
    of approximately 4,000 public water systems serving approximately
    eighty percent of the American public. The remainder of the Nation's
    55,000 community public water systems which are not members of AWWA,
    AMWA or NAWC are primarily small rural public water systems which are
    members of the National Rural Water Association (NRWA) or not members
    of any of the four major public water system associations.
        The 55,000 community public water systems serve a total population
    of 249 million people. However, the 3,687 community public water
    systems serving a population of 10,000 or more serve a total of 204
    million people. Nearly all of these 3,687 community public water
    systems are members of AWWA, AMWA, or NAWC. The remaining community
    public water systems serve a total population of 45 million people. The
    remainder of the United States population obtain their drinking water
    from private wells.
        Approximately 725 public water systems have responded to the
    survey. The responding public water systems range in size from small
    systems serving less than 10,000 people to systems serving more than a
    million. While the number of respondents is a comparatively small
    sample of the total population of community public water systems, the
    preliminary data can be used to provide an indication and understanding
    of the state of preparedness of the Nation's community public water
    systems. However, it is also important to note that the state of
    preparedness of non-responding utilities is not known. This could
    introduce a bias into the results of a large number of non-responding
    utilities are also unprepared. These caveats should be kept in mind
    when evaluating the data of the survey to date.
    Tentative Indications
        Although a statistically valid projection may not be made from the
    survey data, the data provide the following tentative indications
    concerning the state or Year 2000 preparedness of the Nation's
    community public water systems.
        Approximately 75 percent of the American people are served by large
    community public water systems serving a population over 100,000
    people. Based on the survey, community public water systems serving
    populations of 1,000,000 or more can be expected to have little or
    minimal internal problems caused by the change of date at the beginning
    of the year 2000. There are 30 community public water systems which
    serve a population of more than 1,000,000. 89 percent of the community
    public water systems serving a population of 100,000-1,000,000 expect
    to have Year 2000 compliance work done in time. These statistics seem
    to indicate that the overwhelming majority of the American people will
    not have their drinking water supply disrupted or made unsafe by
    internal Year 2000 computer problems of a community public water
    system.
        However, a smaller percentage of community public water systems (26
    percent), including very large systems, appear to have fully assessed
    the Year 2000 compliance status of service providers and vendors which
    could affect public water system operations or expect to have completed
    an external Year 2000 problem assessment before the Year 2000. This
    raises the possibility that some community public water systems could
    be affected by power outages, communications failures including data
    transmission, or a shortage of water treatment chemicals if their
    external service providers and vendors have Year 2000 problems.
        The survey responses concerning contingency plans may cause some
    confusion. Most public water systems have contingency plans for natural
    disasters, etc., to operate and provide safe drinking water. This would
    include using manual operations instead of computer operations and, in
    a worst case scenario, issuing a ``boil water' notice. It would seem
    that existing public water system contingency plans could be used or
    adapted for a system failure caused by a Year 2000 problem. It may be
    that public water systems that indicated that they have not completed
    contingency plans (83 percent) intend to modify their existing
    contingency plans to specifically mention the Year 2000 problem and
    have not completed the update. However, regardless, the majority of the
    public water systems indicated that they expect to have Year 2000
    readiness work done in time.
        As one would expect, the survey data indicates that the cost of
    Year 2000 compliance increases with system size. No estimated total
    national projection of cost of Year 2000 compliance can be determined
    from the survey data at this time until a more refined cost analysis is
    done in conjunction with the total number of public water systems in
    each size category.
                                  data summary
    Formal Plan for Year 2000 Problem
        61 percent of the utilities had formal plans for addressing the
    Year 2000 problem; 36 percent did not have a formal plan; 3 percent did
    not respond to this question.
        52 percent of the systems serving less than 10,000 persons had
    formal plans; 68 percent of systems serving 10,001-100,000 had formal
    plans; 89 percent of systems serving 100,001-1,000,000 had formal
    plans; 100 percent of systems serving over 1,000,000 had formal plans.
    Completed Internal Utility-Wide Year 2000 Problem Assessment
        51 percent of the utilities have completed an internal utility-wide
    Year 2000 problem assessment; 42 percent have not completed a utility-
    wide Year 2000 problem assessment; 7 percent did not respond to this
    question.
        44 percent of utilities serving less than 10,000 persons have
    completed a utility-wide Year 2000 problem assessment; 57 percent of
    systems serving 10,001-100,000 have completed a utility-wide Year 2000
    problem assessment; 63 percent of systems serving 100,001-1,000,000
    have completed a utility-wide Year 2000 problem assessment; 100 percent
    of systems serving over 1,000,000 have completed a utility-wide Year
    2000 problem assessment.
    Expect Internal Year 2000 Work to be Completed in Time
        81 percent of the utilities expect to complete internal Year 2000
    work in time; 13 percent did not expect to complete internal Year 2000
    work in time; 6 percent did not respond to this question.
        76 percent of the utilities serving less than 10,000 persons expect
    to have internal Year 2000 work to be completed in time; 87 percent of
    the utilities serving 10,001-100,000 expect to have internal Year 2000
    work to be completed in time; 89 percent of the utilities serving
    100,001-100,000,000 expect to have internal Year 2000 work to be
    completed in time; 100 percent of the utilities serving over
    100,000,000 expect to have internal Year 2000 work to be completed in
    time.
    Completed External Year 2000 Problem Assessment
        26 percent of the utilities have completed an external Year 2000
    problem assessment; 69 percent have not completed an external Year 2000
    problem assessment; 5 percent did not respond to this question.
        22 percent of utilities serving less than 10,000 persons have
    completed an external 2000 problem assessment; 31 percent of systems
    serving 10,001-100,000 have completed an external Year 2000 problem
    assessment; 35 percent of systems serving 100,001-1,000,000 have
    completed an external Year 2000 problem assessment; 30 percent of
    systems serving over 1,000,000 have completed an external Year 2000
    problem assessment.
    Expect External Year 2000 Work to be Completed in Time
        65 percent of the utilities expect to complete external Year 2000
    work in time; 29 percent did not expect to complete external Year 2000
    work in time; 6 percent did not respond to this question.
        62 percent of the utilities serving less than 10,000 persons expect
    to have external Year 2000 work to be completed in time; 67 percent of
    the utilities serving 10,001-100,000 expect to have external Year 2000
    work to be completed in time; 67 percent of the utilities serving
    100,001-1,000,000 expect to have external Year 2000 work to be
    completed in time; 90 percent of the utilities serving over 100,000,000
    expect to have external Year 2000 work to be completed in time.
    Completed Contingency Plans for Unforseen Internal Problems
        23 percent of the utilities have completed contingency plans for
    unforseen internal problems; 72 percent of the utilities have not
    completed contingency plans for unforseen internal problems; 5 percent
    did not respond to this question.
        20 percent of the utilities serving less than 10,000 persons have
    completed contingency plans for unforseen internal problems; 25 percent
    of the utilities serving 10,001-100,000 have completed contingency
    plans for unforseen internal problems; 23 percent of the utilities
    serving 100,001-1,000,000 have completed contingency plans for
    unforseen internal problems; 30 percent of the utilities serving over
    1,000,000 have completed contingency plans for unforseen internal
    problems.
    Completed Contingency plans for Unforseen External Problems
        12 percent of the utilities have completed contingency plans for
    unforseen external problems; 83 percent of the utilities have not
    completed contingency plans for unforseen external problems; 5 percent
    did not respond to this question.
        13 percent of the utilities serving less than 10,000 persons have
    completed contingency plans for unforseen external problems; 10 percent
    of the utilities serving 10,001-100,000 have completed contingency
    plans for unforseen external problems; 15 percent of the utilities
    serving 100,001-1,000,000 have completed contingency plans for
    unforseen external problems: 30 percent of the utilities serving over
    1,000,000 have completed contingency plans for unforseen external
    problems.
    Cost of Year 2000 compliance
        39 percent of the utilities expect to spend less than $10,000 to
    become Year 2000 compliant; 26 percent of the utilities expect to spend
    $10,000-$50,000 to become Year 2000 compliant; 8 percent of the
    utilities expect to spend $50,000-$100,000 to become Year 2000
    compliant; 10 percent of the utilities expect to spend $100,000-
    $1,000,000 to become Year 2000 compliant; 4 percent of the utilities
    expect to spend over $1,000,000 to become Year 2000 compliant.
        As would be expected, the smaller community public water systems
    expect to spend less and the larger systems expect to spend more on
    Year 2000 compliance. The survey data range from 56 percent of systems
    serving less than 10,000 people expecting to spend less than $10,000 on
    Y2k compliance to 60 percent of systems serving more than 1,000,000
    people expecting to spend more than $1,000,000 on Year 2000 compliance.
                         amsa year 2000 survey analysis
    AMSA Year 2000 Survey--Background
        The Association of Metropolitan Sewerage Agencies (AMSA) is a
    dynamic coalition of over 200 of the nation's publicly-owned wastewater
    treatment agencies. AMSA members collectively serve the majority of the
    sewered population in the United States, and treat and reclaim more
    than 18 billion gallons of wastewater each day. Over the past 28 years,
    AMSA has maintained a close working relationship with both Congress and
    the U.S. Environmental Protection Agency in the development of
    environmental legislation and policymaking.
        Locally, AMSA member agencies play a major role in their
    communities, often spearheading watershed management efforts, promoting
    industrial/household pollution prevention and water conservation, and
    developing urban stormwater management programs. AMSA members are true
    environmental practitioners who work daily towards ensuring the safety
    and quality of our nation's water supply.
        AMSA conducted a survey of its members to assess whether wastewater
    agencies have evaluated the Year 2000 (Y2K) problem, the estimated
    costs to remedy the problem, the status of implementing solutions, the
    impacts of potential system failures, and whether plans are in place
    should systems fail. Seventy-six of AMSA's 206 agencies responded to
    the June 10, 1998 survey, and forty-three responded to the October 2,
    1998 followup survey.
    Computer Use and Level of Automation
        Computers, microchips, electronic data logging/analysis, and remote
    monitoring/control systems are widely used and are critical components
    in the overall functions of the Nation's public wastewater treatment
    agencies. These systems contribute to varying levels of automation in
    the industry. While many of the functions within wastewater agencies
    can be automated or computerized, such as administrative functions
    (i.e., billing, payroll, finances, etc.), process control operations,
    or laboratory functions, all these functions can be performed manually,
    and a significant portion of the industry is not fully automated.
        Respondents to AMSA's recent survey indicated an average level of
    automation of 54 percent. For example, some agencies use automated
    billing systems, while treatment plants may operate manually. Other
    agencies have fully automated administrative operations, process
    operations, and industrial compliance programs, but may not have
    automated data processing in their laboratory.
        The survey examines the level of implementation of Supervisory
    Control and Data Acquisition (SCADA) systems within the AMSA
    membership. SCADA systems can allow operators to remotely collect
    operational data, and control operations of pump stations or treatment
    plant processes from a single location. Among the survey respondents,
    88 percent currently implement some form of SCADA system currently, and
    nearly 100 percent of respondents indicated future plans to use SCADA
    systems. It should be noted that although a wastewater treatment agency
    may use SCADA in some of its processes, this does not necessarily mean
    that the entire treatment process is automated. For instance, a SCADA
    system may be used to monitor and collect data from remote pumping
    stations, however, the SCADA may not monitor treatment plant processes.
        Nearly 100 percent of the agencies responding to the recent AMSA
    survey indicated that computers were used in process control,
    laboratory, industrial compliance, billing systems, and for other
    administrative purposes, such as finances, inventory, and maintenance
    management. A complete listing of responses on the use of computers/
    microchips in agency functions includes:
        Administrative.--billing, accounts payable, payroll, human
    resources, purchasing, telephone systems, assessments, procurement,
    contract management, capital investment programs, general ledger,
    office automation, pensions
        Maintenance.--system and plant maintenance management, inventory
        Operations.--process control, embedded programmable logic controls,
    SCADA, electronic pressure recorders, generators, collection system
    monitoring, flow monitoring, mobile equipment, meter reading and
    routing
        Laboratory.--laboratory analysis, calibration, reporting
        Industrial Waste.--permitting, industrial compliance
    determinations, sampling
        Engineering.--project tracking, geographic information systems,
    computer-aided drafting (CAD)
        Reporting.--NPDES reporting and monitoring
        Other.--interactive voice response, internet, energy management,
    telephones, security, radio, elevators, fire alarms.
    Assessment and Action
        A vast majority of AMSA survey respondents (90 percent) have
    developed a plan to assess and address the Year 2000 problem. Many of
    these assessments are very formal processes which are either initiated
    under a comprehensive local government assessment or as part of the
    agency's overall planning processes (it should be noted that 50 percent
    of the AMSA membership are agencies which operate under the
    jurisdiction of a local city or county government, while another 50
    percent of AMSA members operate as regional districts). A little more
    than half of the agencies are addressing (or intending to address) the
    problem in-house, while the remainder are using consultants or a
    combination of in-house staff and consultants.
    Costs
        The costs to address the Year 2000 problem vary widely for survey
    respondents. Forty-five percent of the wastewater agencies which
    reported estimated costs indicated that the cost to address the Y2K
    problem was relatively minimal, ranging from 0 to $100,000, while
    fifteen percent reported estimated costs in excess of $1,000,000, with
    the two highest reported values being $15,000,000. Most of the agencies
    reporting expenditures in excess of $1,000,000 were relatively large
    systems, however 17 percent of these were agencies serving populations
    less than 250,000. In general, most agencies reported total estimated
    costs to fix the Y2K problem between 0 to 2 percent of annual operation
    costs. Four agencies reported estimated costs to fix the Y2K problem
    over 10 percent of annual operation costs. The average annual budget
    for an agency serving one million people is approximately $125,000,000.
    Progress in Implementing Solutions
        Implementation of solutions to the Y2K problem varies widely,
    though most all responding agencies have made some progress.
    Approximately 95 percent have begun to implement solutions to the Y2K
    problem, while 26 percent are complete or nearly complete. To address
    the Y2K problem, many agencies are systematically checking and
    upgrading systems which are not Y2K compliant. Figure 1 illustrates a
    timeline of responding AMSA POTW Y2K efforts. As illustrated in the
    graph, a majority of the agencies, will have completed the awareness,
    inventory, and assessment phases of Y2K conversion by January 1, 1999.
    Responding agencies are poised to focus Y2K efforts on repair, testing,
    contingency planning, and implementation in 1999 and nearly all have
    plans to be implementing Y2K ready systems by January 1, 2000.
    [GRAPHIC] [TIFF OMITTED] T05AP29.002

        Figure 2, which illustrates the current status of responding
    agencies in accordance with six defined phases of Y2K remediation, also
    highlights that Y2K repair, testing, contingency planning, and
    implementation in will be a major focus of for wastewater agencies in
    1999.
    [GRAPHIC] [TIFF OMITTED] T05AP29.003

        Figure 3 illustrates the status of assessment/correction of Y2K
    problems associated with embedded microchips. Embedded microchips
    present a special challenge to the Y2K issue as they are pervasive in a
    range of systems and equipment including: meter readers, programmable
    logic controllers, security systems, elevators, alarms, etc. Responding
    agencies are both testing these systems and receiving assurances from
    vendors that these systems are Y2K compliant. As the graph illustrates,
    a majority of the responding agencies are still in the assessment phase
    for each system type, while many are complete with embedded chip
    assessments, and are currently implementing remediation efforts,
    especially for mission critical systems such as plant process and
    remote process operations.
    [GRAPHIC] [TIFF OMITTED] T05AP29.004

    Impacts of Year 2000 Failure
        Though most agencies believe they will be Y2K compliant in 1999,
    AMSA's survey requested that agencies project the resulting impact,
    should a Y2K failure occur in any critical systems. A breakdown by
    agency function follows:
        Administration.--Computers are used throughout the administrative
    functions of a wastewater treatment agency. Billing, payroll, human
    resources, and many other functions depend on accurate computerized
    record-keeping and reporting. Potential failures in billing systems are
    the most troublesome to agencies responding to the survey. Should
    systems fail in the event of a Year 2000 problem, nearly all agencies
    indicated that delays in billing would result in serious cash flow
    interruptions. These interruptions in cash flow are unlikely to
    directly affect operations, as many agencies have cash reserves on
    hand, or may be able to negotiate with vendors to extend bill due
    dates, however, such a failure is likely to have major impact on the
    administrative functions of the agency. Some agencies reported that
    they have backup contingencies should there be a failure in automated
    billing.
        Process Control.--All responding agencies with automated process
    controls have the ability to switch to manual operations almost
    immediately or within hours in the event of a Year 2000 failure.
    Approximately 15 percent agencies reported potential treatment plant
    problems and possible compliance issues as a result of switching to
    manual mode. Potential additional costs would be incurred with the
    addition of staff or the payment of overtime.
        One of the biggest concerns in this situation is that collection
    system and plant operational data would not be immediately accessible
    for the operators, and whether this would lead to sewage backups,
    overflows, or compliance problems. However, most agencies reported that
    switching to manual mode would pose none or very minor problems as many
    automated operations run in parallel with ``manual'' instrumentation
    and control. For instance, a wastewater treatment plant may use
    programmable logic controllers (PLCs) within its treatment operations
    to control valves or pump operations based on flow or pressure
    readings. In normal operations, the data from these controllers would
    be relayed to an operator's computer control screen, and the PLCs would
    automatically activate valves or pumps accordingly. Should one or more
    PLCs malfunction, an operator would no longer receive data via the
    computer control screen and would have to ``manually'' read a flow
    meters or pressure gauges. The operator also could not rely on the PLCs
    to automatically activate appropriate valves or pumps, thus would also
    have to ``manually'' adjust these controls.
        One potential catastrophic failure issue which was noted and which
    is beyond the control of the wastewater agency is the occurrence of a
    major regional electrical power failure. There are a wide-range of
    capabilities in terms of operating treatment plants in the absence of a
    electrical power.
        During a recent meeting, with the electric power industry trade
    groups, power industry officials indicated the a ``cautious optimism''
    regarding their industry's ability to meet the Y2K challenge by January
    1, 2000. The groups referenced a recently released report titled,
    ``Preparing the Electric Power Systems of North America for Transition
    to the Year 2000--A Status Report and Work Plan'' which was submitted
    to the Department of Energy on September 17, 1998 (available at
    http:www.nerc.com). In summing up the report, officials indicated that
    any power outages that occur due to Y2K issues are likely to be
    localized and short-term (i.e. hours or days), and that the chance of a
    widespread power grid failure is basically zero. Localized and short-
    term power outages will not produce widespread treatment plant
    disruption as most facilities have the dual power feeds from differing
    electrical sub-stations as backup, and/or have reserve capacity within
    the treatment and collection system to store flows until power is
    restored.
        In the extreme case of a regional, long-term electrical power
    failure, thirty-seven percent of the responding agencies indicated that
    all treatment plants under their control could operate indefinitely
    throughout the power outage. Most of these facilities would use diesel,
    methane, or natural gas powered generators, though fuel availability
    would clearly be an issue. Some plants could operate generators with
    methane produced from on-site solids digestion processes. Another
    twenty-eight percent of the agencies indicated that their plants could
    operate at partial capacity, or that some, but not all of the plants
    under their control could operate fully. Remote pumping stations may
    also be affected by a regional, long-term power failure. While,
    seventy-percent of responding agencies would be able to operate their
    remote pumping stations in the case of a long-term electrical power
    failure using diesel generators, other agencies would have to rely on
    mobile generators, or in-line and off-line storage capacity to contain
    any flows that could not be pumped to the treatment plant.
        Laboratory.--Should laboratory systems fail, the issue would be
    whether agency laboratories could adequately and accurately analyze
    sample results, and report compliance problems adequately to regulatory
    and public health agencies. Some agencies can operate in manual mode,
    while others indicated that out-sourcing of lab functions could be
    implemented.
        Industrial Compliance Programs.--Should industrial compliance
    systems fail, the wastewater treatment agency would not be able to
    adequately monitor industrial customer compliance, which could result
    in undetected high strength discharges leading to treatment plant
    upsets, delays in issuing permits, and noncompliance with federal
    regulatory pretreatment requirements.
    Plan of Action
        Nearly 55 percent of the agencies have completed or begun work on a
    contingency plan should all or a portion of their computer systems fail
    as a result of the Year 2000. As noted in Figure 1, all respondents
    plan to address the issue of contingency plans by January 1, 2000.
    Contingency plans will discuss issues concerning: (1) how manual
    operation should be initiated in the case of system failures; (2)
    chemical and fuel supply needs; (3) coordination with other local
    entities; (4) manpower needs, and; (5) correction of system failures.
    Conclusion
        Based on the results of the AMSA survey and follow up discussions
    with wastewater treatment agency staff, it can be concluded that the
    large segment of wastewater industry represented by AMSA's membership
    will respond effectively to the challenges presented by the Year 2000
    problem. However, a significant portion of work will need to be
    completed prior to January 1, 2000. Remediation, testing,
    implementation, and contingency planning should be high priorities in
    1999.
        While treatment plants have become more and more automated over the
    past ten years, many treatment plants still operate fully manually, and
    even automated plants can be reverted back to manual mode in a matter
    of a few minutes or hours depending upon the complexity of the system
    and manpower availability. Some problems are bound to occur, and may
    involve either or both internal system problems or external factors
    that are beyond the control of a public wastewater treatment agency,
    however, careful program management and proper contingency planning
    should minimize the impacts of these problems on public health and the
    environment.

                        AMSA Year 2000 Survey--Addendum

        CHEMICAL SUPPLY: 85 percent of responding agencies do not
    anticipate chemical supply problems associated with Y2K. Some agencies
    indicate that adequate supply is on-hand (e.g., 3 months) should there
    be a short-term disruption in the chemical supply/delivery chain.
        COMMUNICATIONS: 98 percent of responding agencies indicate that
    pump stations will be able to operate in the event of a
    telecommunications failure.
        MANPOWER: 35 percent of responding agencies indicate additional
    manpower needs and/or shortages should Y2K problems require manual
    operations.
                   potential impact of embedded chip failures
        Communication--Minor
        Building Grounds--Minor
        Instruments--Moderate
        Treatment Plant Processes--Moderate to Major
        Remote Process Operations--Moderate

                          food safety: pesticide risks

        Senator Mikulski. Let me go to another issue and this also
    goes to children and public health. I note from a Washington
    Post article that seven groups have quit your food panel and
    they criticized EPA for being soft on pesticide risks. I found
    the article disturbing, Madam Administrator, and I would like
    to give you the opportunity to share with us where we are on
    food safety, the whole issue around pesticides because
    pesticides have a direct impact in nonpoint runoff in our water
    supply. I was troubled. Could I now hear your response to this
    and how are you dealing with the pesticides problem? And do you
    have the resources to do it?
        Ms. Browner. Yes, we do. As I think you are well aware,
    Senator Mikulski, Congress passed a new modern food safety law
    working closely in a bipartisan manner with the administration
    2 years ago. That law for the first time ever requires us to
    take a set of actions that we are in the process of taking. In
    an effort to make sure that we have addressed both the health
    concerns and the needs of farmers, we did establish an advisory
    committee. We are extremely disappointed that the
    environmentalists, as this committee was concluding its work,
    decided that they would rather simply pull out and make these
    kind of attacks.
        We will comply with the law. We will meet the deadlines but
    we are going to do it in a way that is responsive to the needs
    of all, and that requires a thoughtful and an inclusive process
    and we are on track. The first deadlines come up in August. We
    are on track to make those deadlines. We tried to encourage the
    environmentalists to stay at the table so that they could be a
    part of the final round of process decisions we will make. They
    thought it was better to issue a press release and walk away.
    It is a disappointment to us and we will continue to work----
        Senator Mikulski. I note my time is up. I just want to
    conclude by just saying that they pulled out because they
    accused EPA of endless dithering. Now I am also from the school
    of thought of sound science. We have encountered many issues on
    premature science, and that has resulted in very prickly
    debates on air quality and so on. So I think there is a
    difference between dithering and pursuing a solid course of
    action using the best science and the best minds available in
    the scientific community to advise us before we go off. I am
    looking for a balance here, a streamlined process based on
    sound science, and I think you would have bipartisan support.
        Senator Craig. Would the Senator yield?
        Senator Mikulski. Yes. My time is up.
        Senator Bond. I would say, let me agree with my ranking
    member, sound science should be driving this. I am deeply
    disappointed by the efforts which indicate that we are going to
    have more hysterical anti-science attacks. We banned alar based
    on hysteria, not on sound science. We bankrupted apple growers,
    raised the cost of apples and contributed to more health
    problems by raising the cost of apples than we benefited by
    banning alar.
        You had a--I defer to the Senator from Idaho, Senator
    Craig.
        Senator Craig. Very briefly. The Senator from Maryland is
    absolutely right. And I must say on behalf of EPA, and I do not
    oftentimes find areas to praise them in----
        Senator Bond. That is why I deferred to you briefly,
    Senator Craig. I thought this would be a good opportunity.
    [Laughter.]
        Senator Mikulski. This is great.
        Senator Craig. They were approaching it cautiously and
    responsibly and they were listening to Agriculture and
    Agriculture was really trying to find the right answers in
    working with them in demonstrating how all of this works and
    does not work. And EPA was listening. And I am disappointed
    that other stakeholders in this would walk out hoping they can
    gain ground politically by lawsuits and by press releases. It
    does not work that way. We will ultimately have a nonproductive
    agriculture and, as the Chairman said, one that does not
    produce our food quality in the way we would like it. So on
    this one, EPA gets some kudos. Stay the course.
        Ms. Browner. Thank you.
        Senator Bond. Thank you, Senator. Right now I turn to
    Senator Byrd.

                        transportation partners program

        Senator Byrd. Mr. Chairman, as I indicated earlier, I am
    interested in knowing more about the Transportation Partners
    program. Can anyone, Mrs. Browner, tell us specifically how
    this funding is being spent?
        Ms. Browner. The Transportation Partners is an effort to
    work on a voluntary basis with local, State, public, and
    private organizations to look at what is right for those
    communities at their behest in terms of reducing vehicle miles
    traveled. This is not about highway construction. It is not
    about telling people how they should live their lives. There
    are a number of communities and businesses, for example, some
    of the business partners include Wal-Mart, Kaiser Permanente,
    and Bank of America who on behalf of their employees, want to
    look at alternative modes of transportation which work for the
    business, the employees and ultimately may work to benefit air
    quality in the communities.
        It is not a required program. It is a voluntary
    partnership. I think we have over 300 partners now, project
    partners across the country.
        Senator Byrd. My question was can anyone tell us
    specifically how this funding is being spent?
        Ms. Browner. It is spent through grants. We are more than
    happy to give you a detailed explanation of each of the grant
    awards if that would be helpful. There are nine projects and I
    can give you some examples. But if you would like each one of
    them, we would be happy to provide that. Would you like some of
    the examples?
        Senator Byrd. I would suggest you have all of those put in
    the record and then I will select a few, perhaps, that I may
    wish to visit with you further on.
        Ms. Browner. Okay.
        [The information follows:]

                         Transportation Partners Grants

        Association for Commuter Transportation.--No Transportation
    Partners funds.
        Bicycle Federation of America.--No Transportation Partners funds.
        Business for Social Responsibility Education Fund (BSR).--
    Transportation Partners is providing support to BSR to work with at
    least ten member companies to implement commuter and fleet
    transportation efficiency measures and to measure the greenhouse gas
    emissions reductions that results.
        Center for Clean Air Policy (CCAP).--Fosters dialogue amongst
    governmental and private policy makers to help promote innovative,
    market-based policy approaches to develop effective transportation and
    environmental policies. Transportation Partners supports CCAP's ongoing
    dialogue to develop more effective strategies to increase ridership for
    metropolitan transit systems.
        International Council for Local Environmental Initiatives
    (ICLEI).--By supporting ICLEI's Cities for Climate Protection U.S.
    Sustainable Transportation Program, Transportation Partners is
    facilitating an expansion of ICLEI's network of local governments and
    their private sector allies working on strategies to reduce vehicle
    miles traveled. ICLEI is focusing most heavily on public-private
    partnerships through EPA's Climate Wise Program corporate partners to
    reduce commuter travel through incentives such as parking cash out and
    to improve fleet efficiency. ICLEI is also developing a menu of options
    for local governments to reduce their transportation emissions, and
    quantifying the greenhouse gas emissions reductions resulting from its
    work.
        Environmental Defense Fund (EDF).--Transportation Partners is
    funding EDF to support education and technical assistance for
    innovative regional transportation policy alternatives. The analysis
    and technical assistance provided by EDF to Metropolitan Planning
    Organizations, State Departments of Transportation, local governments
    and community groups improves the awareness of policy approaches that
    can both ease traffic congestion and reduce emissions through demand
    management and more efficient use of existing transportation systems.
    Such policies include: commuter choice for employee transportation
    benefits (aka parking cash-out), time-of-day pricing of roads and
    parking, and single occupant car buy-in options to more effectively use
    high-occupancy vehicle lanes.
        Local Government Commission (LGC).--EPA is supporting LGC's efforts
    to provide tools and information to local governments to enhance
    community livability and reduce vehicle miles traveled. LGC focuses on
    providing assistance with public participation, administering community
    image surveys, and developing and distributing an array of technical
    resources to local governments to encourage transit-oriented and infill
    development and livable downtowns. LGC assembles teams for on-site
    visits. LGC is measuring the greenhouse gas emissions reductions
    attributable to its work.
        Renew America.--Transportation Partners is supporting Renew America
    in its mission to identify, recognize, and promote environmental
    success stories within the U.S. By co-sponsoring Renew America's Way to
    Go transportation and the environment awards, EPA is demonstrating that
    success in reducing vehicle miles traveled is achievable. This program
    disseminates information about award winners, helps pair winners with
    others interested in implementing similar programs, and works with the
    media to ensure appropriate public attention to exemplary
    transportation efficiency achievements.
        Surface Transportation Policy Project (STPP).--STPP promotes
    transportation policy and investments that help conserve energy,
    protect environmental quality,strengthen the economy, promote social
    equity, and make communities more livable. Transportation Partners
    provides funds to STPP to: support community involvement in the
    transportation planning process; assist with the planning of the
    national Railvolution conference; maintain its TransAct web site;
    provide outreach to automobile insurance companies to encourage them to
    price insurance by the mile; and, to document the greenhouse gas
    reductions of its work with Transportation Partners.
        Railvolution.--EPA is supporting this quintessential national
    conference on enhancing community livability and reduced vehicle miles
    traveled through the provision of transportation alternatives and
    supportive community designs. Approximately 1,000 public and private
    sector leaders throughout the nation are anticipated to gather in
    Dallas in September 1999 for this important conference.

        Senator Byrd. So what are you saying to me when I say can
    anyone tell us specifically how this funding is being spent?
        Ms. Browner. Yes.
        Senator Byrd. You are saying the answer is yes?
        Ms. Browner. Absolutely. As I said, I can provide examples
    today and we can provide the rest. One, for example, is in
    Howard County, Maryland, that I would be happy to talk about.
        Senator Byrd. I would be happy to talk about some that may
    be in West Virginia.
        Ms. Browner. Okay.
        Senator Byrd. I understand that to become a partner a group
    must make an application to the agency. What kind of scrutiny
    does the EPA undertake to select its so-called partners?
        Ms. Browner. You are correct. They do make an application
    for a grant award. They come through the traditional grant
    application process and they are required to comply with all
    the grant application processes.

                     transportation partners: grant awards

        Senator Byrd. But the question is what kind of scrutiny
    does the EPA undertake to select its so-called partners?
        Ms. Browner. They have to have an organization that is
    capable of doing the work that they are suggesting or are
    asking to do. They must have the ability to manage the
    resources that would be provided to them.
        If you are concerned that some organization made an
    application and perhaps was not as forthcoming in terms of
    their qualifications or their financial management, we would
    appreciate having that brought to our attention immediately. We
    will fully investigate the matter. The organizations are
    required to meet certain requirements.
        Senator Byrd. Does anyone at the agency conduct any reviews
    of these groups?
        Ms. Browner. Yes. The grant officers are required to
    ascertain whether or not the groups are capable of the work
    that they are committing to do.
        Senator Byrd. Can the EPA provide this subcommittee with
    information as to how many of the partners are involved in
    litigation against highway construction?
        Ms. Browner. Yes. In fact, we have just recently provided
    to another committee information on all grant recipients and
    their litigation records against the agency. I believe that
    probably the group you are interested in would be a part of
    that submission. So we would be happy to provide it. We have
    provided it to the EPW Committee.
        Senator Byrd. Mr. Chairman, I would like to ask that the
    EPA provide this Committee with information of how many of the
    partners are involved in litigation against highway
    construction and what that litigation is about. What the cases
    are, by number. What the status is of the litigation.
        Senator Bond. That will be a request of the committee and
    it will be made available to all members of the committee.
        Ms. Browner. We should be able to make that available this
    week. We have also provided it to the EPW.
        Senator Byrd, if I might, I think we may be familiar with--
    someone here may be familiar with the particular organization
    you may be concerned with in West Virginia. Just so we give you
    all of the information, the litigation may be against other
    Federal agencies that you are concerned about, or against
    perhaps State agencies. So we will do our best to also
    determine that. That is not what we were asked to do in the
    other committee. That may be what you are interested in, in
    part.
        [The information follows:]

        Grant Recipients and Their Litigation Records Against the Agency

        Attached are the two charts concerning litigation by EPA grant
    recipients that EPA submitted to the Senate Environment and Public
    Works Committee.

    Non-Governmental Individuals and Organizations That Received EPA Grants
    From January 1, 1989-March 31, 1999 and also Sued EPA During That Period

                              [Lawsuit information]

    ALABAMA RIVERS ALLIANCE, INC.:                    Date lawsuit was filed
        No. 97-2518 (N.D. Ala.)...................................  09/22/97
        No. 97-0714 (N.D. Ala.) (lead plaintiff is Mudd)..........  03/21/97
    ALASKA CENTER FOR THE ENVIRONMENT:
        No. 96-245 (D. Alaska)....................................  07/18/96
        No. 95-35109 and 95-35065 (W.D. Wash.)....................  04/24/90
        No. 96-1762 (W.D. Wash.) (lead plaintiff is Alaska Clean
          Water Alliance).........................................  11/08/96
        No. 95-1153 and 95-107 (D. Alaska) (lead plaintiff is
          Alyeska Seafood, Inc.)..................................  03/21/95
        No. 97-60042 (5th Cir.) (lead petitioner is Texas Mid-
          Continent Oil & Gas)....................................  01/22/97
    ALASKA CLEAN WATER ALLIANCE:
        No. 96-1762 (W.D. Wash.)..................................  11/08/96
        No. 97-60042 (5th Cir.) (lead petitioner is Texas Mid-
          Continent Oil & Gas)....................................  01/22/97
    AMERICAN FOREST AND PAPER ASSOCIATION, INC.:
        No. 97-1448 (D.C. Cir.)...................................  07/22/97
        No. 97-1210 (D.C. Cir.)...................................  03/31/97
        No. 97-1209 (D.C. Cir.)...................................  03/31/97
        No. 97-1208 (D.C. Cir.)...................................  03/31/97
        No. 97-1206 (D.C. Cir.)...................................  03/30/97
        No. 96-60874 (5th Cir.)...................................  12/21/96
        No. 97-9506 (10th Cir.)...................................  03/03/97
        No. 97-1212 (D.C. Cir.)...................................  03/31/97
        No. 97-1211 (D.C. Cir.)...................................  03/31/97
        No. 98-1427 (D.C. Cir.)...................................  09/16/98
        No. 99-1053 (D.C. Cir.)...................................  02/16/99
        No. 98-1543 (D.C. Cir.)...................................  11/16/98
        No. 96-5324 and 93-0694 (D.D.C.)..........................  04/05/93
        No. 95-1360 (D.C. Cir.)...................................  07/19/95
        No. 93-1347 (D.C. Cir.)...................................  05/24/93
        No. 94-1395 (D.C. Cir.)...................................  05/16/94
        No.95-1007 (D.D.C.).......................................  05/26/95
        No. 95-70025 (9th Cir.)...................................  01/06/95
        No. 95-70027 (9th Cir.)...................................  01/06/95
        No. 98-1203 and 98-1196 (D.C. Cir.) (lead petitioner is
          National Association of Manufacturers)..................  04/10/98
        No. 97-1130 (D.C. Cir.) (lead petitioner is American
          Automobile Manufacturers)...............................  03/13/97
    AMERICAN LITTORAL SOCIETY:
        No. 98-979 (E.D. Va.) (lead plaintiff is American Canoe
          Association, Inc.)......................................  07/09/98
        No. 96-489 (E.D. Pa.).....................................  01/24/96
        No. 96-339 (D.N.J.).......................................  01/24/96
        No. 96-5920 (E.D. Pa.)....................................  08/28/96
        No. 96-330 (D. Del.)......................................  06/19/96
        No. 98-927 (D. Md.)(lead plaintiff is Sierra Club)........  04/01/98
        No. 97-3838 (D. Md.) (lead plaintiff is Sierra Club)......  11/13/97
        No. 96-5772 and 96-5105 (D.N.J.) (lead plaintiff is Clean
          Ocean Action)...........................................  06/01/93
        No. 96-591 (D. Del.)......................................  08/28/96
    AMERICAN LUNG ASSOCIATION:
        No. 93-1305 (D.C. Cir.) (national association)............  05/10/93
        No. 94-1284 (D.C. Cir.) (national association)............  04/01/94
        No. 94-2166 (4th Cir.) (national association).............  09/12/94
        No. 92-6060 and 91-4144 (E.D.N.Y.) (national association
          and American Lung Associations of Nassau, Suffolk,
          Queens, and Brook-
          lyn)....................................................  10/21/91
        No. 92-5316 (E.D.N.Y.) (national association).............  11/12/92
        No. 93-643 (D. Ariz.) (national association and American
          Lung Association of Arizona)............................  10/13/93
        No. 94-2140 (D.D.C.) (national association)...............  10/05/94
        No. 96-1251 (D.C. Cir.) (national association)............  07/19/96
        No. 96-1388 (D.D.C.) (American Lung Association of
          Northern Virginia)......................................  06/18/96
        No. 96-1856 (D. Ariz.) (American Lung Association of
          Arizona)................................................  08/13/96
        No. 95-4000 (6th Cir.) (lead plaintiff is Citizens for a
          Better Environment) (American Lung Association of
          Michigan)...............................................  09/18/95
    AMERICAN PUBLIC POWER ASSOCIATION:
        No. 97-1513 (D.C. Cir.)...................................  08/15/97
        No. 97-1564 (D.C. Cir.)...................................  09/15/97
        No. 97-1562 (D.C. Cir.)...................................  09/15/97
        No. 98-1394 (D.C. Cir.) (lead petitioner is Edison
          Electric Insti-
          tute)...................................................  08/21/98
        No. 97-1125 (D.C. Cir.) (lead petitioner is Appalachian
          Power
          Co.)....................................................  03/17/97
    AMERICAN RIVERS, INC.:
        No. 97-70365 (9th Cir.)...................................  04/04/97
        No. 94-70613 (9th Cir.)...................................  09/28/94
        No. 96-3208 (E.D. La.) (lead plaintiff is Mississippi
          River Basin Alliance)...................................  10/02/96
    AMERICAN WATER WORKS ASSOCIATION:
        No. 96-1208 (D.C. Cir.)...................................  06/21/96
        No. 89-1489 (D.C. Cir.)...................................  08/10/89
        No. 91-1149 (D.C. Cir.)...................................  03/28/91
        No. 97-2 111 (D.D.C.) (lead plaintiff is Association of
          Metropolitan Sewage Authorities)..................................
    ANACOSTIA WATERSHED SOCIETY: No. 98-758 (D.D.C.) (lead
        plaintiff is Kingman Park Civic Association)..............  03/25/98
    ARIZONA TOXICS INFORMATION: No. 99-389 (D.D.C.) (lead
        plaintiff is Greenpeace International)....................  02/18/99
    ATLANTIC STATES LEGAL FOUNDATION:
        No. 95-1788 (N.D.N.Y.)....................................  12/15/95
        No. 97-378 and 95-9525 (lOth Cir.) (lead plaintiff is
          Maier)..................................................  06/02/95
    BABCOCK & WILCOX: No. 90-1509 (DC Cir.).......................  10/29/90
    CITIZENS FOR A BETTER ENVIRONMENT:
        No. 95 4000 (6th Cir.)....................................  09/18/95
        No. 91-15108 (N. D. Cal.).................................  04/17/90
        No. 91-70056 (9th Cir.)...................................  01/25/91
        No. 90-15455 and 89-2044 (N. D Cal.)......................  06/12/89
    CITIZENS FOR A HEALTHY BAY: No. C99-0375Z (W.D. Wash.)........  03/17/99
    CLEAN OCEAN ACTION:
        No. 96-5772 (3rd Cir.) and 96-5105 (D.N.J.)...............  06/01/93
        No. 94-5490 (3rd Cir.) and 94-2614 (D.N.J.)...............  06/01/94
    COLORADO ENVIRONMENTAL ACTION: No. 97-1841 (D. Colo.).........  08/14/97
    CONCERNED CITIZENS OF AGRICULTURE STREET: No. 98-124 (E.D.
        La.)......................................................  01/15/98
    CONSERVATION LAW FOUNDATION:
        No. 91-1269 and 89-2325 (D. Mass.)........................  10/17/89
        No. 95-1047 and 95-1020 (D. N.H.).........................  03/26/92
        No. 92-1335 (1st Cir )....................................  03/26/92
        No. 94-1062 (D.C. Cir.)...................................  01/28/94
        No. 94-1692 (D.C. Cir.)...................................  10/31/94
        No. 91-12222 (D. Mass)....................................  08/21/91
        No. 92-278 and 92-156 (D. N.H.)...........................  03/26/92
    COOK INLET KEEPER: No. 97-60042 (5th Cir.) (lead petitioner is
        Texas Mid-Continent Oil & Gas)............................  01/22/97
    DELAWARE VALLEY CITIZENS COUNCIL FOR CLEAN AIR:
        No. 95-3318 (3rd Cir.)....................................  06/30/95
        No. 95-3363 (3rd Cir.)....................................  06/30/95
        No. 95 3494 (3rd Cir.)....................................  09/14/95
        No. 96-3086 (3rd Cir.)....................................  02/09/96
        No. 95-1241 (D.C. Cir.)...................................  05/01/95
        No. 97-3428 (3rd Cir.)....................................  08/11/97
        No. 96-1316 (D.C. Cir.)...................................  09/06/96
        No. 95-3318 (D. D.C.).....................................  06/18/96
        No. 94-3180 (M.D. Pa.)....................................  04/19/94
        No. 96-3086 and 95-2533 (E.D. Pa.)........................  05/01/95
        No. 90-1309 and 89-2592 (E.D. Pa.)........................  04/17/89
        No. 94-1692 (D.C. Cir.) (lead petitioner is Conservation
          Law Foundation).........................................  10/31/94
    EARTH ISLAND INSTITUTE: No. 96-1457 (D.C. Cir.)...............  12/02/96
    EDISON ELECTRIC INSTITUTE:
        1No. 95-1378 (D.C. Cir.)..................................  07/26/95
        No. 96-1062 (D.C. Cir.)...................................  02/20/96
        No. 95-1393 (D.C. Cir.)...................................  08/04/95
        No. 8-1394 (D.C. Cir.)....................................  08/21/98
        No. 94-2346 (D.D.C.) .....................................  10/28/94
        No. 91-1586 (D.C. Cir.)...................................  11/27/91
        No. 92-1638 (D.C. Cir.)...................................  12/09/92
        No. 93-1474 (D.C. Cir.)...................................  07/27/93
        No. 95-1144 (D.C. Cir.)...................................  03/06/95
        No. 97-1125 (D.C. Cir.) (lead petitioner is Appalachian
          Power Company)..........................................  03/17/97
        No. 91-2435 (D.D.C.) (lead plaintiff is Gearhart).........  09/26/91
    ENVIRONMENTAL DEFENSE FUND:
        No. 92-2520 and 3-91-00058 (E.D. Va.).....................  01/29/91
        (E.D. Va.) \1\............................................  10/09/90
        No. 93-91-00165 (E.D. Va.)................................  03/29/91
        No. 93-0532 (D.D.C.)......................................  03/15/93
        No. 95-15574 (N.D. Cal.)..................................  04/30/92
        No. 90-1074 (D.C. Cir.)...................................  02/13/90
        No. 92-1082 ( Cir.) \2\...................................  02/24/92
        No. 93-1203 (D.C. Cir.)...................................  03/12/93
        No. 94-1044 (D.C. Cir.)...................................  01/21/94
        No. 89-0598 (D.D.C.)......................................  03/08/89
        No. 91-0429 (D.D.C.)......................................  02/26/91
        No. 90-1387 (D.C. Cir.)...................................  07/25/90
        No. 91-1296 (D.C. Cir.)...................................  06/24/91
        No. 97-1562 and 97-467-5 (E.D.N.C.).......................  07/22/91
        No. 98-1363 (D.C. Cir.)...................................  02/12/99
        No. 99-1048 (D.C. Cir.)...................................  02/12/99
        No. 93-1316 (D.C. Cir.)...................................  05/14/93
        No. 93-1830 and 93-1789 (D.C. Cir.) (lead petitioner is
          American Road & Transportation Builders Association)....  11/17/93
    FRIENDS OF THE EARTH:
        No. 92-1761 (W.D. Wash.)..................................  11/16/92
        No. 91-3013 and 91-1109 (4th Cir.)........................  01/18/91
        No. 94-1079 (D.C. Cir.) (lead petitioner is Natural
          Resources Defense Council)..............................  02/08/94
        No. 98-758 (D.D.C.) (lead plaintiff is Kingman Park Civic
          Association)............................................  03/25/98
        No. 97-1518 (D.D.C.) (lead plaintiff is Friends of Mount
          Aventine)...............................................  07/02/97
    GENERAL ELECTRIC COMPANY:
        No. 95-2818 (7th Cir.)....................................  08/02/95
        No. 97-1695 \3\...........................................  11/04/97
        No. 97-2738 (7th Cir.)....................................  07/11/97
        No. 98-60642 (D.C. Cir.)..................................  10/21/98
        No. 93-1251 (D.C. Cir.)...................................  04/01/93
        No. 95-1165 (D.C. Cir.)...................................  03/16/95
        No. 90-1297 (D.C. Cir.)...................................  06/06/90
        No. 94-0457 (D.D.C.)......................................  03/08/94
        No. 93-1272 (D.C. Cir.)...................................  04/16/93
        No. 93-1807 (D.C. Cir.)...................................  11/30/93
        No. 94-1274 (D.C. Cir.)...................................  03/29/94
        No. (D.C. cir.) \4\.......................................  05/16/94
        No. 91-1645 (D.C. Cir.)...................................  12/24/91
        No. 94-1163 (1st Cir.)....................................  02/25/94
    GEORGIA ENVIRONMENTAL ORGANIZATION: No. 97-8680 and 96-9327
        (N.D. Ga.) (lead plaintiff is Sierra Club)................  09/22/94
    HEAL THE BAY: No. 98-4825 (N.D. Cal.).........................  12/17/98
    HORSEHEAD RESOURCE DEVELOPMENT CO.:
        No. 96-3475 and 95-1785 (W.D. Pa.)........................  11/01/95
        No. 95-1286 (D.C. Cir.)...................................  06/01/95
        No. 90-1413 (D.C. Cir.)...................................  08/06/90
        No. 94-1764 (D.C. Cir.)...................................  12/16/94
        No. 94-1709 (D.C. Cir.)...................................  11/21/94
        No. 91-1221 (D.C. Cir.)...................................  05/14/91
        No. 98-1397 (D.C. Cir.) (lead petitioner is Zinc
          Corporation of America).................................  08/24/98
        No. 91-1538 (D.C. Cir.) (lead petitioner is Steel
          Manufacturers Association)..............................  11/12/91
    IDAHO CONSERVATION LEAGUE:
        No. 97-35336 and 96-807 (W.D. Wash.)......................  05/24/96
        No. 96-829 (W.D. Wash.) (lead plaintiff is Idaho Sporting
          Con-
          gress)..................................................  05/29/96
    LAND AND WATER FUND OF THE ROCKIES: No. 97-35336 and 96-807
        (W.D.Wash.) (lead plaintiff is Idaho Conservation League).  05/24/96
    MAINE ORGANIC FARMERS & GARDENERS: No. 99-389 (D.D.C.) (lead
        plaintiff is Greenpeace International)....................  02/18/99
    MOTHERS AND OTHERS FOR A LIVABLE PLANET: No. 99-389 (D.D.C.)
        (lead plaintiff is Greenpeace International)..............  02/18/99
    NATIONAL ASSOCIATION OF HOMEBUILDERS:
        No. 97-1588 (D.C. Cir.)...................................  09/16/97
        No. 4-99-11 (E.D. Va.)....................................  01/27/99
    NATIONAL WILDLIFE FEDERATION:
        No. 4-95-131 (W.D. Mich.).................................  07/19/95
        No. 95-1811 (D.D.C.)......................................  09/21/95
        No. 95-1363 (D.C. Cir.)...................................  07/19/95
        No. 97-1504 (D.D.C.)......................................  07/01/97
        No. 93-0331 (D.D.C.)......................................  02/17/93
        No. (S.D. Fla.) \5\.......................................  01/14/91
        No. (S.D. Tex.) \6\.......................................  05/09/91
        No. 94-3309 (6th Cir.)....................................  03/24/94
        No. 96-3208 (E.D. La.) (lead plaintiff is Mississippi
          River Basin Alliance)...................................  10/02/96
        No. 96-1680 (D.D.C.) (lead plaintiff is Sierra Club)......  07/18/96
        No. 97-60042 (5th Cir.) (lead petitioner is --Texas Mid-
          Continent Oil & Gas)....................................  01/22/97
    NATURAL HERITAGE INSTITUTE: No. 97-3997 (N.D. Cal.) (lead
        plaintiff is Defend the Bay, Inc.)........................  07/19/96
    NATURAL RESOURCES DEFENSE COUNCIL:
        No. (D.D.C.) \7\..........................................  11/26/90
        No. 92-2520 and 3-91-00058 (E.D. Va.).....................  01/29/91
        No. 91-5235 (D.N.J.)......................................  11/25/91
        No. 92-122 (N.D. Okla.)...................................  02/10/92
        No. 94-8424 (S.D.N.Y.)....................................  11/18/94
        No. 95-634 (D.D.C.).......................................  04/03/95
        No. 89-2980 (D.D.C.)......................................  10/30/89
        No. 90-70671 (9th Cir.)...................................  12/10/90
        No. 91-70200 (9th Cir.)...................................  03/27/91
        No. 91-1343 (D.C. Cir.)...................................  07/22/91
        No. 92-70020 (9th Cir.)...................................  01/03/92
        No. (9th Cir.) \8\........................................  01/08/92
        No. 92-70543 (9th Cir.)...................................  07/29/92
        No. 92-3756 (3rd Cir.)....................................  12/31/92
        No. 93-3293 and 93-3066 (3rd Cir.)........................  02/11/93
        No. 93-70313 (9th Cir.)...................................  03/23/93
        No. 93-3131 (3rd Cir.)....................................  03/25/93
        No. 93-3130 (3rd Cir.)....................................  03/25/93
        No. 92-1534 (E.D. Va.)....................................  01/24/92
        No. 92-1494(E.D.N.Y.).....................................  03/30/92
        No. 92-2225 (D.D.C.)......................................  10/01/92
        No. 90-1068 (D.C. Cir.)...................................  02/13/90
        No. 90-3439 and 90-2447 (3rd Cir.)........................  07/17/90
        No. 90-1464 (D.C. Cir.)...................................  09/24/90
        No. 91-1170 (D.C. Cir.)...................................  04/10/91
        No. 91-1294 (D.C. Cir.)...................................  06/21/91
        No. 92-1137 (D.C. Cir.)...................................  04/02/92
        No. 92-1197 (D.C. Cir.)...................................  05/04/92
        No. 92-1353 (D.C. Cir.)...................................  08/11/92
        No. 92-1415 (D.C. Cir.)...................................  09/14/92
        No. 92-1409 (D.C. Cir.)...................................  09/11/92
        No. 92-1535 (D.C. Cir.)...................................  10/09/92
        No. 92-1596 (D.C. Cir.)...................................  11/16/92
        No. 92-1630 (D.C. Cir.)...................................  12/04/92
        No. 93-1204 (D.C. Cir.)...................................  03/12/93
        No. (D.C. Cir.) \9\.......................................  03/12/93
        No. 94-1079 (D.C. Cir.)...................................  02/08/94
        No. 94-1398 (D.C. Cir.)...................................  05/18/94
        No. 94-1647 (D.C. Cir.)...................................  09/27/94
        No. 92-2093 (E.D.N.Y.)....................................  05/29/92
        No. 92-2196 (D.D.C.)......................................  09/25/92
        No. 93-1946 (D.D.C.)......................................  09/21/93
        No. 90-0694 (D.D.C.)......................................  03/26/90
        No. (D.D.C.) \10\.........................................  03/14/91
        No. 91-1105 (D.D.C.)......................................  05/15/91
        No. 90-1245 (D.C. Cir.)...................................  05/10/90
        No. 90-1322 (D.C. Cir.)...................................  06/27/90
        No. 90-1497 (D.C. Cir.)...................................  10/19/90
        No. 92-1005 (D.C. Cir.)...................................  01/06/92
        No. 92-1371 (D.C. Cir.)...................................  08/18/92
        No. 92-1639 (D.C. Cir)....................................  12/09/92
        No. 98-1431 (D.C. Cir.)...................................  09/16/98
        No. 98-1363 (D.C. Cir.) (lead petitioner is Environmental
          Defense Fund)...........................................  06/05/98
        No. 97-1686 (D.C. Cir.) (lead petitioner is Sierra Club)..  07/15/97
        No. 96-1316 (D.C. Cir.) (lead petitioner is Delaware
          Valley Citizens Council)................................  09/06/96
        No. 98-1379 (D.C. Cir.)...................................  06/08/92
        No. 92-2369 (D.N.J.)......................................  06/08/92
        No. 97-60042 (5th Cir.) (lead petitioner is Texas Mid-
          Continent Oil & Gas)....................................  01/22/97
    NEW YORK CITY ENVIRONMENTAL JUSTICE ALLIANCE: No. 98-4404
        (S.D.N.Y.) (lead plaintiff is South Bronx Coalition for
        Clean Air, Inc.)..........................................  07/20/98
    NORTH CAROLINA COASTAL FEDERATION: No. 97-1562 and 97-467-5
        (E.D.N.C.) (lead plaintiff is Environmental Defense Fund).  07/22/91
    NORTHWEST COALITION FOR ALTERNATIVES:
        No. 90-70262 (9th Cir.)...................................  06/05/90
        No. 91-70426 (9th Cir.)...................................  07/12/91
        No. 97-1135 (W.D. Wash.) (lead plaintiff is Pineros y
          Campesinos Unidos del Nordeste).........................  07/10/97
    OKLAHOMA WILDLIFE FEDERATION:
        No. 99-0020 (N.D. Okla.)..................................  01/07/99
        No. 98-145 (N.D. Okla.)...................................  02/23/98
        No. 97-1090 (N.D. Okla.) (lead plaintiff is Hayes)........  12/11/97
    PEOPLE FOR PUGET SOUND:
        No. 93-70301 (9th Cir.)...................................  03/19/93
        No. C99-0375Z (W.D. Wash.) (lead plaintiff is Citizens for
          a Healthy Bay)..........................................  03/17/99
    SANTA NIONICA BAYKEEPER: No. 98-4825 (N.D. Cal.) (lead
        plaintiff is Heal the Bay)................................  12/17/98
    SCENIC HUDSON: No. 94-4105 and 93-4011 (2d Cir.)..............  01/29/93
    SERVICE EMPLOYEES INTERNATIONAL UNION:
        No. 89-0851 (D.D.C.)......................................  03/31/89
        No. 89-1228 (D.C. Cir.)...................................  04/03/89
    SIERRA CLUB:
        No. 98-1195 (W.D. Mo.) (lead plaintiff is American Canoe
          Association, Inc.)......................................  11/12/98
        No. 96-5920 (E.D. Pa.) (lead plaintiff is American
          Littoral Soci-
          ety)....................................................  08/28/96
        No. 96-330 (D. Del.) (lead plaintiff is American Littoral
          Society)................................................  06/19/96
        No. 97-1562 and 91-467-5 (E.D.N.C.) (lead plaintiff is
          Environmental Defense Fund).............................  07/22/91
        No. 96-245 (D. Alaska) (lead plaintiff is Alaska Center
          for the Environment)....................................  07/18/96
        No. 99-30 (N.D. Iowa).....................................  02/25/99
        No. 99-114 (E.D. Ark.)....................................  02/18/99
        No. 96-527 (E.D. La.).....................................  02/12/96
        No. 98-927 (D. Md.).......................................  04/01/98
        No. 97-3838 (D. Md.)......................................  11/13/97
        No. 97-3683 (N.D. Ga.)....................................  12/11/97
        No. 98-71120 and 98-60804 (9th Cir.)......................  09/24/98
        No. 99-60015 (5th Cir.)...................................  02/08/99
        No. 96-70223 (9th Cir.)...................................  03/27/96
        No. 98-1270 (D.C. Cir.)...................................  06/09/98
        No. 95-9541 (10th Cir.)...................................  09/15/95
        No. 96-1007 (D.C. Cir.)...................................  01/12/96
        No. 95-1562 (D.C. Cir.)...................................  11/03/95
        No. 97-1686 (D.C. Cir.)...................................  07/15/97
        No. 97-2119 (4th Cir.)....................................  08/22/97
        No. 98-1610 (D.D.C.)......................................  06/24/98
        No. 98-2733 (D.D.C.)......................................  11/12/98
        No. 95-1747 (D.D.C.)......................................  09/13/95
        No. 96-672 (S.D. Ala.)....................................  07/16/96
        No. 99-388 (D.D.C.).......................................  02/18/99
        No. 96-436 (D.D.C.).......................................  03/07/96
        No. 96-1680 (D.D.C.)......................................  07/18/96
        No. 97-675 (D.D.C.).......................................  04/04/97
        No. 96-2431 (D. Md.) (lead plaintiff is Audubon Naturalist
          Society)................................................  10/31/95
        No. 95-24901 (D. Kan.) (lead plaintiff is Kansas Natural
          Resources Council)......................................  10/31/95
        No. 98-1379 (D.C. Cir.) (lead plaintiff is Natural
          Resources Defense Council)..............................  08/18/98
        No. 98-1431 (D.C. Cir.) (lead petitioner is Natural
          Resources Defense Council)..............................  09/16/98
        No. 97-3004 (D.D.C.)......................................  12/16/97
        No. 97-3888 (N.D. Cal.)...................................  10/23/97
        No. 98-5366 and 97-1984 (D.D.C.)..........................  08/29/97
        No. 98-1564 (D.C. Cir)....................................  11/30/98
        No. (N.D. Ga.) \11\.......................................  04/24/91
        No. 4-92-970 (D. Minn.)...................................  10/07/92
        No. 90-1674 (D. Ariz.)....................................  10/29/90
        No. 97-8680 (N.D. Ga.)....................................  09/22/94
        No. 93-2644 (D.D.C.)......................................  12/30/93
        No. 1:94-CV-2501 (N.D. Ga.)...............................  09/22/94
        No. 89-2064 (N.D. Cal.)...................................  06/13/89
        No. 89-3408 (D.D.C.)......................................  12/20/89
        No. 91-10898 (D. Mass.)...................................  03/25/91
        No. 92-1749 (D.D.C.)......................................  07/27/92
        No. 93-5245 and 93-0124 (D.D.C.)..........................  01/19/93
        No. 92-2282 (1st Cir.)....................................  11/05/92
        No. 93-0125 (D.D.C.)......................................  01/19/93
        No. 93-0284 (E.D.N. Y )...................................  01/21/93
        No. 93-0197 (D.D.C.)......................................  02/01/93
        No. 93-0564 (D.D.C.)......................................  03/19/93
        No. 94-0553 (D.D.C.)......................................  03/17/94
        No. 94-0954 (D.D.C.)......................................  04/29/94
        No. 95-0627 (D.D.C.)......................................  03/21/95
        No. 93-2167 (D.D.C.)......................................  10/21/93
        No. 92-1003 (D.C. Cir.)...................................  01/06/92
        No. 94-1692 (D.C. Cir.) (lead petitioner is Conservation
          Law Foundation).........................................  10/31/94
        No. 96-1316 (D.C. Cir.) (lead petitioner is Delaware
          Valley Citizens Council)................................  09/06/96
        No. 95-15574 and 92-1636 (N.D. Cal.) (lead plaintiff is
          Environmental Defense Fund).............................  04/30/92
        No. 92-2227 and 91-10898 (D. Mass.).......................  03/25/91
        No. 98-927 (D. Md.).......................................  04/01/91
        No. 94-920 (S.D. Cal.) (San Diego chapter)................  06/09/94
    SOUTHERN ENVIRONMENTAL LAW CENTERS: No. 97-1562 and 91-467-5
        (E.D.N.C.) (lead plaintiff is Environmental Defense Fund).  07/22/91
    SOUTHWEST RESEARCH AND INFORMATION CENTER \12\:
        No. 98-1323 (D.C. Cir.)...................................  06/17/98
        No. 96-1109 and 96-1108 (D.C. Cir.) (lead plaintiff is
          State of New Mexico)....................................  04/08/96
    SUSTAINABLE COTTON PROJECT: No.99-389 (D.D.C.) (lead plaintiff
        is Greenpeace International)..............................  02/18/99
    TEXACO INC.:
        No.98-1428(D.C. Cir.).....................................  09/16/98
        No.94-1143(D.C. Cir.).....................................  02/25/94
        No.94-1686(D.C. Cir.).....................................  10/25/94
        No.92-9569 (10th Cir.) (Texaco Exploration & Production,
          Inc.)...................................................  11/23/92
        No.90-1321 (D.C. Cir.) (Texaco Refining)..................  06/27/90
    TIDES CENTER: No.97-1342 (D.C. Cir.)..........................  04/30/97
    TIDES FOUNDATION: No.94-2663 (D.D.C.).........................  12/12/94
    WASHINGTON ENVIRONMENTAL COUNCIL: No.C99-0375Z (W.D. Wash.)
        (lead plaintiff is Citizens for a Healthy Bay)............  03/17/99
    WASHINGTON PARK LEAD COMMITTEE: No.2-98-421 (E.D. Va.)........  04/17/98
    WASHINGTON TOXICS COALITION:
        No.98-1564 (D.C. Cir.) (lead petitioner is Sierra Club)...  11/30/98
        No.C99-0375Z (W.D. Wash.) (lead plaintiff is Citizens for
          a Healthy Bay)..........................................  03/17/99
    WYOMING OUTDOOR COUNCIL: No 97-140 and 96-2831 (D. Colo.).....  12/09/96

    \1\ Case number not readily available.
    \2\ Case number not readily available.
    \3\ Court not readily available.
    \4\ Case number not readily available.
    \5\ Case number not readily available.
    \6\ Case number not readily available.
    \7\ Case number not readily available.
    \8\ Case number not readily available.
    \9\ Case number not readily available.
    \10\ Case number not readily available.
    \11\ Case number not readily available.
    \12\ We are uncertain whether Southern Environmental Law Center is the
    same entity as grantee Southern Environmental. In the interest of
    inclusiveness, however, we have included Southern Environmental Law
    Center on this list.
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        EPA has entered into cooperative agreements with groups that have
    expertise in various aspects of the transportation and environmental
    issues. In some cases, groups which have received Federal funds are
    also engaged in litigation with the Federal government. EPA has strict
    guidelines that prevent groups from using EPA funds to pay for these
    legal actions. Every EPA grant agreement is conditioned on compliance
    with OMB Circulars that prohibit the use of grant funds for suits
    against the Government. Specifically, they prohibit ``costs of legal,
    accounting, and consultant services, and related costs, incurred in
    connection with * * * the prosecution of claims or appeals against the
    Federal Government'' (OMB Circular No. A-122, Attachment B, Section
    10.g, which applies to nonprofit organizations; same provision in
    Circular No. A-21, Section J.11.g, which applies to educational
    institutions) and ``legal expenses for prosecution of claims against
    the Federal Government'' (Circular No. A-87, Attachment B, Section
    14.b, which applies to State, local, and tribal governments). In
    addition, EPA's appropriation acts provide that grant funds may not be
    used to pay the expenses of, or otherwise compensate, non-Federal
    parties intervening in regulatory or adjudicatory proceedings.
        EPA's Transportation Partners (TP) Program is a voluntary program
    that promotes and supports innovative, local, voluntary efforts to
    reduce vehicle miles traveled (VMT). The TP program is comprised of a
    team of national, non- governmental organizations, called Principal
    Partners, that receive EPA funding to foster innovative transportation
    solutions nationwide. Transportation Partners has funded nine Principal
    Partners organizations since 1995.
        Funds received by the Principal Partners are used to assist over
    350 Project Partners, which include State and local government
    officials, businesses, communities, and organizations that are engaged
    in VMT reduction strategies. Project Partners receive no funds from
    EPA's Transportation Partners Program, nor do they receive any funds or
    technical assistance from the Principle Partners for litigation.
        We are aware of one lawsuit brought by a Principle Partner that is
    related to highway projects:
        Environmental Defense Fund, Inc. v. Environmental Protection
    Agency, 167 F.3d 641 (D.C. Cir. 1999). This case does not involve a
    challenge to a particular highway project but to EPA's national
    conformity rules under the Clean Air Act. (These rules implement the
    Act's prohibition on metropolitan transportation projects unless they
    are part of a regional transportation plan that conforms to applicable
    state air quality standards.) EDF brought the suit to require states to
    conduct a more extensive and timely analysis of a plan's conformity
    with air quality standards than was required by EPA's rules. In a
    decision issued on March 2, 1999, the court held that various parts of
    EPA's conformity regulations were inconsistent with requirements of the
    Act.
        We are also aware of three lawsuits that appear to have been
    brought by Project Partners \1\ and that are related to highway
    projects:
    ---------------------------------------------------------------------------
        \1\ Conservation Law Foundation of Rhode Island is a Project
    Partner. We do not know, however, whether this is the chapter of
    Conservation Law Foundation that instituted this lawsuit.
    ---------------------------------------------------------------------------
        Corridor H Alternatives, Inc. v. Slater, 982 F.Supp. 24 (D.D.C.),
    aff'd in part and rev'd in part, 166 F.3d 368 (D.C. Cir. 1999). This is
    a case alleging that the U.S. Department of Transportation (DOT)
    violated the Department of Transportation Act, DOT's regulations, and
    the National Environmental Policy Act in approving the Corridor H
    highway project. In an opinion issued on February 9, 999, the D.C.
    Circuit halted further construction of Corridor H pending DOT's
    evaluation of historic sites along the corridor.
        Georgians for Transportation Alternatives and Sierra Club v.
    Shakelford, No. 99-CV-0160. This is a case against DOT (not EPA)
    relating to numerous grand fathered projects in Atlanta. The case is
    pending.
        Conservation Law Foundation v. Federal Highway Administration, 827
    F.Supp. 871 (D. R.I.), aff'd 24 F.3d 1465 (1st Cir. 1994). This is a
    suit against DOT (not EPA) to stop the Jamestown Connector highway
    project. The district court denied the plaintiffs' motion for a
    preliminary injunction against the project; this decision was upheld on
    appeal.
        We are also aware that the Sierra Club and the Conservation Law
    Foundation have filed three lawsuits related to highway construction in
    Massachusetts, Connecticut, and Missouri. Although these groups'
    national offices are not Principle or Project Partners, a number of
    their local chapters are Project Partners. However, in the states
    affected by the three lawsuits we are aware of, the local chapters of
    Sierra Club or the Conservation Law Foundation are not Project
    Partners. In addition, two of these cases were filed in the early
    1990's, long before EPA started its Transportation Partners program.
        Lawsuits concerning highway construction are generally brought
    against the U.S. Department of Transportation (DOT) and/or State or
    local agencies, not EPA. Because EPA is not a party, we generally do
    not know about the cases unless they involve the interpretation of
    EPA's statutes or regulations, and the Department of Justice asks us to
    review the Government's brief. The Department of Justice or DOT would
    likely have more complete information than EPA on these lawsuits.

        Senator Byrd. Let me state again, Mr. Chairman, what I
    stated earlier out of order. The EPA program known as
    Transportation Partners has recently come to my attention
    through some published reports that make some rather
    disconcerting charges. Primary among those charges are that
    this program is the source of funding for some purely anti-road
    initiatives.
        I can certainly see the merit in a program that helps local
    communities to develop voluntary strategies for transportation-
    related emissions reduction and that assist them in developing
    transportation alternatives that reduce traffic volume and
    congestion. It seems to me that if EPA is actually helping to
    underwrite activities designed to block construction of
    authorized and desired safe and more modern highways, a
    critical name is being built and I would like to know if EPA is
    doing that. I have no doubt that the public would be dismayed
    to hear it if, in fact--these are the only reports that I have
    had--one Federal agency was spending millions of taxpayer
    dollars to build modern infrastructure and another agency was
    spending additional taxpayer money to help prevent such
    construction.
        The logical result of this kind of mess is that the
    taxpayers end up paying several times over, including footing
    the bill to fight court battles to defend the projects and
    covering the costs of inflation resulting from lengthy
    construction delays. The only beneficiaries from this kind of
    scheme, it would seem, are the lawyers. This scenario simply
    defies fiscal logic.
        I am not saying that these reports are true but that is
    what we need to find out. And I thank the Chairman and I thank
    you the Administrator.
        Ms. Browner. Mr. Chairman, may I just respond very quickly.
        Senator Bond. Please.
        Ms. Browner. Senator Byrd, I am also familiar with a
    report. The one I am familiar with was the Washington Times
    that raised this question. When it was brought to my attention,
    I did ask the people in the Agency questions about it. I do not
    know if that is the report that you saw.
        What I do want this committee to know is that there are
    Federal rules prohibiting grant moneys from being used in
    litigation, and we abide by all of those rules. We are sued by
    everybody from environmental groups to Fortune 500 companies.
    The Home Builders sue us and they receive grants from us. If
    any of these organizations were to use their grant monies to
    litigate against us, that would be inappropriate and we would
    take action and we do monitor for that.
        I appreciate the fact that there have been these news
    reports. It does raise questions and we are more than happy to
    answer them.
        Senator Byrd. Mr. Chairman, I thank the Administrator for
    making that statement.
        Senator Bond. That was the question I was going to ask.
    Madam Administrator, I would only note that money is fungible.
    That is one of the problems we will get into when I come back
    to ask questions.
        We will ask you about the EPA Region 1 Regional
    Administrator's statement about the agency's, ``unwavering
    commitment to use the full force of environmental law to oppose
    or seek modification of those transportation projects which by
    their very nature contribute to sprawl.'' We will give you an
    opportunity to respond to that.
        Ms. Browner. I did not make the statement. I want to be
    very clear.
        Senator Bond. That is the administrator in Region 1. He got
    our attention.
        Senator Burns.

                           nonpoint source pollution

        Senator Burns. Do you know what we are supposed to be
    doing? Senator Byrd, you raise a very interesting point and I
    am very interested in what the Administrator said. We could
    expand this way beyond the Transportation Partnership because
    we have been trying to deal with this situation in other areas.
        Ms. Browner, thank you for coming this morning. And I
    wanted to talk to you a little bit about what we find ourselves
    in, as far as an issue that you brought up yourself this
    morning and that is nonpoint source pollution in the clean
    water and what we feel is sort of--we are worried about
    livestock operations.
        Let me preface this by saying, clean water is not a luxury.
    It is essential. We not only think--I know we think principally
    here in this 17 square miles of logic-free environment that it
    is for people alone. It is not. It is essential for any kind of
    production of livestock. I would say that we probably take as
    much pains and procedures to make sure that we have clean
    water. So that becomes very important to us.
        As you know we, in this country, especially in the
    agriculture production, there is no commodity making any money
    now, not one commodity being produced on the farm is making any
    money. The oil patch is dead; timber, precious metals. The
    spread between the raw product and the end product is greater
    now than it has ever been. And yet we proceed under a trade act
    that opens our markets to those commodities that are not
    produced under the same rules and regulations that we find
    ourselves trying to operate under. We cannot compete. We have
    eaten our seed corn. We are now into the equity of--losing
    equity very, very quickly.
        It is not that we do not want to comply. But we cannot
    comply. The money is not there. We cannot redo a feeding
    operation. We just do not have the money. In fact, we are
    closing them up, in my country anyway. And it is market
    conditions.
        It is hard to talk to my constituents when you have about
    250 loads of live cattle a day coming from Canada. Whenever we
    look at the profitability of banks, improved grocery stores
    that pack every single item of the food chain, their
    profitability has improved. Yet we see hardly any increase in
    food prices, but a drastic decrease in farm funds. It is not
    the fact that we do not want to cooperate in giving out the
    money.
        I would ask that in your thinking, whenever we start going
    out and trying to enforce some of these situations that we
    have, that you take into consideration the situation that we
    find ourselves in.
        Where in the world did I put my questions? I had a whole
    bunch. That will teach him to give me the gavel. We will have
    to just adjourn and go home.
        You might want to respond to that statement.
        Ms. Browner. I recognize and the administration certainly
    recognizes the plight of the farmer in the country today. I
    know you have worked closely with my colleague Dan Glickman and
    others to provide very, very much needed support. One
    suggestion I would make to you----
        Senator Burns. Ms. Browner, that does not do us a damn bit
    of good.
        Ms. Browner. I think the problem is quite large.
        Senator Burns. It is market. Ain't nothing wrong on the
    farm except the product. What they do down there, they might as
    well go out and go to the golf course with the rest of them.
    And I am serious about that. I am dead serious. I do not know
    how we confront that. But go ahead. I'm sorry. I get very
    emotional about this because they are my people.
        Ms. Browner. I would not want to suggest that this is the
    answer. However, I think there may be some opportunity in
    addressing the environmental concerns of farmers through the
    funding flexibility that we are asking Congress to provide each
    State. The flexibility would allow the States to set aside 20
    percent of the money for direct grants to communities and
    combine that with some of the other resources you have been
    willing to provide.
        I do not want to suggest this solves the problem but for a
    State like Montana, for example polluted runoff, I think that
    some of the flexibilities and the funding flexibilities we are
    asking you to provide could be helpful.

                     budget priorities for fiscal year 2000

        Senator Burns. We want to work with you and we want to take
    this thing head on if we possibly can. Keeping in mind that the
    funds that an individual has are very much limited right now.
    And it is not that they do not want to. And it is not that they
    have not done a pretty good job up to this point. Now there are
    changing conditions out there that would sort of hold some of
    this up, but nonetheless we know that it is just not there.
        Give me some kind of an idea, like, you had a $383 million
    reduction for the existing programs in the 2000 budget. If you
    wanted to come before this committee, what are your primary
    priorities? What do you see where you will be placing your
    emphasis in this budget as we move forward into next year?
        Ms. Browner. Twofold. One is strengthening the protections
    we provide the American people, air, water----
        Senator Burns. I know. In those areas.
        Ms. Browner. For example, within the clean water efforts,
    fully funding the Clean Water Action Plan, $651 million. Within
    drinking water, fully funding the request. And I would like to
    note that there was a statement made earlier that we had cut
    our drinking water request. We have not. We did not carry
    forward a congressional earmark. In fact, we have increased
    funding for that program, not a large amount. But there is no
    cut to that program.
        So within our air pollution efforts, to continue the
    partnership with the states in terms of the funding we provide
    to them and the technology.
        The second large area of focus will be to give both States
    and local communities greater abilities to access resources for
    those things they want to do. For example, the Clean Air
    Partnership Fund, the President's Better America Bonds Program,
    really provide tools and resources for those communities who
    want to take a certain approach to addressing environmental
    issues. No one is required to participate.
        The third area, as important as the others, is ensuring
    that we have the kind of science, the kind of data analysis,
    data management that are important to providing both the
    American people with information but also to the decisions that
    we, the states and industry, all make in terms of continuing
    our efforts to reduce pollution challenges.

                            food quality and safety

        Senator Burns. You are moving into an area of regulating
    health care. You are moving into an area where I do not think
    you are needed, most of it in food quality and safety. I think
    the USDA has done a pretty good job up to this point.
        Ms. Browner. USDA has never regulated pesticides. We have
    done that for 28 years.
        Senator Burns. I know. Now, when we had a meeting, I met
    with members of Parliament in Canada just this last week in
    Great Falls. As you know, we have got to standardize one way or
    the other our regulatory regime between Canada and the United
    States because Canada continues to have, it seems like, access
    to pesticides and herbicides and fungicides that we do not down
    here in the production of some of our crops. Have you had made
    any efforts to work with Canada to harmonize those standards?
        Ms. Browner. Yes. In fact, we have a significant effort
    underway with Canada to look at environmental standards
    broadly. I meet with the Environment Minister, Christine
    Stewart, regularly and talk to her even more frequently.
    Canada, as you well know, their government is set up completely
    differently. Their Federal level has much less authority in
    terms of setting environmental standards than the individual
    provinces. Simple difference in terms of how their government
    is structured, has proven to be one of the challenges and one
    of the many challenges we face.
        Yes. We recognize this issue and we are, in fact, working
    with Canada on these issues.
        Senator Burns. In other words, the rules and regulations we
    have to operate under down here. Yet we allow imports to come
    in and compete with us. They operate under a different
    rulebook.
        Ms. Browner. I know you know this. But a food product
    cannot enter the United States that does not meet our pesticide
    tolerance requirements. It cannot be in exceedance. If it is a
    banned pesticide, for example, it cannot be used. The FDA is
    responsible for the border inspections to ensure compliance.
        In terms of technical issues like the residual limits and
    data review, we do have differences that we are working on.
        Senator Burns. Are you ready over there, Senator?
        Senator Harkin. I am just getting my instructions.
        Senator Burns. I have got a couple of local issues that we
    can talk about in my office or your office.
        Ms. Browner. I will come and see you.

                                 regional haze

        Senator Burns. I feel like this is a place--I am concerned
    a little bit about regional haze. As you know, the commission
    was established and then what they recommended, that was made
    up of governors, with the Grand Canyon. And it seems as though
    after all was said and done nothing was--the recommendations of
    those people--of that study, not very many of those
    recommendations were put in place.
        I continue to have those kind of concerns, concerns about
    we have no control on Federal lands as far as our air quality
    is concerned. I will talk to Mr. Frampton about that in a
    little bit in those areas. But a couple of areas that I think--
    this is more of a local thing with Montana.
        Ms. Browner. We have worked very, very closely with WGA,
    and with Governor Leavitt who is their representative, on the
    regional haze rule. We did make changes in accordance with
    their recommendations and I think WGA issued a public statement
    of support for the final program which was announced last week.
        Senator Burns. On what they had recommended.
        Ms. Browner. No. For the final program which we announced
    last week on Thursday, Earth Day. WGA is supporting that
    program and the Western Governors are supporting it. We would
    be happy to show you the changes we made. We have a very, very
    intense effort with them.
        [The information follows:]
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        Senator Burns. I better head over there and vote. The
    Honorable Senator from Iowa.
        Senator Harkin. I thank the Chairman.
        Senator Burns. You are going to be all by yourself.
        Senator Harkin. That is dangerous.
        Senator Burns. It certainly is.
        Senator Harkin. We can pass all kinds of things.
        Senator Burns. I wanted to adjourn.
        Senator Harkin. I want to vote.
        Senator Burns. If you can get a quorum.

                                     afo's

        Senator Harkin. Thank you very much. I will just go ahead.
    Madam Secretary, I appreciate you being here. I have just two
    or three things I want to cover: Animal waste, radon and EPP,
    which is a shorthand for environmentally preferable products.
        The administration's national strategy for animal feeding
    operations announced by EPA and USDA in March calls for upwards
    of 20,000 livestock operations to be permitted under the Clean
    Water Act. I have legislation pending myself calling for
    tighter environmental standards for large animal feeding
    operations. I, again, compliment and congratulate you for
    working with Secretary Glickman on this issue and joining
    forces together.
        What I am concerned about is the fact that many States lack
    the personnel to make the regular inspections of these large
    animal feeding operations that would be required for meaningful
    environmental oversight under the Clean Water Act. Is EPA going
    to make additional funding available to the States? What do we
    need in order to get the personnel that we need for the
    inspections?
        Ms. Browner. The national strategy for animal feeding
    operations EPA-USDA announcement--essentially requires States
    to demonstrate that they can run the program within their
    State. We provide money to the States and, in fact, this budget
    request continues a $20 million increase in section 106 grants
    for the States. States can make a decision to use some of these
    funds for this program.
        Many of the States have told us that they think they are
    going to be able to address it through prioritization within
    their existing resources. One of EPA's roles is to make sure
    that the States are able to carry through on the commitments
    that they are making. If a State were to fail, then we can
    backstop the State. For example, we could help them with the
    permitting aspects.
        It is a relatively new program and a large undertaking. I
    think we have managed to provide this national backstop, so you
    do not have all of these differences that were unfolding among
    States. The second phase will be working with the States to
    ensure full implementation.

                       environmental preferable products

        Senator Harkin. I may have a follow-up question on that.
    But let me get to the other two things I wanted to cover.
        My main concern on that is the personnel required. I am
    really concerned about how much personnel. If you need
    additional personnel, what kind of funding is it going to take
    and what do we need to do up here on the appropriations side?
    How much more money do we need for those personnel?
        The second thing I wanted to cover is what I call the
    environmental preferable products, EPP. These are consumer and
    industrial products made from agriculturally based substances
    such as soy, corn oil, ag waste, wheat straw, things like that.
    If we do that, that is sort of taking care of the environment
    in the beginning rather than in the end. For example, the
    Federal Government can usually avoid having to pay a high
    disposal cost and can easily beat environmental compliance
    rules. For example, rather than buying standard industrial
    lubricants or solvents, Federal agencies can buy bio-based
    equivalents made from soy oil. They meet the same performance
    standards. They are less toxic and you do not have the disposal
    problem.
        In fact, the Government can help by identifying
    environmentally preferable products in establishing common
    standards. I have a couple of things here, like, the Department
    of Interior, I guess, is testing starch-based plates and bowls
    and utensils to replace polystyrene in cafeterias throughout--I
    guess they are going to do it throughout the Park Service and
    things like that.
        Ms. Browner. This starch-based product is also used in
    shipping peanuts.
        Senator Harkin. Exactly. That kind of stuff. The same
    thing. The Postal Service is testing building materials made
    from straw. Anyway, there is an executive order. President
    Clinton issued an executive order to do this, 13101, providing
    that Federal agencies should find ways of using more
    environmentally preferable products. And, I guess, EPA ought to
    be in the lead in this.
        My question is what is the EPA doing in moving forward
    toward increasing the Government's purchase of bio-based EPPs
    as required by the Executive Order, number one. Number two,
    what are the barriers you see in implementing this Executive
    Order, not just for you but for the rest of the Government?
        This committee--and the Chairman did this last year--added
    a million dollars in the budget this year. And how are those
    funds being used?
        Ms. Browner. The Environmentally Preferable Purchasing
    [EPP] program has been in existence for several years. The bio-
    based products are a new focus of this program. EPA, on behalf
    of the entire Federal Government, reviews products either
    through our own volition or products brought to us by
    manufacturers to ascertain whether or not they are
    environmentally preferable.
        We do that in accordance with a set of protocols. Once we
    make that decision, the rest of the Government is informed and
    there is a list of products that have been certified with EPP
    status. One of EPP's challenges is the reviewing of the
    products. There can be a lot of controversy in weighing. For
    instance, how much energy went into making two otherwise
    seemingly comparable bars of soap, rather than just looking at
    the environmental ``friendliness'' of the final product.
        Once we actually make the EPP these determinations, the
    next step is to get the other Federal agencies and departments
    to use the products. The example you give of the Department of
    Interior [DOI] is encouraging. It shows that this is not simply
    EPA producing a list and then begging people to review and make
    use of the list. Other agencies are formulating these ideas on
    their own. We can work with DOI to see whether or not the
    starch-based plate, bowls and utensils can be certified.
        Senator Harkin. My time is up. If you cannot tell me now,
    maybe you can just supply to me, Ms. Browner, what the million
    dollars you put--what you have used that million dollars for.
        [The information follows:]

       Environmentally Preferable Products: $1 Million Congressional Add

        The fiscal year 1999 $1 million Congressional Add-On for
    Environmentally Preferable Products is being used primarily to build
    infrastructure for green procurement. Approximately 75 percent of these
    funds will go toward engaging voluntary standard setting organizations
    to develop environmental standards and tools to train and provide
    environmental information to federal procurement officials.
                           specific resource breakout
    Pilots--$405K
      --pilots with third party, standards organizations
      --other pilots
    Tools--$310K
      --training and information tools for federal purchasers
      --life cycle based decision support tool (NIST software tool)
      --measurement
    Outreach--$235K
      --case studies, EPP updates, outreach to federal agencies, website
    Coordination--$50K
      --funds for Office of Federal Environmental Executive--support for
            ``summit'' of state/local/federal green purchasing programs
    Total: $1.0 million

        Senator Bond. Thank you very much, Senator Harkin. Thank
    you for keeping the hearing going and now we turn back to
    Senator Craig.

                  regional haze: western governors conference

        Senator Craig. Mr. Chairman, thank you very much. Director
    Browner, thank you for being with us today.
        My colleague from Montana broached a couple of questions
    with you as it related to regional haze which remains of great
    concern to our Governors in the West. And I know that you had
    mentioned to him that one of the Governors thought that the way
    this was developing under your agency might be okay. Let me
    read a quote from an April 6 letter you got from the chairman
    of the Western Governors Conference in which--it does not sound
    like things are okay.
        I will ultimately ask you why you did not follow the
    congressional intent last year that we established in the
    budget process recommending that you go back and deal with this
    issue.
        I quote from Governor Geringer of Wyoming:

        Given the rapidity with which the air frequently moves
    through Wyoming, we are acutely aware that air does not respect
    political boundaries. We believe that the regional haze and
    visibility can only be addressed through a cooperative and a
    collaborative process involving a number of States. We are
    committed to a regional process. Through the regional haze
    rules we are about to embark on a process that may drastically
    affect the way we do business. It is imperative that when we
    take the bold steps required in addressing visibility we do it
    with the best set of rules possible. I must, therefore, once
    again urge you--

        I cannot read the print here. It is a fax letter--

        to repropose the rules to allow a full public process to
    resolve the concerns and the confusion in the currently
    circulated rules.

        That is the chairman of the Western Governors Conference. I
    think that is respectful also of my Governor's concerns that we
    are out there dealing with something that we have not dealt
    with in an up-front manner. You talk about developing a
    cooperative relationship with States and local entities.
    Approximately 15 Governors from throughout the country have
    requested that EPA now repropose the rules. What are you doing?
        Ms. Browner. We have finalized the rule on Thursday.
        Senator Craig. In other words, you are not going to do it?
        Ms. Browner. I can explain why. We worked very closely with
    all of the Governors who expressed interest in this. We had
    numerous meetings, telephone calls with Governors. We made
    changes in the original proposal. This effort of protecting air
    quality in our natural parks and wilderness areas has been
    underway for almost 20 years.
        Senator Craig. I know it well. I have been with it longer
    than you, Carol. So what happened to last year's appropriation
    conference report where we encouraged EPA to repropose the
    regional haze rules?
        Ms. Browner. We have worked closely with all of the
    interested parties to see if we could resolve differences. We
    believe that we have struck the appropriate balance----
        Senator Craig. Well, I am still waiting for the call
    because I helped put that language in. I am one of those
    interested parties. I am not at all happy. We are going to come
    at you aggressively on this. Fifteen Governors have a right to
    be heard and we do not believe----
        Ms. Browner. They were heard.
        Senator Craig. No. They do not think so.
        Ms. Browner. With all due respect, we have spoken to
    Governors. Bob Perciasepe has been on the phone with Governors
    including Governor Geringer and I am sure he would be happy to
    explain the nature of those calls in the last several weeks.
        Senator Craig. I visited with the Governors, too. I am sure
    there are always two sides to a story. I am one that will
    accept that reality. But what I hear from the Governors is that
    it puts them, they find, in a very difficult situation and they
    do not believe that the effort was as full as you suggest it
    is.
        Ms. Browner. We did repropose the western portion of the
    rule so that we could engage in further dialogue. I am not
    suggesting that every single Governor was made absolutely
    happy.
        Senator Craig. And I do not believe you could probably do
    that.
        Ms. Browner. It was my understanding that Governor Leavitt
    who was one of the leading governors----
        Senator Craig. I am aware of the Governor's position and I
    visited with him on it.
        Ms. Browner. Per our conversation with Governor Leavitt, we
    were under the impression that the Governor believes we were
    responsive to his concerns in the final rule.

                       regional haze: statutory authority

        Senator Craig. What is the statutory authority for a
    regional BART in view of the specific resource requirements?
    How can you do that best available retrofit technology in light
    of what we are trying to do here?
        Ms. Browner. The Clean Air Act provided for the best
    available retrofit technology. We have added to that
    opportunity, embodied in the Clean Air Act, a trading program,
    so that we could further assist the utilities and the other 26
    industrial sources who will be required to retrofit, the
    commonly referred to grandfather sources and do it in the most
    cost-effective manner.
        So we did go beyond simply stating the technology and
    looked to some of the kind of market mechanisms that we have
    used in other sections of the Clean Air Act.
        Senator Craig. Carol, I think you know why I asked the
    question. Because when we talk about regional problems and air
    moving within a region, BART statutes require a specific
    attribution of haze to a specific source and knowledge of
    environmental benefits anticipated from BART controls. That is
    how Congress intended it, and yet you appear to be kind of
    spreading a broad net not specific to the intent of the law or
    the regulations.
        Ms. Browner. The States have to do an inventory and they
    will, in accordance with the law, look at the 26 categories and
    make determinations in terms of sources. But rather than simply
    stopping there and stating what the reductions are going to be,
    we added to that, per a lot of input from Governors and others,
    a trading mechanism so that as you look across the problem you
    can find the most cost-effective and the cheapest reductions,
    rather than simply stating every single facility that shows up
    in the survey has to do this.
        We worked very hard to strike that balance between the
    issues for the national parks and the wilderness areas, the
    economics of these older or these grandfathered facilities, and
    the regional component of this problem. I think this is why
    many of the Governors feel like we spoke to their issues.

                        regional haze: selective burning

        Senator Craig. In this instance, let me ask you, do the
    right hand and the left hand communicate? The right hand being
    EPA and these regional haze rules and Interior. Now Interior
    doesn't have anything to do with the Forest Service. But, as we
    know, Bruce Babbitt has been out recently talking about
    selective burns in a rather sizable manner. He was recently
    flying over the mountains of Idaho saying we are going to burn
    several hundred thousand acres here this year. Simple logic,
    because I was born and raised in the West, the West gets kind
    of hazy in the fall with burning and, that is, now the right
    hand and the left hand are trying to do this. So we're going to
    compensate on one hand by squeezing the private sector and the
    public sector is going to do selective burning.
        Are you communicating and is there a plan where that begins
    to fit together?
        Ms. Browner. Yes. Whether it be a regional haze or any of
    the other air pollution programs of this administration, we
    have continued to support selective burning.
        Senator Craig. You should.
        Ms. Browner. We think it provides important fire
    protections for the communities and for wildlife habitat. We
    have been very, very clear that when States look at their
    pollution data, the burn days, when you can monitor for the
    effect, are taken out of the database. We do not want people
    going through the expense of reducing air pollution that is
    attributable to burns. In no way is that what this is about. We
    have worked hard.
        Many of the States have come to us. We have pulled data for
    them to segregate out those days where either there was a
    forest fire happening or a prescribed burn happening. We are
    not hearing from States complaining that this is not the case
    in the air quality database. If your State thinks there is
    something in the air quality database that was attributable to
    a burn, we are happy to work with them.
        Senator Bond. Madam Administrator, we appreciate that
    particularly, since I burned my native warm season grasses this
    weekend and only burned one section of the fence. [Laughter.]
        Senator Craig. You were a contributor to a regional haze
    and I will bet you were not in their database.
        Ms. Browner. We are taking it out today.
        Senator Craig. Thank you, Mr. Chairman, I will come back
    with another----
        Senator Bond. We do have lots of questions.
        Senator Craig. Let me conclude that your rhetoric is fine.
    I will tell you that not all is well with 15 Governors in the
    West. Thank you.

                        clean water: unmet capital needs

        Senator Bond. The Association of Metropolitan Sewerage
    Agencies has told us that the capital needs for waste water
    treatment are $10 billion per year and replacement needs are
    $6.2 billion per year and the annual, local and Federal
    expenditures are $10.5 billion a year. That means there is a
    difference of $5.7 billion, almost $6 billion in annual unmet
    needs for capital in clean water. I would ask that as you
    develop your information that you are going to submit us on the
    unmet capital needs that you comment on that.
        Let me turn back to the questions that my colleague from
    West Virginia was asking. You have stated that Federal funds
    cannot be used for litigation against the Federal Government;
    is that correct?
        Ms. Browner. Yes.

                                  grant audits

        Senator Bond. Okay. How many financial audits of grantees
    does EPA conduct each----
        Ms. Browner. Through the IG's office?
        Senator Bond. Through the grants office.
        Ms. Browner. All grants are subject to audit review.
        Senator Bond. How many audits did EPA do of grantees last
    year?
        Ms. Browner. Of the grantees or of the grants?
        Senator Bond. Of the grants. You do audits of the grants.
    Where the money went. Do you audit where the money goes?
        Ms. Browner. Yes.
        Senator Bond. And how it is used?
        Ms. Browner. Yes. We have what are referred to as post-
    award management reviews, 333 last year.
        Senator Bond. Out of how many? What is the universe? How
    many are out there, roughly?
        Ms. Browner. The problem with this is it is apples and
    oranges. In terms of the number of grant awards that we made
    last year, we have----
        Senator Bond. You can submit that for the record.
        Ms. Browner. We will submit that.
        [The information follows:]

                          Completing Financial Audits

        Financial audits of grantees are audits performed by either the
    Inspector General (IG) or by CPA firms under the auspices of OMB
    Circular A-133 or the Single Audit Act.\1\ Grant Offices are not
    permitted to perform ``financial audits.''
    ---------------------------------------------------------------------------
        \1\ The Single Audit Act and A-133 are intended to cover the
    financial audits of State and local governments and institutions of
    higher education and nonprofit organizations expending $300,000 or more
    in grants or cost reimbursable contracts per year; that is, requires
    grantees to obtain audits in accordance with these requirements to
    determine the effectiveness of its financial management systems and
    internal control procedures (neither the IG or the Federal Agencies are
    allowed to duplicate what was done under the Single Audit Act). The
    Office of the Inspector General, receives notification of the all
    single audits with findings impacting EPA.
    ---------------------------------------------------------------------------
        As applied in EPA, in addition to the audits performed under the
    Single Audit Act requirements, financial audits include the IG's
    financial statement audits of the State Revolving Funds Trust Funds and
    financial management audits performed of grantees (examples of
    financial management audits include audits of accounting systems,
    procurement systems, internal controls, cash management procedures or
    expenditures under a given grant or grants). During fiscal year 1998,
    the IG or its representative, performed six financial audits of EPA
    grantees. Additionally, there were 91 single audits with findings
    impacting EPA. During fiscal year 1999, the IG has performed four
    financial audits and three audits of the SRF Trust Fund. Additionally,
    there have been 76 single audits issued with findings impacting EPA.
      ensuring grant programmatic and administrative requirements are met
        The Agency is responsible for monitoring and overseeing grantees.
    EPA officials must perform the following certifications and steps
    before the grant can be formally accepted and closed out:
        Role of the Program Office.--The program office's responsibilities
    are to certify that the deliverables of the grant have been received
    and are acceptable and that the grantee has met all the programmatic
    terms and conditions of the grant.
        Role of the Grants Management Office.--The grants management
    office`s responsibilities are to certify that the grantee has met all
    administrative requirements of the grant; reconcile grantee payments to
    EPA financial management system records to grantee's financial status
    report and; deobligate any unliquidated obligations.
        Role of the Finance Office.--The finance office is responsible for
    deobligating funds and setting up and collecting any accounts
    receivable, if necessary.
        During fiscal year 1998, EPA formally closed out over 9,000
    nonconstruction grants and over 4,000 grants through April 30 for
    fiscal year 1999.
                        outreach and review of grantees
        The eleven Grants Management Offices in EPA perform outreach to and
    review of grantees through several mechanisms such as workshops and
    training, technical assistance visits, evaluative onsite reviews (e.g.
    evaluating grantee financial management system and cost sharing
    documentation and validating data on financial reports) and desk
    reviews.
        During fiscal year 1998, the Grants Management Offices performed
    about 468 such outreach and reviews of grantees. The number to date for
    fiscal year 1999 is about 480.
        EPA has developed websites on the Internet, including a tutorial,
    providing many basic types of information for the public, including
    step-by-step instructions for preparing a grant application.

        Senator Bond. Were these financial audits to see how the
    money was used or did somebody just go out and look at the----
        Ms. Browner. No. They have to spend the money in accordance
    with the grant award.
        Senator Bond. You did make the determination they spent the
    money and complied, so you could give an opinion that those
    were done adequately?
        Ms. Browner. The grants that we review, the 333, are
    subject to the full review that every Federal agency engages in
    terms of grant awards.
        Senator Byrd. Mr. Chairman, would you allow for a question
    without it being taking out of your time?
        Madam Administrator, can you trace this money from the
    source of the grant to the expenditure of it?
        Ms. Browner. Yes. They are required to provide us with that
    information. And if someone were to fail to provide us with
    that information, then they can be required to return the
    funds.

                        grant money used for litigation

        Senator Byrd. Supposed they used some other money to carry
    out what they purportedly are to do, that used this money which
    is fungible. How do you know if this money is actually being
    spent in accordance with your regulations and the laws?
        Ms. Browner. We review and audit the grants to ensure that
    it is occurring.
        I think the issue perhaps--if I might, just so we can all
    make sure we're understanding each other.
        Senator Byrd. I do not mean to take Mr. Chairman's time.
        Senator Bond. I am going to reclaim it. Don't worry about
    that. If you give a brief answer on that, then I have a
    hypothetical and maybe it will help get to the question that
    Senator Byrd and I want to address.
        Ms. Browner. As a hypothetical, we'll just say it is a
    million-dollar organization that does any number of things.
    They make an application to EPA to do a specific project. When
    we grant that award, we make that grant, they are required to
    do the work under that project. They are not allowed to use
    grant funds to lobby. And we have withdrawn funds for that
    reason. They are not allowed to use it in litigation.
        I think the question we are all struggling with here is
    because of that grant award, do they now have resources in that
    million dollars that they used to do something else? I think
    that is the question that is before us.
        I think a more specific question that is before us is, do
    organizations get grants from EPA and then turn around, using
    other moneys, and sue EPA? And the answer to that is yes,
    everybody from the National Home Builders Association to
    environmental organizations. However, they cannot use those
    grant funds to sue us, and we have rules in place. If you are
    under the impression that someone has done that, we will take
    immediate action.
        Senator Bond. Let me pose to you a hypothetical. An
    organization that has an annual operating budget of three
    quarters of a million dollars and they do lots of good things.
    They educate school children and they have offices. They get a
    grant from EPA to educate school children. The grant is
    $500,000. They have the existing three quarters of a million
    dollars. They then spend a half million dollars on legal fees
    to sue EPA or the Department of Transportation or the State and
    the city combined and use the Federal grant money plus $250,000
    left over to run their educational programs. Is this
    acceptable?
        Ms. Browner. If they make an application to do specific
    public education and they are awarded a grant per that
    application, that is all they can spend that money on. They
    cannot----
        Senator Bond. And it is not--you think it is not EPA's
    concern that they used--that the $500,000 freed up enables them
    to sue EPA or Department of Transportation?
        Ms. Browner. Rest assured. We do not like being sued. I do
    not like being the named respondent in these lawsuits. What the
    law allows us to do is to make a solicitation for grants and to
    review them. They are earmarks. There are grants that function
    as earmarks that go to organizations that turn around and sue
    us.
        If I might give you a statistic that I think might bring
    this into focus. I think it is something that deserves
    attention. We were asked to look at this by another committee.
    We were actually asked in that committee to look at it over a
    10-year period. Over a 10-year period there were over 6,000
    grant recipients who got EPA grants, 6,200. During this same
    period of time there were approximately 2,000 lawsuits filed
    against EPA representing something on the order of 4,000
    parties, 2,000 actual lawsuits. We can give you the case
    numbers and everything. Of that, in this 10-year review, 250 of
    the litigants in those lawsuits, their organizations had also
    received grants. This is over 10 years, a universe of 6,200
    grants, 2,000 lawsuits of which 250 received grant funds.
        They include people like General Electric, the Home
    Builders Association, and the Environmental Defense Fund. One
    of the largest recipients of grant money from EPA and one of
    the litigants, and one of the organizations who love to take us
    to court, is the American Lung Association. In community after
    community your local American Lung chapters are receiving funds
    to work with schools on asthma, and on radon. So, yes, as grant
    recipients, their organizations have sued us. There are rules
    against using our money to sue us.

                           grant audits: ig's report

        Senator Bond. Madam Administrator, we have the Inspector
    General's report. This one was 1998. He said that EPA did not
    fulfill its obligations to adequately monitor assistance
    agreement activities. The staff did not always negotiate work
    plans with well-defined commitments, adequately document costs.
        In prior audits, they said material weaknesses: Failed to
    review grant applications, perform site visits, provide
    complete certifications. And we continue to get assurances that
    EPA will correct the problems. We do not see an item in the
    budget request that EPA is developing a policy addressing post-
    award management of grants, even though it has been committed
    to issue this policy since 1997.
        I might just ask a quick question. I believe the Inspector
    General Ms. Tinsley is here. On the basis of your work, can you
    tell us whether EPA has an understanding and a knowledge of
    whether any of their grant money is used for--has been used
    either directly or indirectly for litigation against the
    Government? Is EPA able to ascertain that based on your work?
        Ms. Tinsley. Our work has not shown that to date. We are
    developing a much broader strategy to look at how the EPA
    distributes funds.
        Senator Bond. You continue to believe this is a material
    weakness?
        Ms. Browner. I want to be clear----
        Senator Bond. Let Ms. Tinsley finish. Is there anything
    else you want to add on that?
        Ms. Tinsley. I can add that the agency is aware that there
    are problems. They have recently issued a policy to do this
    grant oversight and to do reviews as grants are delivered to
    make sure that the grants identify what the grantee is going to
    do specifically. It is a major part of EPA's budget. It's a
    difficult problem. There are a lot of grantees.
        Senator Bond. If you have further comments on the policy or
    the status of the program, we would invite you to submit it to
    the committee because I am getting a sense that we may not have
    gone far enough in ensuring that we are not using taxpayer
    dollars indirectly to finance lawsuits which challenge pilot
    policies and programs established by the Congress.
        Now, Madam Administrator, you wish to comment.
        Ms. Browner. The Inspector General I know will correct me
    if I am wrong, but I do not believe that the Inspector General
    who also looks at grant awards and does tell us when they find
    problems on specific grants has ever come to us and said one of
    your grants was used to sue you. I do not believe they have
    ever found one and I think she is indicating no.
        Senator Bond. I think our question is, it is not whether
    the money is used directly. It is the fact that funds are
    fungible and that it is a potential to displace and utilize
    those resources, freeing up other funds for litigation.
        Ms. Browner. Mr. Chairman, as I said, I don't like being
    sued any more than any one else likes being sued. I believe
    this is an issue Government-wide and I believe there are
    obviously constitutional issues. Organizations, simply because
    they receive a grant to do specific work, do not give up their
    right to publicly disagree with us and drag us into court.
        Senator Bond. Exactly. But we, as taxpayers, do not have
    any obligation to keep funding. Let me turn to Senator Byrd----

                                consent decrees

        Senator Craig. Mr. Chairman, could I ask that the director
    submit us a list that goes directly to this and that, could we
    find out from you, since 1993, which organizations have brought
    suits against EPA that have resulted in, very important here,
    consent decrees which led to new requirements on the agency or
    the public at large?
        Ms. Browner. That is a different question than the one we
    have----
        Senator Craig. Not really.
        Ms. Browner. I am happy to answer it. We have provided this
    before. I think we provided it, if not to this committee last
    year, a different committee. We will be happy to provide it
    again.
        [The information follows:]

    Organizations That Have Brought Lawsuits Against EPA That Have Resulted
                 in Consent Orders That Led to New Requirements

        Attached is a chart listing all of EPA's consent orders in
    defensive judicial litigation since 1989. For each consent order, the
    chart provides the case caption, a list of the parties to the lawsuit,
    the allegations in the complaint (including, for lawsuits alleging that
    EPA failed to carry out a non-discretionary duty by a statutory
    deadline, the statutory deadline), a brief description of the order,
    and a list of the parties that were involved in negotiation of the
    order.
        Because some of the EPA attorneys who worked on older consent
    orders are no longer employed by the Agency and because some of our
    older litigation files contain limited information, we had some
    difficulty assembling this chart for some cases. However, we believe
    that the attached chart is reasonably accurate and complete.
        Please note that virtually all the consent orders in the chart
    merely establish court deadlines for EPA actions that are required by
    statute and do not dictate the content of those actions. Where they
    involve a commitment to undertake rulemaking, EPA's actions would be
    subject to the notice-and-comment provisions of the Administrative
    Procedure Act. Like all consent orders, each of these orders was
    reviewed at a high level within the Department of Justice and by a
    court to ensure that it was fair, reasonable, and in the public
    interest. In addition, it is the policy of the Department of Justice
    that the United States not consent to court orders which contain
    provisions for injunctive relief which could not be ordered by a court
    unilaterally. Finally, you should be aware that Section 113(g) of the
    Clean Air Act requires EPA to provide notice of and opportunity to
    comment on defensive consent orders under the Clean Air Act before they
    are final or filed with a court, a practice to which EPA carefully
    adheres.

                                                          CONSENT ORDERS RESOLVING DEFENSIVE JUDICIAL LITIGATION BETWEEN EPA AND OTHER PARTIES
                                                                                  [January 1, 1989-March 31, 1999 \1\]
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                           Parties to consent order (other than    Allegations in complaint against EPA,
                    Case                                   EPA)                    including original statutory deadline         Description of consent order        Parties present in negotiations
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Alabama Rivers Alliance v.           Alabama Rivers Association, Edward Mudd  Failure to establish total maximum       EPA agreed to establish TMDLs for all    Parties to the consent order.
     Hankinson, No. CV-97-S-2518-M        II, Ouida Fritschi, and the Homewood     daily loads (TMDLs) by statutory         WQLs on Alabama's 1996 CWA Sec.
     (N.D.Ala.) and Edward Mudd, II v.    Citizens Association.                    deadline (30 days from alleged           303(d) list by 2005 if Alabama does
     Hankinson, No. CV-97-S-0714-M                                                 constructive submission of no TMDLs)     not do so. EPA will also develop a
     (N.D.Ala.).                                                                   and failure to undertake monitoring      report evaluating and making
                                                                                   necessary to identify all water          recommendations regarding Alabama's
                                                                                   quality limited segments (WQLs) in       water quality monitoring and
                                                                                   Alabama. CWA Sec.  303(d).               assessment program and CWA Sec.
                                                                                                                            303(d) listing process.
    American Littoral Society v. EPA,    American Littoral Society and Public     Failure to establish total maximum       EPA agreed, among other things, to       Parties to the consent order and
     No. 96-489 (E.D.Pa.).                Interest Research Group of               daily loads (TMDLs) and lists of         establish TMDLs for Pennsylvania         State of Pennsylvania (non-
                                          Pennsylvania.                            impaired waters by statutory deadline    waters not meeting water quality         party).
                                                                                   (30 days from alleged constructive       standards by 2009 if Pennsylvania does
                                                                                   submission of no TMDLs or lists--7/79,   not do so, take final action regarding
                                                                                   as alleged by plaintiffs). CWA Sec.      Pennsylvania's CWA Sec.  303(d) list,
                                                                                   303(d). Failure to approve               develop report on Pennsylvania's
                                                                                   Pennsylvania's continuing planning       monitoring and listing program, review
                                                                                   process by statutory deadline (30 days   Pennsylvania's continuing planning
                                                                                   from submission) and review it from      process, and request comment on TMDLs
                                                                                   time to time thereafter. CWA Sec.        and lists from Fish & Wildlife Service
                                                                                   303(e). Failure to consult under ESA     and National Marine Fisheries Service.
                                                                                   on list and TMDL approvals.
    American Littoral Society v. EPA,    American Littoral Society and Sierra     Failure to comply with mandatory         EPA agreed, among other things, to       Parties to the consent order and
     No. 96-591 (SLR) (D.Del.).           Club.                                    duties, including establishment of       establish TMDLs for Delaware waters      State of Delaware (non-party).
                                                                                   total maximum daily loads (TMDLs) by     not meeting water quality standards by
                                                                                   statutory deadline (30 days from         2006 if Delaware does not do so,
                                                                                   alleged constructive submission of no    consider basis for Delaware's 1998
                                                                                   TMDLs or lists--7/79, as alleged by      listing decision and take appropriate
                                                                                   plaintiffs). CWA Sec.  303(d). Failure   action, develop report on Delaware's
                                                                                   to approve Delaware's continuing         monitoring and listing program, review
                                                                                   planning process by statutory deadline   Delaware's continuing planning
                                                                                   (30 days from submission) and review     process, and request comment on TMDLs
                                                                                   it from time to time thereafter. CWA     and lists from Fish & Wildlife Service
                                                                                   Sec.  303(e). Failure to consult under   and National Marine Fisheries Service.
                                                                                   ESA on list and TMDL approvals.
    American Lung Association of         American Lung Association of Arizona,    Failure to promulgate Federal            EPA agreed to a schedule for issuance    Parties to the consent order.
     Arizona v. Browner, No. Civ. 96-     Carolyn Aspegren, and William Grimm.     implementation plan (FIP) for non-       of a FIP for Phoenix, Arizona ozone
     1856 PHX ROS (D. Ariz.).                                                      attainment area by statutory deadline    nonattainment area for reductions of
                                                                                   (2 years after finding of failure of     volatile organic compounds (VOCs)
                                                                                   State implementation plan (SIP)). CAA    under CAA Sec.  182(b)(1).
                                                                                   Sec.  110(c).
    American Lung Association of         American Lung Association, Urban         Failure to promulgate Federal            EPA agreed to a schedule regarding       Parties to the consent order.
     Northern Virginia v. Browner, Civ.   Protectors, Sierra Club, Friends of      implementation plan (FIP) for non-       issuance of a FIP for ozone
     No. 1:96 CVO 1388 (and               the Earth, Delaware Valley Citizens      attainment area by statutory deadline    nonattainment areas in Washington,
     consolidated cases Civ. No. 1:96     Council for Clean Air, Chester           (2 years after finding of failure of     D.C., Baltimore, MD, and Philadelphia,
     CVO 1392 and Civ. No. 1:96 CVO       Residents Concerned for Quality          State implementation plan (SIP)). CAA    PA for reductions of volatile organic
     1393) (D.D.C.).                      Living, Communities Organized to         Sec.  110(c).                            compounds (VOCs) under CAA Sec.
                                          Improve Life, Odette McDonald, and                                                182(b)(1).
                                          Katherine Nueslein.
    American Lung Association v.         American Lung Association (ALA); ALA of  Failure to review criteria under CAA     EPA agreed to a schedule for review of   Parties to the consent order.
     Browner, No. 92-5316 (E.D.N.Y.).     Nassau (NY), Queens (NY), and Brooklyn   Sec.  108 and national ambient air       NAAQS for sulfur oxides.
                                          (NY); States of Maine and New Jersey;    quality standard (NAAQS) for sulfur
                                          Paul Henry, Noberto Cabballery,          oxides by statutory deadline (5 years
                                          Alexandra Cabballery, and Howard Hills.  after completion of previous NAAQS
                                                                                   review for sulfur oxides). CAA Sec.
                                                                                   109(d).
    Atlantic States Legal Foundation v.  Atlantic States Legal Foundation.......  Failure to promulgate regulations        EPA agreed to schedule for promulgating  Parties to the consent order.
     EPA, No. 95-CV-1788 (N.D.N.Y.).                                               identifying dangerous levels of lead     regulations identifying dangerous
                                                                                   in paint, dust and soil by statutory     levels of lead.
                                                                                   deadline of 4/28/94. TSCA Sec.  403.
    Brewster v. Reilly, No. 90-6367-HO   William L. Brewster....................  Failure to promulgate drinking water     EPA agreed to schedules for issuing      Parties to the consent order.
     (D.Or.).                                                                      regulations by statutory deadline of 6/  drinking water regulations.
                                                                                   89. SDWA Sec.  1412(b).
    Bull Run Coalition v. EPA, No. 88-   Bull Run Coalition, Citizens Interested  Failure to promulgate drinking water     EPA agreed to schedules for issuing      Bull Run Coalition.
     6097 (D.Or.).                        in Bull Run, Inc., Frank Gearhart,       regulations by statutory deadline of     drinking water regulations.
                                          Joseph L. Miller, Kathy Williams,        12/87. SDWA Sec.  1412(b).
                                          Lucia N. Skov, Vera Defoe, Mark Wigg,
                                          Samuel E. Sargent, Frances Price Cook,
                                          and William L. Brewster.
    Bull Run Coalition v. EPA, No. 88-   Bull Run Coalition, Citizens Interested  Failure to promulgate drinking water     EPA agreed to schedules for issuing      Bull Run Coalition.
     6444 (D.Or.).                        in Bull Run, Inc., Frank Gearhart,       regulations by statutory deadline of 6/  drinking water regulations.
                                          Joseph L. Miller, Kathy Williams,        88. SDWA Sec.  1412(b).
                                          Lucia N. Skov, Mark Wigg, Samuel E.
                                          Sargent, Frances Price Cook, William
                                          L. Brewster, Cherie Holenstein, Ralph
                                          Frohwerk, Georgia Frohwerk, and
                                          Margaret H. Thomas.
    Citizens for Balanced                Citizens for Balanced Transportation,    Failure to promulgate federal            EPA agreed to a schedule regarding       Parties to consent order and
     Transportation v. EPA, No. 96-W-     Bob Yuhnke, and Earth Law.               implementation plan (FIP) for carbon     action on SIP measures for carbon        Colorado Air Quality Control
     645 (D. Colo.).                                                               monoxide and particulate matter (PM-     monoxide (CO) and particulate matter     Commission (non-party).
                                                                                   10) for Denver within 2 years of EPA     (PM-10) for Denver.
                                                                                   finding of SIP failure. CAA Sec.
                                                                                   110(k).
    Citizens Interested in Bull Run,     Citizens Interested in Bull Run, Inc...  Failure to promulgate drinking water     EPA agreed to schedules for issuing      Parties to consent order.
     Inc. v. EPA, No. CIV 92-1587                                                  regulations by statutory deadline of 6/  drinking water regulations.
     (D.Or.).                                                                      91. SDWA Sec.  1412(b).
    Citizens Interested in Bull Run,     Citizens Interested in Bull Run, Inc...  Failure to promulgate regulations        EPA agreed to a schedule for issuing     Parties to the consent order.
     Inc. v. Reilly, No 92-6258 (D.Or.).                                           requiring federal agencies to conform    regulations requiring federal agencies
                                                                                   their procurement regulations with       to conform their procurement
                                                                                   title VI of the CAA by statutory         regulations with Title VI of the CAA.
                                                                                   deadline of 5/15/92. CAA Sec.  613.
    Citizens to Preserve the Ojai v.     Citizens to Preserve the Ojai..........  Failure to promulgate Federal            EPA agreed to schedules regarding        Parties to the consent order.
     EPA, No. CV 88-0982 HLH (C.D.Cal.).                                           implementation plan (FIP) for non-       issuance of a FIP for ozone for the
                                                                                   attainment area by statutory deadline    Ventura Air Quality Management
                                                                                   (4-10 months from SIP disapproval).      District.
                                                                                   CAA Sec.  110(c).
    Clinton County Commissioners v.      Clinton County Commissioners and Arrest  Response action at Drake Chemical        EPA agreed to discontinue soil           Parties to the consent order.
     EPA, No. 4:CV-96-00181 (M.D.Pa.).    the Incinerator Remediation, Inc.        Superfund Site violated CERCLA and       excavation and incinerator test
                                                                                   RCRA and threatened human health and     operations at Drake Chemical Superfund
                                                                                   the environment.                         Site until further risk analysis was
                                                                                                                            completed by EPA and the court issued
                                                                                                                            a ruling with respect to plaintiffs' 2/
                                                                                                                            96 motion for a preliminary injunction.
    Clinton County Commissioners v.      Clinton County Commissioners and Arrest  Response action at Drake Chemical        Upon plaintiffs' motion for injunctive   Parties to the consent order.
     EPA, No. 4:CV-96-00181 (M.D.Pa.).    the Incinerator Remediation, Inc.        Superfund Site violated CERCLA and       relief pending appeal, EPA agreed not
                                                                                   RCRA and threatened human health and     to commence full-scale operation of
                                                                                   the environment.                         the incinerator before 5/15/97 or
                                                                                                                            before Court of Appeals for the Third
                                                                                                                            Circuit issued decision (in exchange
                                                                                                                            for plaintiffs' agreement that EPA
                                                                                                                            could proceed with test operations).
    Coalition for Clean Air, Inc. v.     Coalition for Clean Air, Inc., and       Failure to promulgate Federal            EPA agreed to schedules regarding        Parties to the consent order.
     EPA, No. CV 88-4414 HLH (C.D.        Sierra Club.                             implementation plan (FIP) for non-       issuance of FIPs for carbon monoxide
     Cal.).                                                                        attainment area by statutory deadline    (CO) and ozone for the South Coast Air
                                                                                   (4-10 months from SIP disapproval).      Quality Management District.
                                                                                   CAA Sec.  110(c).
    Coalition for Clean Air, Inc. v.     Coalition for Clean Air, Inc., Natural   Failure to fulfill commitment in         EPA agreed to a schedule to conclude     Parties to the consent order.
     EPA, No. 97-6916 (C.D.Cal.).         Resources Defense Council, Inc., and     approved California ozone State          the public consultative process on the
                                          Communities for a Better Environment.    implementation plan (SIP) approval to    California ozone SIP.
                                                                                   make certain determinations by 12/31/
                                                                                   97 as part of a public consultative
                                                                                   process on Federal and State measures.
                                                                                   Complaint was amended in 1998 to
                                                                                   include this claim.
    Cook v. Reilly, No. 89-6307E         Frances P. Cook and Citizens Interested  Failure to issue standards of            EPA agreed to a schedule for regulation  Parties to the consent order.
     (D.Or.).                             in Bull Run, Inc.                        performance for stationary source by     of emissions of volatile organic
                                                                                   statutory deadline (4 years after the    compounds (VOCs) from dry cleaners
                                                                                   category is listed under CAA Sec.        under CAA Sec.  111.
                                                                                   111(b)). CAA Sec.  111.
    Cronin v. Browner, No. 93-0314       John J. Cronin, the Hudson Riverkeeper,  Failure to promulgate regulations for    EPA agreed to propose regulations for    Parties to the consent order.
     (AGS)  (S.D. N.Y.).                  Cynthia E. Poten, the Delaware           cooling water intake structures by       cooling water intake structures by 7/2/
                                          Riverkeeper, The Hudson Riverkeeper      statutory deadline of 2/15/74 for new    99 and take final action by 8/13/01.
                                          Fund, Inc., The New York Coastal         sources and 7/1/77 for existing
                                          Fishermen's Association, Inc., The       sources. CWA Sec. Sec.  301(b), 306,
                                          American Littoral Society, Inc.,         and 316(b).
                                          Michael Lozeau, the San Francisco
                                          BayKeeper, BJ Cummings, the Puget
                                          Soundkeeper, Terrance E. Backer, the
                                          Soundkeeper, The Long Island
                                          Soundkeeper Fund, Inc., Andrew
                                          Willner, the Baykeeper for the New
                                          York and New Jersey Harbor Estuary,
                                          Joseph E. Payne, the Casco BayKeeper,
                                          Terrance Tamminen, the Santa Monica
                                          BayKeeper, John Torgan, the
                                          Narragansett BayKeeper, Save the Bay,
                                          Inc.
    Defend the Bay, Inc. v. Marcus, No.  Defend the Bay, Inc....................  Failure to establish total maximum       EPA agreed to establish TMDLs for        Parties to the consent order.
     97-3997 MMC (N.D.Cal.).                                                       daily loads (TMDLs) for Newport Bay by   Newport Bay by 2001 if California does
                                                                                   statutory deadline (30 days from         not do so.
                                                                                   alleged constructive submission of no
                                                                                   TMDLs--6/79, as alleged by
                                                                                   plaintiffs). CWA Sec.  303(d). Failure
                                                                                   to disapprove California's 1994 CWA
                                                                                   Sec.  303(d) list for impaired waters
                                                                                   despite omission of Newport Bay.
    Defenders of Wildlife v. Browner,    Defenders of Wildlife, George Marsik,    Failure to act on Arizona's submission   EPA agreed to take final action on       Parties to the consent order.
     No. CIV 93-234 TUC ACM (D.Ariz.).    Jerry Van Gasse, and James Slingluff.    of water quality standards by            water quality standards submitted by
                                                                                   statutory deadline of 5/92; failure to   Arizona under CWA Sec.  303(c) by 4/30/
                                                                                   propose federal water quality            94; EPA agreed to establish TMDLs for
                                                                                   standards by statutory deadlines of 12/  mercury in certain waters in Arizona
                                                                                   9/93 and 7/29/94; failure to establish   by 2001 if Arizona does not do so.
                                                                                   total maximum daily loads (TMDLs) by
                                                                                   statutory deadline (30 days from
                                                                                   alleged constructive submission of no
                                                                                   TMDLs). CWA Sec.  303 (c) and (d).
    DiSimone v. Browner, No. 97-1987     Barry DiSimone and Donald Steuter        Failure to implement Federal             EPA agreed to a schedule for rulemaking  Parties to the consent order.
     (D.Ariz.).                           (represented by Arizona Center for Law   implementation plan (FIP) commitments    to implement the FIP for carbon
                                          in the Public Interest).                 that came due at various times in mid-   monoxide in Phoenix, Arizona.
                                                                                   1990's. CAA Sec.  110(c).
    Donison v. Browner, No. CIV 92-6280- Clare Donison, Ralph Frowerk, Frank      Failure to promulgate drinking water     EPA agreed to schedules for issuing      Parties to the consent order.
     HO  (D.Or.).                         Gearhart, Kathy Williams, and Citizens   regulations by statutory deadline of 6/  drinking water regulations under SDWA.
                                          Interested in Bull Run, Inc.             89. SDWA Sec.  1412(b).
    Environmental Technology Council v.  Environmental Technology Council and     Failure to revise regulations governing  EPA agreed to a rulemaking schedule      Parties to the consent order;
     Browner, Nos. 94-2119 and 94-2346    Edison Electric Institute.               mixtures and treatment residues of       regarding revisions to a specific        Chemical Manufacturers
     (D.D.C.).                                                                     hazardous waste by statutory deadline    section of the regulatory definition     Association (intervenor), the
                                                                                   of 10/1/94. Pub. L. No. 102-389 (1992).  of hazardous waste, including possible   American Forest and Paper
                                                                                                                            exemptions from hazardous waste          Association (intervenor), the
                                                                                                                            regulation.                              Chamber of Commerce of the
                                                                                                                                                                     United States (intervenor), the
                                                                                                                                                                     American Iron and Steel
                                                                                                                                                                     Institute (intervenor), the
                                                                                                                                                                     American Petroleum Institute
                                                                                                                                                                     (intervenor), and The
                                                                                                                                                                     Fertilizer Institute
                                                                                                                                                                     (intervenor).
    Environmental Defense Fund v.        Environmental Defense Fund.............  Failure to determine whether certain     Required EPA to complete several RCRA    Parties to the consent order.
     Browner, No. 89-0598 (D.D.C.).                                                hazardous wastes should be listed as     rulemakings required by statute by
                                                                                   hazardous wastes by statutory deadline   various dates, including determining
                                                                                   of 2/8/86 (RCRA Sec.  3001(e));          whether certain solid wastes should be
                                                                                   failure to promulgate toxicity           listed as hazardous wastes and
                                                                                   characteristic by statutory deadline 3/  producing studies of certain wastes.
                                                                                   8/87 (Sec.  3001(g)).
    Environmental Defense Fund v. EPA,   Environmental Defense Fund.............  Failure to determine whether mining      Required EPA to issue regulatory         Parties to the consent order.
     No. 91-0429 (D.D.C.).                                                         wastes should be regulated under RCRA    determination under RCRA Sec.  3001(b)
                                                                                   Subtitle C by statutory deadline of 1/   regarding status of mineral processing
                                                                                   31/91 (RCRA Sec.  3001(b)).              wastes under Subtitle C of RCRA by 5/
                                                                                                                            20/91.
    Environmental Defense Fund v. EPA,   Environmental Defense Fund, Sierra       Failure to promulgate conformity rule    EPA agreed to a schedule for issuance    Parties to the consent order.
     No. 92-1636 (N.D.Cal.).              Club, and Carla Baird.                   by statutory deadline of 11/15/91. CAA   of conformity rules under CAA Sec.
                                                                                   Sec.  176(c)(4)(A).                      176(c)(4).
    Environmental Defense Fund v.        Environmental Defense Fund, Natural      Failure to review criteria under CAA     EPA agreed to a schedule to review the   Parties to the consent order.
     Reilly, No. 85-9507 (S.D.N.Y.).      Resources Defense Council, Inc.,         Sec.  108 and secondary national         secondary NAAQS for sulfur oxides
                                          National Parks and Conservation          ambient air quality standard (NAAQS)     under CAA Sec.  109(d).
                                          Association, and States of New York,     for sulfur oxides by statutory
                                          Connecticut, Massachusetts, New          deadline (5 years after completion of
                                          Hampshire, Minnesota, and Rhode Island.  previous secondary sulfur oxides NAAQS
                                                                                   review). CAA Sec.  109(d).
    Forest Guardians v. EPA, Civ. No.    Forest Guardians and Southwest           Failure to establish total maximum       EPA agreed to establish TMDLs for all    Parties to the consent order.
     96-0826 LH (D.N.M.).                 Environmental Center.                    daily loads (TMDLs) by statutory         water quality limited segments on New
                                                                                   deadline (30 days from alleged           Mexico's 1998 CWA Sec.  303(d) list by
                                                                                   constructive submission of no TMDLs--7/  2006 if New Mexico does not do so.
                                                                                   79, as alleged by plaintiffs). CWA
                                                                                   Sec.  303(d).
    Frohwerk v. Reilly, No. CIV 91-6549- Ralph Frowerk, Citizens Interested in    Failure to promulgate drinking water     EPA agreed to schedules for issuing      Parties to the consent order.
     TC (D.Or.).                          Bull Run, Inc., Frank Gearhart, Joseph   regulations by statutory deadline of 6/  drinking water regulations.
                                          Miller and Kathy Williams.               89. SDWA Sec.  1412(b)..
    Frohwerk v. Reilly, No. CIV 90-6363- Ralph Frowerk, Frank Gearhart, Kathy     Failure to promulgate drinking water     EPA agreed to schedules for issuing      Parties to the consent order.
     JO (D.Or.).                          Williams, William L. Brewster and        regulations by statutory deadline of 6/  drinking water regulations.
                                          Citizens Interested in Bull Run, Inc.    90. SDWA Sec.  1412(b).
    Gearhart v. Browner, Civil No. 89-   Frank Gearhart, Citizens Interested in   Failure to propose and promulgate        EPA agreed to issue sewage sludge        Natural Resources Defense
     6266-HO  (D.Or.).                    Bull Run, Inc., Kathy Williams,          regulations for sewage sludge by         regulations under CWA Sec.  405 as       Council, Inc. and all
                                          Frances Price Cook, Natural Resources    statutory deadlines (propose round       follows : promulgate round one--11/25/   plaintiffs.
                                          Defense Council, Inc. (intervenor),      one--11/30/86; promulgate round one--8/  92; notice of round two pollutants--5/
                                          and Association of Municipal Sewage      31/87; propose round two--7/31/87;       24/93; propose round two--12/15/99;
                                          Authorities (AMSA) (intervenor).         promulgate round two--6/15/88). CWA      promulgate round two--12/15/01.
                                                                                   Sec.  405(d).
    Gearhart v. Reilly, No. 91-2435      Bull Run Coalition, Frank Gearhart, and  Failure to submit a report to Congress   Required EPA to submit report to         Parties to the consent order.
     (D.D.C.).                            Edison Electric Institute.               on fossil fuel combustion wastes by      congress and to issue regulatory
                                                                                   statutory deadline of 10/21/82;          determinations under RCRA Sec.
                                                                                   failure to determine whether to          3001(b) regarding the status under of
                                                                                   regulate these wastes under RCRA         fossil fuel combustion wastes under
                                                                                   Subtitle C by statutory deadline (6      Subtitle C of RCRA by various dates.
                                                                                   months after submission of report to
                                                                                   Congress). RCRA Sec.  3001(b).
    Golden Gate Audubon Society v.       Golden Gate Audubon Society, Marin       Failure to promptly propose water        EPA agreed to propose and promulgate     Sierra Club Legal Defense Fund
     Browner, No. CIV-5-93 646 LKK PAN    Audubon Society, Santa Clara Audubon     quality standards; failure to            water quality standards for the San      represented plaintiffs.
     (E.D.Cal.).                          Society, Ohlone Audubon Society, Mount   promulgate standards by statutory        Francisco Bay Delta by 12/93, and 12/
                                          Diablo Audubon Society, Sequoia          deadline (90 days after proposal). CWA   94, respectively.
                                          Audubon Society, Madrone Audubon         Sec.  303(c).
                                          Society, Point Reyes Bird Observatory,
                                          Environmental Defense Fund, Natural
                                          Resources Defense Council, Inc., The
                                          Bay Institute, Save San Francisco Bay
                                          Association, Pacific Coast Fisheries
                                          Associations, California Native Plant
                                          Society, Citizens for a Better
                                          Environment, United Anglers of
                                          California, Sierra Club, and
                                          Streaminders Chapter of the Izaak
                                          Walton League.
    Heal the Bay, Inc., v. Carol         Heal the Bay, Inc., Santa Monica         Failure to establish total maximum       EPA agreed to backstop development of    Natural Resources Defense
     Browner, No. C98-4825 (SBA)          BayKeeper, Inc., and Terry Tamminen.     daily loads (TMDLs) by statutory         TMDLs for the Los Angeles region of      Council, Inc., Heal the Bay,
     (N.D.Cal.).                                                                   deadline (30 days after alleged          California by 2012. EPA also agreed to   Inc., and Santa Monica
                                                                                   constructive submission of no TMDLs);    review the State's continuing planning   BayKeeper, Inc.
                                                                                   failure to review State continuing       process and to develop a report
                                                                                   planning process from time to time;      evaluating the State's monitoring
                                                                                   failure to monitor as necessary to       program.
                                                                                   identify all water quality limited
                                                                                   segments. CWA Sec.  303(d).
    Institute for Energy and             Not known. In process of obtaining       Failure to act on petition to add        EPA agreed to a schedule to take action  Parties to the consent order.
     Environmental Research v. EPA, No.   consent decree from DOJ archives.        substance to list of class I             on a petition to list certain
     93-2266 (D.D.C.).                                                             substances by statutory deadline (1      hydrochlorofluorcarbons (HCFCs) as
                                                                                   year after receipt of petition). CAA     class I ozone depleting substances
                                                                                   Sec.  602(c)(3).                         under CAA Sec.  602(c).
    Kansas Natural Resource Council,     Kansas Natural Resource Council, Inc.,   Failure to establish total maximum       EPA agreed, among other things, to       Parties to the consent order.
     Inc. v. Browner, No. 95-2490-JWL     Sierra Club, and State of Kansas         daily loads (TMDLs) and lists of         establish TMDLs for Kansas waters not
     (D.Kan.).                            (intervenor/defendant).                  impaired waters by statutory deadline    meeting water quality standards by
                                                                                   (30 days after constructive submission   2006 if Kansas does not do so, and to
                                                                                   of no TMDLs or lists--7/79, as alleged   review Kansas' continuing planning
                                                                                   by plaintiffs). CWA Sec.  303(d).        process.
                                                                                   Failure to approve Kansas' continuing
                                                                                   planning process by statutory deadline
                                                                                   (30 days after submission--3/73, as
                                                                                   alleged by plaintiffs); failure to
                                                                                   review continuing planning process
                                                                                   from time to time. CWA Sec.  303(e).
    Legal Environmental Assistance       Legal Environmental Assistance           Failure to promptly propose federal      EPA agreed to either propose water       Parties to the consent order.
     Foundation v. Browner, No. CV-96-    Foundation.                              water quality standards. CWA Sec.        quality standards for Alabama or
     ETC-2454-S (N.D.Ala.).                                                        303(c).                                  withdraw outstanding disapprovals of
                                                                                                                            Alabama water quality standards by 2/
                                                                                                                            98.
    Legal Environmental Assistance       Legal Environmental Assistance           Failure to promptly propose water        EPA agreed to promulgate revised water   Parties to the consent order.
     Foundation, v. Browner, Civ. No.     Foundation.                              quality standards; failure to            quality standards for Florida within
     92-40252-WS (N.D.Fla.).                                                       promulgate standards by statutory        22 months unless Florida adopts
                                                                                   deadline (90 days after proposal). CWA   revised standards addressing EPA's
                                                                                   Sec.  303(c).                            previous disapproval.
    Maryland Environmental Interest      Maryland Environmental Interest Group,   Failure to promulgate regulations        EPA agreed to a schedule for issuing     Parties to the consent order.
     Group v. Reilly, No. 92-1225         Lisa Satterfield, and Sierra Club.       regarding the use and disposal of        final rule on use and disposal of
     (D.D.C.).                                                                     certain class I substances during the    Class I substances during servicing of
                                                                                   servicing of refrigeration systems by    refrigeration systems under CAA Sec.
                                                                                   statutory deadline of 1/1/92. CAA Sec.   608(a)(1).
                                                                                    608(a)(1).
    Miller v. EPA, No. 89-6328 (and      Joseph L. Miller, Ralph Frohwerk,        Failure to promulgate drinking water     EPA agreed to schedules for issuing      Parties to consent order.
     consolidated cases Frohwerk v.       Citizens Interested in Bull Run, Inc.,   regulations by statutory deadline of 6/  drinking water regulations.
     EPA, No. 90-6363, Citizens           Kathy Williams, and Clare Donison.       87 (Miller). SDWA Sec.  1412(b).
     Interested in Bull Run, No. 92-
     1587, Frohwerk v. EPA, No. 91-
     6549, and Donison v. EPA, No. 92-
     6280) (D.Or.).
    National Wildlife Federation v.      National Wildlife Federation, Great      Failure to promulgate by statutory       EPA agreed to promulgate by 2/27/98      Parties to the consent order.
     Browner, No. 97-1504-HHK (D.D.C.).   Lakes Water Quality Coalition, and       deadline of 3/23/97 federal water        federal water quality standards for
                                          State of New York (defendant).           quality standards for Great Lakes        Great Lakes States that did not make
                                                                                   States that failed to make timely        timely submissions of State programs
                                                                                   submissions of state water quality       under CWA Sec.  118.
                                                                                   programs. CWA Sec.  118(c)(3).
    National Wildlife Federation v.      National Wildlife Federation...........  Failure to issue water quality guidance  EPA agreed to promulgate Great Lakes     Parties to the consent order.
     Browner, No. 92-2338-CCR (D.D.C.).                                            for the Great Lakes System by            Water Quality Initiative Guidance
                                                                                   statutory deadline of 6/20/92. CWA       under CWA Sec.  118 by 3/13/95.
                                                                                   Sec.  118(c)(2).
    Natural Resources Defense Council,   Natural Resources Defense Council,  Inc  Failure to promulgate regulations for    EPA agreed to propose (by 12/97) and     Parties to the consent order.
     Inc. v. Browner, No. 95-634 (PLF)                                             storm water discharges by statutory      take final action (by 10/99) on
     (D.D.C.).                                                                     deadline of 10/1/93. CWA Sec.            rulemaking for regulation of storm
                                                                                   402(p)(6).                               water discharges under CWA Sec.
                                                                                                                            402(p)(6) (``Phase 2'').
    Natural Resources Defense Council,   Natural Resources Defense Council, Inc.  Failure to promulgate new source         EPA agreed to a schedule regarding       Parties to the consent order.
     Inc. v. EPA, No. 92-2093             and Sierra Club.                         performance standards for solid waste    issuance of standards of performance
     (E.D.N.Y.) and Sierra Club v. EPA,                                            incinerators by statutory deadline (11/  for municipal solid waste and medical
     No. 93-0284 (E.D.N.Y.).                                                       15/91 for municipal waste combusters     waste incinerators under CAA Sec.  129.
                                                                                   and 11/15/92 for medical waste
                                                                                   incinerators). CAA Sec.  129(a)(1)(A).
    Natural Resources Defense Council,   Natural Resources Defense Council,       Failure to determine whether used oil    EPA agreed to determine whether non-     Parties to the consent order.
     Inc. v. EPA, No. 90-0694 (D.D.C.).   Inc., Hazardous Waste Treatment          should be listed as a hazardous waste    recycled used oil should be listed as
                                          Council, and Association of Petroleum    by statutory deadline (proposal--11/8/   a hazardous waste by 5/1/92.
                                          Re-refiners.                             85; final rule--11/8/86). RCRA Sec.
                                                                                   3014(b).
    Natural Resources Defense Council,   Natural Resources Defense Council, Inc.  Failure to issue national toxics water   Agreement on attorneys fees and          Parties to the consent order.
     Inc. v. EPA, No. 92-2369 (D.N.J.).   and New Jersey Public Interest           quality standards rule by statutory      dismissal of underlying action
                                          Research Group.                          deadline of 2/92. CWA Sec.  303(c).      challenging national toxics water
                                                                                                                            quality standards rule.
    Natural Resources Defense Council,   Natural Resources Defense Council,  Inc  Failure to act on petition to add        EPA agreed to a schedule to take action  Parties to the consent order.
     Inc. v. EPA, No. 93-1946 (D.D.C.).                                            substance to list of Class I             on a petition to add methyl bromide to
                                                                                   substances by statutory deadline (1      list of Class I substances, and
                                                                                   year after receipt of petition). CAA     accelerate phase out of certain
                                                                                   Sec.  602(c)(3). Failure to promulgate   chlorofluorocarbons (CFCs) under CAA
                                                                                   regulations to phase out production of   Sec. Sec.  601 and 604.
                                                                                   Class I substances by statutory
                                                                                   deadline of 9/15/91. CAA Sec.  604(c).
    Natural Resources Defense Council,   Natural Resources Defense Council,  Inc  Failure to promulgate revisions to       EPA agreed to promulgate revisions to    Parties to the consent order.
     Inc. v. Reilly, No. 88-3199                                                   CERCLA National Contingency Plan (NCP)   the CERCLA NCP Plan by 2/5/90.
     (D.D.C.).                                                                     by statutory deadline of 4/17/88.
                                                                                   CERCLA Sec.  105(b).
    Natural Resources Defense Council,   Natural Resources Defense Council,  Inc  Petitioner sought review of EPA          EPA agreed to a schedule after remand    Parties to the consent order.
     Inc. v. Reilly, No. 92-1137                                                   decision not to require on-board vapor   in NRDC v. Reilly, 983 F.2d 259 (D.C.
     (consolidated with Nos. 92-1142,                                              recovery for autos under CAA Sec.        Cir. 1993), concerning onboard vapor
     92-1157, 92-1222, 92-1260, and 92-                                            202(a)(6) (which established statutory   recovery for cars under CAA Sec.
     1243) (D.C. Cir.).                                                            deadline of 11/15/91 for promulgation    202(a)(6).
                                                                                   of on-board standards). On remand to
                                                                                   EPA, petitioners sought a schedule for
                                                                                   Agency action consistent with D.C.
                                                                                   Circuit's opinion.
    Natural Resources Defense Council,   Natural Resources Defense Council,       Failure to promulgate by statutory       EPA agreed to propose and take final     Parties to the consent order.
     Inc. v. Browner, No. 89-2980         Inc., Public Citizen, Inc., American     deadline of 2/4/91 effluent guidelines   action with respect to effluent
     (D.D.C.).                            Forest & Paper Association               in accordance with required plan;        guidelines for 12 point source
                                          (intervenor), and Chemical               failure to issue required plan by        categories, ending in 2003; EPA agreed
                                          Manufacturers Association (intervenor).  statutory deadline of 2/4/88. CWA Sec.   to conduct studies for 11 point source
                                                                                   Sec.  301(b), 304(m), 306(b) and         categories; EPA agreed to provide
                                                                                   307(b).                                  plaintiffs with a semi-annual status
                                                                                                                            report. Consent order entered in 1992,
                                                                                                                            amended in 1997 and thereafter.
    Nelson v. Reilly, No. 92-6260        Nelson, Gearhart, Kelly, and Citizens    Failure to revise certification test     EPA agreed to a schedule regarding       Parties to the consent order.
     (D.Or.).                             for Bull Run, Inc.                       procedures for light-duty trucks and     issuance of certification test
                                                                                   vehicles by statutory deadline of 11/    procedures under CAA Sec.
                                                                                   15/91. CAA Sec.  206(a)(4)(A).           206(a)(4)(A).
    Northwest Environmental Advocates    Northwest Environmental Advocates and    Failure to approve or disapprove         EPA agreed to establish 38 TMDLs in 5    Parties to the consent order and
     v. EPA, No. C91-427 (W.D.Wash.).     Northwest Environmental Defense Center.  Washington `s CWA Sec.  303(d) list      years if Washington does not do so.      State of Washington (non-
                                                                                   and total maximum daily loads (TMDLs)                                             party).
                                                                                   by statutory deadline (30 days after
                                                                                   State's submission); failure to
                                                                                   establish reasonable schedule for TMDL
                                                                                   development; failure to disapprove
                                                                                   Washington's continuing planning
                                                                                   process and NPDES permit program as of
                                                                                   7/27/79. CWA Sec.  303(d).
    Northwest Environmental Advocates    Northwest Environmental Advocates and    Failure to approve or disapprove         EPA agreed to exercise all reasonable    Parties to the consent order.
     v. EPA, No. C94-1666R (W.D.Wash.).   Northwest Environmental Defense Center.  Oregon's list of water quality limited   diligence to see that Oregon's 1994
                                                                                   waters by statutory deadline (30 days    CWA Sec.  303(d) list was submitted
                                                                                   after State's submission). CWA Sec.      before 9/30/95 and approved no later
                                                                                   303(d).                                  than 11/30/95.
    Ober v. Browner, No. CIV 94-1318     Edward Ober and Robin Silver             Failure to promulgate Federal            EPA agreed to a schedule regarding       Parties to the consent order.
     PHX PGR (D.Ariz.).                   (represented by Arizona Center for Law   implementation plan (FIP) for non-       issuance of a FIP for particulate
                                          in the Public Interest).                 attainment area by statutory deadline    matter (PM-10), for the Phoenix,
                                                                                   of 3/4/94. CAA Sec.  110(c).             Arizona area.
    Ohio Valley Environmental            Ohio Valley Environmental Coalition,     Failure to establish total maximum       EPA agreed, among other things, to       Parties to the consent order;
     Coalition, Inc. v. Browner, Nos.     Inc., West Virginia Highlands            daily loads (TMDLs) and lists of         establish TMDLs for West Virginia        West Virginia Chamber of
     2:95-0529, 2:96-0091 (S.D.W.Va.).    Conservancy, Inc., Rogenia Fout,         impaired waters by statutory deadline    waters not meeting water quality         Commerce, West Virginia Coal
                                          Thomas E. Keating, and Bill Ragette.     (30 days after alleged constructive      standards by 2006 if West Virginia       Association, West Virginia Farm
                                                                                   submission of no TMDLs or lists--7/79,   does not do so, and consider certain     Bureau, West Virginia Forestry
                                                                                   as alleged by plaintiffs). CWA Sec.      factors in reviewing West Virginia's     Association, West Virginia
                                                                                   303(d).                                  lists of impaired waters.                Mining and Reclamation
                                                                                                                                                                     Association (intervenors).
    Oregon Natural Resources Council,    Oregon Natural Resources Council.......  Failure to promulgate rule establishing  EPA agreed to a schedule for issuing     Parties to the consent order.
     Inc. v. Browner, No. 93-79 (D.Or.).                                           specifications for detergent additives   rules on detergent additives for
                                                                                   for gasoline by statutory deadline of    gasoline under CAA Sec.  211(l).
                                                                                   11/15/92. CAA Sec.  211(l).
    Oregon Natural Resources Council,    Oregon Natural Resources Council and     Failure to review criteria under CAA     EPA agreed to a schedule for review of   Parties to the consent order.
     Inc. v. Reilly, No. 91-6529          individual citizen plaintiffs.           Sec.  108 and national ambient air       NAAQS for NO2 under CAA Sec.  109(d).
     (D.Or.).                                                                      quality standard (NAAQS) for nitrogen
                                                                                   dioxide (NO2) by statutory deadline (5
                                                                                   years after completion of previous NO2
                                                                                   NAAQS review). CAA Sec.  109(d).
    Pacific Coast Federation of          Pacific Coast Federation of Fishermen's  Failure to establish total maximum       EPA agreed to establish TMDLs for the    Parties to the consent order.
     Fishermen's Associations v.          Association, Golden Gate Fishermen's     daily loads (TMDLs) for 17 North Coast   17 North Coast rivers by 2008 if
     Marcus, No. 95-4474 MHP (N.D.Cal.).  Association, Sierra Club,                rivers that California included in its   California does not do so.
                                          Environmental Protection Information     1994 CWA Sec.  303(d) list of impaired
                                          Center, Coast Action Group, Friends of   waters by statutory deadline (30 days
                                          the Garcia California Trout, Klamath     after alleged constructive submission
                                          Forest Alliance, Mendocino               in 12/94 of no TMDLS for those listed
                                          Environmental Center, Willits            rivers). CWA Sec.  303(d).
                                          Environmental Center, California
                                          Wilderness Coalition, Friends of the
                                          Navarro, South Fork Mountain Defense
                                          Committee, Northcoast Environmental
                                          Center.
    Sierra Club v. Browner, No. 96-1747  Sierra Club............................  Failure to take various actions          EPA agreed to a schedule to take         Parties to the consent order;
     (consolidated with No. 95-463)                                                concerning air toxics by statutory       various actions regarding air toxins     American Petroleum Institute,
     (D.D.C.).                                                                     deadlines in CAA Sec.  112; failure to   under CAA Sec. Sec.  112 (c)(3),         American Automobile
                                                                                   promulgate emissions standards for       (c)(6), and (k)(3), and 202(l)(2). EPA   Manufacturers Association, and
                                                                                   locomotives by statutory deadline of     agreed to a schedule for issuing rules   International Automobile
                                                                                   11/15/92. CAA Sec.  213(a)(5).           on locomotives under CAA Sec.            Manufacturers (intervenors).
                                                                                                                            213(a)(5).
    Sierra Club v. Browner, No. 93-0124  Sierra Club and Natural Resources        Failure to take actions by statutory     EPA agreed to a schedule for             Parties to the consent order.
     (consolidated with Nos. 93-0125,     Defense Council, Inc.                    deadlines under a variety of different   miscellaneous CAA actions.
     93-0197, and 93-0564) (D.D.C.).                                               CAA provisions, including Sec. Sec.
                                                                                   112(d) (11/15/92), 111 (11/15/92),
                                                                                   112(e) (11/15/92), 612 (11/15/92),
                                                                                   407(c) (proposal--1/1/93; final--1/1/
                                                                                   94), 112(n)(5) (11/15/92) and 112(s)
                                                                                   (1/15/93).
    Sierra Club v. Browner, No. 93-2644  Sierra Club............................  Failure to promulgate regulations for    EPA agreed to schedules for issuing      Parties to the consent order
     (NHJ) (D.D.C.).                                                               Class V underground injection wells by   study and proposed and final             (represented by Earth Justice).
                                                                                   statutory deadline of 12/75. SDWA Sec.   rulemaking determinations for Class V
                                                                                    1421(a).                                underground injection wells.
    Sierra Club v. Browner, No. 95-627   Sierra Club............................  Failure to promulgate regulations        EPA agreed to a schedule to issue        Parties to the consent order.
     (D.D.C.).                                                                     regarding the use and disposal of        regulations pertaining to halons and
                                                                                   certain class I and class II             methyl bromide under CAA Sec.
                                                                                   substances by statutory deadline of 11/  608(a)(2).
                                                                                   15/94. CAA Sec.  608(a)(2).
    Sierra Club v. Browner, No. 95-627   Sierra Club............................  Failure to issue guidance concerning     EPA agreed to a schedule to issue        Parties to the consent order.
     (D.D.C.).                                                                     physical and operational changes at      guidance concerning construction of
                                                                                   major sources of hazardous air           major sources of HAPs under CAA Sec.
                                                                                   pollutants (HAPs) by statutory           112(g).
                                                                                   deadline of 5/15/92. CAA Sec.
                                                                                   122(g)(1)(B).
    Sierra Club v. Browner, No. 95-627   Sierra Club............................  Failure to submit study on mercury       EPA agreed to a schedule for study on    Parties to the consent order.
     (D.D.C.).                                                                     emissions to Congress by statutory       mercury under CAA Sec.  112(n)(1)(B),
                                                                                   deadline of 11/15/94. CAA Sec.           and to promulgate standards for
                                                                                   112(n)(1)(B). Failure to promulgate      certain categories of sources under
                                                                                   emission standards for hazardous air     CAA Sec.  112(d).
                                                                                   pollutants for source category by
                                                                                   statutory deadline of 11/15/94. CAA
                                                                                   Sec.  112(e).
    Sierra Club v. Browner, No. 96-1680  Sierra Club, National Wildlife           Failure to submit report to Congress     EPA agreed to a schedule for actions     Parties to the consent order.
     (D.C. Cir.).                         Federation, and Chesapeake Bay           concerning atmospheric deposition to     concerning atmospheric deposition to
                                          Foundation.                              the Great Waters by statutory deadline   the Great Waters under CAA Sec. Sec.
                                                                                   of 11/15/93. CAA Sec.  112(m)(5).        112(m)(5) and 112(m)(6).
                                                                                   Failure to promulgate regulations to
                                                                                   prevent harmful atmospheric deposition
                                                                                   to the Great Waters by statutory
                                                                                   deadline of 11/15/95. CAA Sec.
                                                                                   112(m)(6).
    Sierra Club v. Browner, No. 97-0675  Sierra Club............................  Failure to submit report to Congress on  EPA agreed to a schedule for report to   Parties to the consent order.
     (D.D.C.).                                                                     residual risk by statutory deadline of   Congress on residual risk under CAA
                                                                                   11/15/96. CAA Sec.  112(f)(1). Failure   Sec.  112(f)(1), and promulgation of
                                                                                   to promulgate regulations for solid      regulations for solid waste
                                                                                   waste incinerators by statutory          incinerators under CAA Sec.
                                                                                   deadline of 11/15/94. CAA Sec.           129(a)(1)(D).
                                                                                   129(a)(1)(D).
    Sierra Club v. Browner, No. 97-1984  Sierra Club............................  Failure to promulgate best available     EPA agreed to a schedule for issuing     Parties to the consent order
     PLF (D.D.C.).                                                                 control regulations for emissions of     rules on consumer/commercial products    (represented by Earth Justice).
                                                                                   volatile organic compounds (VOCs) from   under CAA Sec.  183(e).
                                                                                   consumer and commercial products by
                                                                                   statutory deadline of 3/15/97. CAA
                                                                                   Sec.  183(e)(3).
    Sierra Club v. Browner, No. 97-3004  Sierra Club............................  Failure to submit report to Congress     EPA agreed to a schedule for Tier 2      Parties to the consent order and
     (D.D.C.).                                                                     concerning the results of Phase II       study concerning light-duty vehicles     American Automobile
                                                                                   study of certain light-duty vehicles     and trucks under CAA Sec.  202(I).       Manufacturers Association.
                                                                                   and trucks by statutory deadline of 6/
                                                                                   1/97. CAA Sec.  202(I)(2)(B).
    Sierra Club v. EPA, No. 94-0553;     Sierra Club............................  Failure to take actions by statutory     EPA agreed to a schedule for             Parties to the consent order.
     Sierra Club v. EPA, No. 94-0954                                               deadlines under a variety of different   miscellaneous CAA actions.
     (D.D.C.)..                                                                    CAA provisions, including Sec. Sec.
                                                                                   112(k)(2) (11/15/93), 603(d)(1) (11/15/
                                                                                   93), 404 (11/15/93), 112(n)(1) (11/15/
                                                                                   93), and 129(a) (11/15/93).
    Sierra Club v. EPA, No. 97-3888      Sierra Club............................  Failure to act on submission of state    EPA agreed to a schedule for action on   Parties to the consent order.
     (N.D.Cal.).                                                                   implementation plan (SIP) by statutory   SIP in San Francisco Bay Area under
                                                                                   deadline (12 months from complete SIP    CAA Sec.  110.
                                                                                   submission). CAA Sec.  110(k).
    Sierra Club v. Hankinson, No. 1:94-  Sierra Club, Georgia Environmental       Failure to establish total maximum       EPA agreed to a schedule for (1) the     Parties to the consent order.
     CV-2501-MHS (N.D.Ga.).               Organization, Inc., Coosa River Basin    daily loads (TMDLs) by statutory         establishment of TMDLs for Georgia
                                          Initiative, Inc., Trout Unlimited, and   deadline (30 days after constructive     waters not meeting water quality
                                          Ogeechee River Valley Association, Inc.  submission of no TMDLs--7/79, as         standards by 2005 if Georgia does not
                                                                                   alleged by plaintiffs); failure to       do so.; (2) the evaluation of certain
                                                                                   disapprove State's list of impaired      information relating to Georgia's CWA
                                                                                   waters; failure to establish a           Sec.  303(d) lists; and (3) making
                                                                                   schedule for the submission of all       certain decisions regarding the
                                                                                   TMDLs in Georgia. CWA Sec.  303(d).      content of Georgia's CWA Sec.  303(d)
                                                                                                                            lists.
    Sierra Club v. Hankinson, No. 97-CV- Sierra Club............................  Failure to establish total maximum       EPA agreed to establish TMDLs for all    Parties to the consent order.
     3683 (N.D.Ga.).                                                               daily loads (TMDLs) by statutory         water quality limited segments on
                                                                                   deadline (30 days after alleged          Mississippi's 1996 CWA Sec.  303(d)
                                                                                   constructive submission of no TMDLs).    list by 2009 if Mississippi does not
                                                                                   CWA Sec.  303(d)..                       do so.
    State of Connecticut v. Browner,     States of Connecticut, Massachusetts,    Failure to act on petitions to make      EPA agreed to a schedule to act on       Parties to the consent order.
     No. 98-1376 (S.D.N.Y.).              Maine, Pennsylvania, New Hampshire,      finding that major sources emit or       petitions submitted under CAA Sec.
                                          New York, Rhode Island, and Vermont.     would emit prohibited pollutants by      126.
                                                                                   statutory deadline (60 days plus time
                                                                                   provided by CAA Sec.  307(d)(10)
                                                                                   extensions, approximately 12/98). CAA
                                                                                   Sec.  126.
    Tides Foundation v. EPA, No. 94-     Tides Foundation.......................  Failure to propose and promulgate by     Required EPA to promulgate regulations   Parties to the consent order
     2663 (D.D.C.).                                                                statutory deadlines (proposal--4/6/92;   under RCRA Sec.  3004(y) by February     (represented by the Military
                                                                                   final--10/6/94) regulations governing    1997 identifying when military           Toxics Project).
                                                                                   military munitions which are hazardous   munitions are hazardous wastes and
                                                                                   wastes. RCRA Sec.  3004(y).              establishing standards for their
                                                                                                                            transportation and storage.
    Ward v. Browner, No. Civ. 97-1418    LaVonda Ward and Carolyn Aspegren......  Failure to promulgate determination of   EPA agreed to a schedule regarding       Parties to the consent order.
     PHX ROS (D.Ariz.).                                                            attainment or non-attainment areas by    determination of attainment for ozone
                                                                                   statutory deadline of 6 months after     for the Phoenix, Arizona area.
                                                                                   11/15/96 attainment date (i.e., 5/15/
                                                                                   97). CAA Sec.  107(d)).
    Washingto n Legal Foundation v.      Washington Legal Foundation; Senators    Failure to submit reports to Congress    EPA agreed to a schedule to provide      Parties to the consent order.
     EPA, No. 95-2396 (D.D.C.).           Craig and Nickles; Representatives       on costs and benefits of CAA             reports to Congress on costs and
                                          Boehner, Barton, Livingston, Barr,       compliance by statutory deadlines (pre-  benefits under CAA Sec.  312.
                                          Chenoweth, Klug, and Norwood.            1990 requirements--11/15/91; 1990
                                                                                   requirements--11/15/92). CAA Sec.
                                                                                   312(d) and (e).
    Waxman v. Reilly, No. 92-1320        Representative Waxman, Public Citizen,   Failure to take actions by statutory     EPA agreed to a schedule for             Parties to the consent order.
     (D.D.C.), Sierra Club v. Reilly,     and Sierra Club.                         deadlines under a variety of different   miscellaneous actions under CAA Titles
     No. 92-1749 (D.D.C.).                                                         CAA provisions, including Sec. Sec.      I, II, IV and VI.
                                                                                   407(d) (5/15/92), 610(a) (11/15/91),
                                                                                   611(a) (5/15/92), 602(e) (11/15/91),
                                                                                   112(j) (5/15/92), 112(l)(2) (11/15/
                                                                                   91), 129(a) (5/15/92), and 407(b)(1)
                                                                                   (5/15/92).
    Williams v. Reilly, No. 89-6265-E    Kathy Williams, Citizens Interested In   Failure to promulgate regulations        EPA agreed to issue final NPDES storm    Parties to the consent order.
     (D.Or.).                             Bull Run, Inc., Frank Gearhart, Samuel   establishing permit application          water (Phase I) application
                                          E. Sargent, and Frances Price Cook.      requirements for storm water             regulations by March, 1990 (later
                                                                                   discharges by statutory deadline of 2/   amended to October 31, 1990).
                                                                                   4/89. CWA Sec.  402(p)(4).
    Williams v. Reilly, No. 90-6255-JO   Kathy Williams, William Brewster, Ralph  Failure to promulgate emission           EPA agreed to a schedule to issue        Parties to the consent order.
     (D.Or.).                             Frohwerk, and Georgia Bunn.              standards for hazardous air pollutants   regulations controlling air emissions
                                                                                   for source category by statutory         from organic solvent cleaners under
                                                                                   deadline (4 years after the category     CAA Sec.  112.
                                                                                   is listed under CAA Sec.  111(b)). CAA
                                                                                   Sec.  111.
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\ Abbreviations: CAA--Clean Air Act; CWA--Clean Water Act; CERCLA--Comprehensive Environmental Response, Compensation and Liability Act (``Superfund''); TSCA--Toxic Substances Control Act;
      ESA--Endangered Species Act. Case numbers indicate the year in which the case was filed (e.g., a case with the number 92-1234 would have been filed in 1992).

        Senator Craig. Would you give us an update on it?
        Ms. Browner. On our consent decrees. Yes. Certainly.
        Mr. Chairman, the vast majority of the consent decrees that
    we have entered into are the result of the fact that over the
    years EPA has missed congressionally mandated deadlines.
    Congress has said set a standard by X date. We miss it. We are
    then sued for missing it and we enter into a schedule for
    compliance.
        I think what would be most helpful on these consent
    decrees, on the ones that we refer to as deadlines suits, we
    will also provide for you what the congressionally mandated
    deadline was and you will see how far off we are.
        Senator Craig. We want a complete picture.
        Senator Bond. Thank you, Madam Administrator. Senator Byrd.

                   nitrogen oxide: state implementation plans

        Senator Byrd. Mr. Chairman, I have to leave shortly. Let me
    ask briefly a question or two with regard to the nitrogen oxide
    state implementation plans for 22 States in the eastern United
    States. Several States including West Virginia requested a 7-
    months stay in the deadline for the submission of state
    implementation plans under the NOX SIP Call Rule to
    give them sufficient time to complete their regulatory
    processes for approval of the plans.
        Since the Clean Air Act clearly contemplated the States
    receiving 18 months to develop and submit SIPS, why is the
    agency in such a hurry for the States to complete and file
    those SIPS?
        Ms. Browner. There are a number of reasons. I am sure you
    are aware we are in litigation. The court has not yet set a
    briefing schedule but there has been a lawsuit filed. One of
    the issues that we are dealing with, just by way of example, is
    the fact that the Northeast states have asserted their rights
    under the Clean Air Act, section 126 petitions, which calls for
    specific reductions from specific facilities, and that is
    moving forward on a time frame laid out in the Act.
        While we recognize their right to do that, we believe that
    the best way to address the ozone transport issue will not be
    ultimately through these petitions but rather through the SIP
    calls, that States will get a much better opportunity to make
    their own decisions in the SIP planning process than if we are
    forced into a situation of having to move forward with the
    States' petition.
        Senator Byrd. Madam Administrator, I do not want to appear
    to be discourteous but I do have to leave. My question is not
    really being answered. Since the appeal of the NOX
    SIP Call will likely be decided by early 2000, why not grant
    the States the stay in the deadline for SIP submission until
    after the court has acted?
        Ms. Browner. There are a number of reasons. I tried to give
    you one reason, which is we have these other petitions pending
    that we think would limit your State's options and
    opportunities to make their own decisions.
        We, also, have a group of States that have filed a lawsuit
    against us to move forward. We have existing court deadlines.
    When we look across all of the issues and the legal
    requirements and judicial requirements, we believe that a delay
    in the State Implementation Planning process is not beneficial
    and is not warranted.
        Senator Byrd. Does it not make sense, though, Madam
    Administrator, to wait until the court has acted?
        Ms. Browner. There are a lot of different court actions
    that are going to take place around this.
        Senator Byrd. I did not say which court action I'm talking
    about----
        Ms. Browner. But there are others, quite frankly, Senator,
    that I think your State would probably feel could ultimately
    tie their hands in making a set of State-specific decisions. We
    are trying to weed through this across all of the litigation
    and across all of the Clean Air requirements. It is not easy.
    These are difficult decisions.
        There are tensions here, as you are well aware, between
    some of the other States and some of the Northeast states and
    some of the rights that can arise.
        Senator Byrd. The electric utility industry in several
    States have raised concerns about the ability to comply with
    the very stringent NOX reduction requirements in a
    very short time frame without threatening the reliability of
    the electrical supply in the affected and neighboring states.
    The North American Electric Reliability Council is preparing a
    comprehensive report to assess this issue. If it should
    determine that the compliance deadline imposes a certain threat
    to the reliability of electricity, will the EPA be willing to
    extend the compliance deadline to alleviate this problem?
        Ms. Browner. We spent a great deal of time discussing with
    trade associations in various States this issue prior to----
        Senator Byrd. Is the answer not yes or no to my question?
        Ms. Browner. We did it in the SIP call. That is the answer.
        Senator Byrd. Then the answer is yes?
        Ms. Browner. Yes. We have done it in the SIP Call. We gave
    the state the right to move deadlines for individual facilities
    if they felt there would be an interruption in electrical
    service. Your State got that in the SIP call. In fact, your
    State was very vocal in arguing for that. We provided
    reliability and flexibility, what they wanted, 200,000 tons
    extra to the States for precisely this reason. It is in the SIP
    Call now.
        Senator Byrd. Would you examine the cumulative effect of
    your regulations instead of looking at the EPA regulations on a
    case-by-case basis? States like West Virginia are suffering
    death by a thousand cuts instead of a single blow. Could you do
    that?
        Ms. Browner. Yes. We are certainly willing to work with
    West Virginia to do that.
        Senator Byrd. What did you say?
        Ms. Browner. I said we would be more than happy to work
    with West Virginia to do that. Yes.
        Senator Byrd. Mr. Chairman, I have some other questions.
    But, I take it, you will not be in session this afternoon.
        Senator Bond. We hope to finish this up in time for lunch.
    I have a number of questions on the NOX and SIP Call
    myself. There will be significant questions submitted for the
    record.
        Senator Byrd. Very well. I'll submit mine for the record.
    Thank you, Madam Administrator.
        Ms. Browner. Thank you.
        Senator Bond. Thank you very much, Senator Byrd, for your
    participation, and my staff and I will look forward to working
    with your staff on a number of these issues you have raised.
        Turning back to Senator Craig for questions.

                               SF: coeur d'alene

        Senator Craig. Thank you very much, Mr. Chairman.
        Director Browner, another set of questions on a different
    issue, and some of them you may not be able to respond to now
    and we will submit them so that we can get a complete set of
    answers for the record.
        As you know, in the north end of my State I have one of the
    largest Superfund sites geographically in the country, a 21-
    mile square Superfund site in the greater Coeur d'Alene Basin
    and it is what is known as the Silver Valley, an old lead and
    zinc and silver mining region of our State that has been gone
    now for well over a century.
        We are extremely frustrated in the region by an inability
    to shape and to bring to some definitive conclusion where we
    go. As you know, some years ago a natural resource damages suit
    was filed by the Justice Department on behalf of Interior and
    Native Americans as it relates to the region and that has, of
    course, complicated the process. But I think the thing that
    frustrates all of us most is a concern that outside the 21-mile
    zone, we have seen EPA's presence in an ever-increasing way, as
    their scientists comb the region to try to find impacts outside
    the Superfund site.
        In fact, there is great concern there that EPA might
    propose an expanded Superfund site that would be almost
    unbelievable regionally. Now in latter days there has been a
    backing away from that and I am very pleased about that. But
    what concerns me most is when we did deal with the remediation
    and investigation feasibility studies, we have seen lots of
    money spent and no gold nuggets found. Kootenai City, Idaho
    attracts worldwide recreation. EPA is out on the beaches and
    testing the water and implying, at least in the short term,
    that this may not be a safe area to be in, even though the
    beaches were found safe. Kids swim in the water. Fish
    promulgate in the water and Mother Nature is doing a reasonably
    good job of cleaning it up. I guess my question to you is how
    much money has been spent on RFI studies outside the existing
    Superfund sites? Do you have that figure?
        Ms. Browner. There has not been a Superfund designation at
    this time. We are working, in fact, I had a meeting with your
    Governor just last week. Our regional administrator met with
    the Governor and we are fully committed to finding consensus on
    how to deal with any listings. But there is----
        Senator Craig. That was not my question. My question was
    could you to date or could you provide to me the amount of
    money EPA has spent in these remedial investigation feasibility
    studies outside the site?
        Ms. Browner. There is no site.
        Senator Craig. No. EPA is all over the Coeur d'Alene area
    and the Spokane area.
        Ms. Browner. Maybe we can provide the information for the
    entire State.
        Senator Craig. No. I want it to be provided for the Coeur
    d'Alene Basin region. That spills across State boundaries into
    the Spokane valley. That would be extremely helpful. Do you
    know how much more is anticipated in relation to the scientific
    efforts going on and what that would be?
        Ms. Browner. We will provide that for you. I do know that
    on April 22 there were two separate meetings held to discuss
    results of the ecological sampling. There are more meetings
    planned and we have indicated that we will adjust the time
    frames to incorporate the public participation.
        [The information follows:]

                              Coeur D'Alene Basin

        EPA estimates that as of May 2, 1999, approximately $10,200,000 in
    cost associated with work in the Basin, including the RI/FS and the
    costs associated with litigation. In addition, EPA has incurred
    $750,000 conducting residential and school soil removals outside of the
    existing 21 square mile Superfund site.
        These costs are estimates and have not been reconciled by EPA
    finance personnel. All site costs are reconciled as part of the cost
    recovery process which occurs when the sites reach completion.
        EPA estimates spending an additional $6.1 million in fiscal year
    1999 and approximately $8.8 million in fiscal year 2000 to complete the
    RI/FS for the Basin. These costs are estimates; actual cost will be
    dependent upon factors that are unknown at this time, such as the
    nature and extent of contamination found, the need for treatability
    studies, and input from a large number of stakeholders involved in the
    Basin.

        Senator Craig. In those time frames, how long do you think
    it will take EPA to finalize this? And it now looks like 2001
    may be the case, with cost upwards to $17 million. Do we know
    that to be the case?
        Ms. Browner. I do not know that to be the case. What I
    would like to do, if this would be helpful to you, is ask Chuck
    Clark who met with your Governor to actually call you and
    discuss the outcome of that meeting and the specific
    commitments in terms of how we will proceed.
        Senator Craig. Carol, that region is very intent on getting
    cleaned up and getting this passed them. They have been intent
    on that for a decade. And I must say you have not been at the
    helm for EPA a decade but EPA has not been acting in a
    contributing manner toward timeliness. I would say in all
    credibility it has been getting better and we are going to put
    enough heat on you that it gets a lot better a lot quicker.
        Ms. Browner. I think the intention on this side is to make
    sure that those areas that may need cleanup remediation, that
    we manage it in such a way that other areas are not affected. I
    think that has proven to be more difficult than anyone thought.
    The easy way to proceed and perhaps the way the Agency
    proceeded historically was to draw a big line around everything
    as opposed to just taking the isolated areas. I know that is
    what we all want.
        Senator Craig. The U.S. Geological Survey has been there
    and we can tell you where the hot spots are. There have been
    major effort on the part of the States and the interested
    parties and they have probably done more for cleanup--Mother
    Nature is doing a pretty good job in cooperation with these hot
    spot cleanups and all that kind of thing. I think that is our
    frustration.
        As you know, when EPA casts its net, it also creates a
    cloud and that cloud can impact economic activity and it can
    also impact the future opportunities in a region that is
    extremely beautiful. And if anyone drives there, they think it
    has got to be one of the beauty spots of the Western world. We
    say EPA is scouring on the beach to see if there is a problem
    and that is an impact that is very negative. That is why
    timeliness is important here.
        Ms. Browner. Okay.
        Senator Craig. I am pleased with your sensitivity to it. It
    is something that deserves to be dealt with in a timely
    fashion. I have a number of other questions and I will submit
    those for the record.

                         information management office

        Senator Bond. Thank you very much for your questions and
    thank you for your participation on this subcommittee.
        We have many, many very important areas and we are very
    grateful when the subcommittee members will take part and help
    us in pursuing the knowledge and the information that we need
    to craft a bill.
        Let me turn now to a very exciting topic, one that always
    captures headlines. It is information management. And if
    everybody will bear with us. This is important.
        The committee expressed last year the need for an office of
    information management. As you and I discussed yesterday, I
    would like to note for the record, when will this office be
    fully operational? When will we have someone in charge? Will
    this individual be fully accountable for the quality and
    integrity of all EPA data that is released?
        Ms. Browner. By the end of summer it will be operational.
    And, yes, that person will be fully accountable. Per our
    discussion in your office earlier this week, we have provided
    an organizational chart.
        [The information follows:]
        [GRAPHIC] [TIFF OMITTED] T05AP29.001

        Ms. Browner. I think what you will see that we are taking
    the issues of both collection, management, quality assurance
    and dissemination very, very seriously.
        You see there is a quality board and quality staff that
    answer directly to----
        Senator Bond. I guess, the question is you've got this
    person in the middle of it there.
        Ms. Browner. On top.
        Senator Bond. How is this person going to exercise the
    discipline over all of the different lines of authority within
    EPA?
        Ms. Browner. Since the actual programs that collect the
    data are getting moved into this office, for example, a program
    that traditionally sat in the Office of Toxic Release Inventory
    is getting moved into this office and they will answer to this
    person.
        Senator Bond. And you pointed out the move would not
    initially include all of them. But the most important ones that
    have multiprogram application would be moved in.
        Ms. Browner. Correct.
        Senator Bond. So they would actually be reporting to this
    national program manager, not the old division or department
    directly?
        Ms. Browner. Correct.
        Senator Bond. By the end of September this will be in
    operation. Have you developed the plan for how this office will
    operate, the goals and other objectives, the management
    priorities and what resources are needed? Do you have that
    information available?
        Ms. Browner. Yes. We can provide that for the record. What
    we are doing is a broad outreach to parties who will make use
    of this office, to parties who will be responsible for
    providing information to this office in terms of how to go into
    all of the details of creating this office.
        We do have a general mission statement and a basic design
    premise that we have developed. We have been working to refine
    it with parties both inside the agency and outside the Agency
    such as industries, the states, and the public.
        There is, for example, the data quality----
        [The information follows:]

                          EPA's New Information Office

                              the need for change
    External Drivers
      --Rapid Technology Development
      --Greater Demand for Environmental Information
      --Concerns about Data Quality and Security
      --Concerns about Reporting Burden
      --GPRA
    Internal Responses
      --REI Action Plan
      --Data Quality Action Plan
      --Center for Environmental Information and Statistics Strategies
      --Goal 7 of EPA's Strategic Plan
                              developments to date
        Comprehensive Information Management Force.--recommends
    organization to oversee information management and policy (Aug-Sept
    1998)
        Information Working Group.--recommended a structural framework for
    the new Information Office (Oct-Dec 1998)
        Information Transition and Organizational Planning.--established
    framework and early action projects, will launch new office this summer
    (Jan-Aug 1999)
                                 who's involved
    Leadership Team
      --David Gardiner
      --Margaret Schneider
      --Al Pesachowitz
    ITOP
      --Kathy Petruccelli, Director
      --Temporary team of about 25 staff
    Active Inreach and Outreach
      --EPA programs and regions
      --State partners
      --Other external groups
                                our aspirations
        Vision.--a center of excellence that advances use of integrated
    multi-media information:
      --as a strategic resource for decisionmakers, and
      --to satisfy the publics right-to-know
        Mission.--provide leadership in creating information policies and
    mechanisms that enable:
      --efficiency,
      --effectiveness,
      --quality, and
      --usability of information throughout EPA
                                 our key goals
        Provide:
      --Information Integration
      --Information Quality
      --Burden Reduction
      --Right-to-know
        Through:
      --A strong Leadership and Policy Framework
      --Enhanced State Partnership
      --Sound Information Infrastructure
        For information-based decisionmaking by all.
                      programs coming into the new office
    OIRM
    TRI
    CEIS
    EMPACT
    EMMC
    ECOS/EPA Envir. Info. Mgmt WG
    One Stop Program
    EPA QA Program
    Regulatory Info. Div.
    Surf Your Watershed
    National Computer Center
    LAN/e-mail
    IRM ESC
    Centralized Dockets
    Spatial Data/MultiResolution Land Characterization
                             early action projects
    New Projects
      --Information Plan
      --Public Access Policies
      --Open Data Access
    Important Work Underway
      --REI
      --Data Quality Action Plan
      --Burden Reduction
      --Enhanced Public Access
      --Streamlining TRI Data Collection and Release
      --Systems Modernization
                                   key issues
        Cross-Agency Support
        Collaborative Partnerships with States
        ``Respectful Use'' of Information
        Information Security
        Balancing Burden Reduction and Data Gaps
        Data Quality
                                 budget status
        Currently defining a process to identify functions and resources
    moving to the new Office while simultaneously defining roles,
    responsibilities and needs.
      --Fiscal year 1999: Approximately 350-400 FTE; Approximately $45-55M
            extramural
      --Fiscal year 2000: Internal adjustments via Operating Plan
      --Fiscal year 2001: Develop needs through Goal 7 and 10 process
                                    timeline
    April
      --Resolve ``gray areas'' for inclusion in new Office
      --Define new Office functions
    May
      --Design new Office substructure
      --Develop process for selecting managers and staff
    June
      --Select managers
      --Develop fiscal year 2001 budget
    July
      --Select staff
    August
      --Resolve all administrative, organizational, and logistical details
      --Complete internal review of full reorganization proposal
      --Complete Union review of reorganization
      --Complete reorganization by Labor Day

                               missouri lawsuits

        Senator Bond. Because it is important, we want to make sure
    that you focus on that.
        There are many other questions that we will be submitting
    for the record. But let me ask, the authority to file lawsuits
    is provided in many of our environmental statutes, especially
    clean air. Can you give me any reason that I can share with my
    Missouri constituents why Missouri has become such a particular
    focus for some of these lawsuits? What is it in Missouri that
    attracts lawsuits? There are some areas that attract tornadoes.
    What is about Missouri that attracts lawsuits?
        Ms. Browner. The good news is we are all on the same side.
        Senator Bond. Do you know what it is?
        Ms. Browner. We will look at that. You do have one that has
    attracted a lot of attention. But there, I think, you and the
    Agency and the State are all of common mind. We think we did
    something very reasonable in terms of providing the State some
    relief that they sought and not affecting the public's air
    quality.
        Unfortunately, there was an organization out there who did
    not agree with us. We are in lockstep with the State in
    defending against the lawsuit.
        [The information follows:]

                         Air Quality Lawsuits: Missouri

        Missouri has been the subject of Clean Air Act litigation for a few
    reasons. First, EPA did not meet the statute's requirements for the
    Agency to determine whether the St. Louis moderate ozone nonattainment
    area had attained the 1-hour ozone standard by the area's attainment
    date and, if the area had not, to reclassify it from moderate status to
    a serious or higher classification under the Act's provisions for
    implementing the 1-hour standard. In addition, the plaintiffs allege
    that EPA has failed to meet a duty to promulgate federal implementation
    plans for the St. Louis area due to the lack of approved state
    implementation plan provisions satisfying various Clean Air Act
    requirements. It should be noted that this litigation also affects
    Illinois since the St. Louis ozone nonattainment area includes a
    portion of Illinois, as well as Missouri. Moreover, other states have
    been the subject of similar litigation (e.g., Phoenix, Arizona was the
    subject of litigation concerning EPA's failure to determine whether it
    had attained the 1-hour ozone standard and various cities in the east
    such as Baltimore, Philadelphia and New York have been the subject of
    litigation concerning EPA's alleged failure to promulgate federal
    implementation plans).
        Other citizen suits have been brought against EPA which affect
    Missouri's environmental programs. For example, there are two pending
    lawsuits in which the plaintiffs are seeking a court order to require
    EPA to develop total maximum daily loads (TMDLs) for waters in
    Missouri. American Canoe Association v. EPA, No. 98-1195 (W.D. Mo.) and
    Missouri Soybean Association v. EPA, No. 98-4282 CV-C-5 (W.D. Mo.).
    However, lawsuits of this nature are not unusual. For example, citizens
    groups have filed TMDL lawsuits similar to the one in Missouri in 28
    states.

        Senator Bond. Madam Administrator, we are going to move on.
    Let me close. This is going to be Senator Craig's--he said he
    needed an opportunity to ask a question. I would say, just to
    follow up on that, Missouri is not in compliance yet. Is that
    one of the reasons there is a lawsuit? Are we on the way? Is
    this a problem?
        Ms. Browner. We have enjoyed a very good relationship with
    your Governor and others in your State in addressing difficult
    air pollution challenges. We appreciate their creativity and
    willingness to work with us. You have a plan and are moving
    forward. We will go and look at how many lawsuits have been
    filed around Missouri. There are probably many more in my home
    state of Florida.

                        compliance assistance activities

        Senator Bond. I would note that EPA is only requesting $19
    million for compliance assistance activities, a reduction. But
    in your budget you state that you think the States will assume
    the majority of the work.
        I question whether it would be wasteful for 50 States to
    develop compliance tools, and EPA has indicated how successful
    those programs are, and we would like to have for the record
    your assessment of the effectiveness of these programs.
        Ms. Browner. Within compliance, there are a number of
    different programs. The nine compliance centers we think, have
    been hugely successful. We are not cutting those. There are
    some non-agency training programs that we have not sought
    funding for.
        Senator Bond. We were just looking at the compliance
    assistance and grants line. My staff will get back to you on
    that.
        [The information follows:]

                Compliance Assistance: Effectiveness of Programs

        EPA's role has been and continues to be to develop and distribute
    compliance assistance information and tools for business and industry.
    As the primary providers of direct assistance to the regulated
    community, states and localities and other compliance assistance
    providers use or adapt EPA compliance assistance materials to reflect
    specific state or local requirements. We believe this relationship has
    been very successful in improving the regulated community's awareness
    and understanding of its environmental obligations. We intend to expand
    these outreach efforts by working more closely with compliance
    assistance providers, especially with state and local governments.
        Participants at our recent conferences on EPA's compliance programs
    confirmed the value of EPA's compliance assistance tools and materials
    and urged us to continue developing general compliance assistance tools
    that are widely applicable and that are made widely available through
    the Internet, toll-free hot lines and other appropriate channels. We
    also heard strong support for the view that states are the first-line,
    on-site purveyors of compliance assistance. EPA continues to work with
    the states and other assistance providers to develop a strong network
    to exchange information and tools and minimize duplicate services.
        We believe that our compliance assistance tools have increased the
    regulated community's understanding of environmental requirements. For
    example, working with industry associations and other organizations, we
    have set up nine Compliance Assistance Centers through Internet web
    sites, toll-free telephone lines, and fax mail, each directed toward a
    specific industry or government sector. During 1998, the five existing
    Compliance Assistance Centers logged over 190,000 user sessions and
    responded to over 3,600 toll free phone calls and questions via e-mail.
    In addition to the Centers usage, EPA Regional offices in fiscal year
    1998 collectively reached almost 250,000 regulated entities through
    compliance assistance outreach mechanisms including telephone hotlines,
    workshops and training sessions, on-site visits and compliance
    assistance tools. Notable examples of these tools include the 28 sector
    notebooks, which are industry sector profiles containing information on
    the overall compliance history, applicable federal requirements,
    industrial processes, pollutants generated, pollution prevention
    approaches, and cooperative programs designed to improve the
    environmental performance of the industry. Since 1995, over 300,000
    copies have been distributed in printed and electronic form. Moreover,
    eighteen plain language guides and several compliance checklists have
    been prepared for selected sectors, including the food processors,
    paints and coatings, and automotive sectors.
        In addition to the development of compliance assistance materials,
    EPA regions and states have undertaken sector-based compliance
    assistance projects in partnership with industry. For example, EPA,
    Virginia, Maryland, the District of Columbia, and the Korean Dry
    Cleaners Association of Greater Washington developed a mentoring
    program where experienced dry cleaners trained by EPA and the states
    helped less-sophisticated dry cleaners understand and comply with
    environmental requirements. The compliance rate of participants was
    estimated to be 20 percent higher than other area dry cleaners. EPA
    will continue these types of partnerships to increase environmental
    compliance.

                         Additional committee questions

        Senator Bond. Thank you very much, Madam Administrator.
        [The following questions were not asked at the hearing, but
    were submitted to the Agency for response subsequent to the
    hearing:]

                      Questions Submitted by Senator Bond

        grants oversight of assistance agreement: post award management
        Question. How would these reviews enable EP grants management staff
    to ensure individual grant recipients did not charge the Federal
    government unallowable costs such as litigation expenses?
        Answer. The main purpose of post-award management review is to
    provide a general overall evaluation and discussion of the recipient's
    financial, procurement, property management, and general and
    administrative systems. To ensure the grantees system are working, we
    do some transactional testing on a select sample basis, looking for
    unallowable costs such as litigation and other expenses.
        However, these are not audits, because only the Office of the
    Inspector General (OIG or IG) or Certified Public Accountant (CPA) can
    perform audits. Post Award Management reviews are limited in scope and
    range from 1.5 to three days on-site.
        Question. Do the monitoring strategies required under the Tier I
    Baseline Monitoring component of the Policy enable EPA grants
    management staff to ensure individual grant recipients did not charge
    the Federal government unallowable costs such as litigation expenses?
        Answer. Tier I monitoring is geared toward proactive and preventive
    monitoring, such as continual contact and communication with the
    project officers and recipients to ensure the grants are progressing
    satisfactorily and to respond to any problems or concerns. If the
    recipient or project officer has a concern or question about
    allowability of any activity or purchase under the grant, the Grants
    Management staff will address those questions in accordance with the
    grant agreement and administrative rules and regulations, or as
    necessary, obtain or provide the appropriate guidance or direction.
        Question. How many financial audits did grants management staff
    perform on non-construction grants to non-profits (grants) in fiscal
    year 1999 to enure individual grant recipients did not charge the
    Federal government unallowable cost such as litigation expenses? What
    percentage does this represent of the fiscal year 1999 total number of
    grants?
        Answer. Financial audits are audits performed by staff in the OIG
    or by CPA firms under either the Single Audit Act or the IG Act. Grant
    staff are not permitted to perform financial audits. However, we do
    perform post-award management review monitoring and other grantee
    outreach activities as noted in response # 1.
        During fiscal year 1999, grants management staff performed 638
    outreach activities to recipient type organizations through training
    and outreach, technical assistance onsite reviews, evaluative on-site
    reviews (e.g. general evaluation of grantee financial management
    systems, cost sharing, source documentation, subawards, property
    management, travel, payroll, and cost allocability and allowability),
    etc. This represents approximately 16 percent of the fiscal year 1999
    total number of active awards. However, with emphasis on Post Award,
    the percentage is 6.2 percent of total active awards.
        Moreover, to date in fiscal year 1999, we have performed Post Award
    Outreach (including Evaluative and Technical Assistance on-site visits,
    desk reviews, and management assistance forums) at approximately 16.5
    percent of our ``recipient organizations''. This percentage does not
    include Pre-award workshops, training, and outreach.
        Question. Did any of these financial audits obtain general ledger--
    summary of transactions, transaction details, originating documents or
    other materials to ensure individual grant recipients did not charge
    the Federal government unallowable costs such as litigation expense?
        Answer. Again, we do not perform financial audits. However, our
    post award management reviews frequently involve a review of the
    general and or subsidiary ledgers from which to judgementally select
    samples for transaction testing purposes. Within the tests of
    transactions we obtained supporting details through supporting
    documentation, discussions, and observations. We also, performed traces
    to originating documents looking at original authorizing signatures,
    approval dates, and need for the transaction. During each visit the
    four major areas (i.e., financial, procurement, property management,
    and general and administrative) are addressed, however, the detailed
    focus of our review may vary to some degree based upon identified
    problem areas.
        Question. As of April 29, 1999, how many of EPA's Grants Management
    Offices (GMOs) have fully implemented the policy and which GMOs have
    not, if any?
        Answer. As of April 29, 1999, all Grants Management Offices (GMOs)
    have begun to implement the Post Award policy. With the exception of
    one GMO, these offices are complete or nearly complete in their
    implementation of the policy. The GMO in Region X will benefit from a
    national conference this month when officials and representatives from
    each GMO will discuss the policy's implementation in each of their
    regions and Headquarters. While we are happy to report that most of our
    offices are at or near full implementation, the facet of `full
    implementation' extends out to December, 1999 in accordance with the
    Post Award policy.
        Question. How many GMOs have developed a Monitoring Plan to monitor
    their post-award management activities and which GMOs have not, if any?
        Answer. All but two GMOs have developed a Post Award Monitoring
    Plan. The GMO in Region VII is well underway in implementing the Post
    Award Monitoring policy but is in the midst of completing its
    Monitoring Plan. Region X will develop a plan in June, 1999.
        grants: oversight of assistance agreement--material weaknesses
                                   correction
        Question. When the Administrator first declared oversight of
    assistance agreements a Material Weakness in 1996 under the Federal
    Managers' Financial Integrity Act, the Agency targeted 1998 as the
    target correction date for this Weakness. The Agency has pushed back on
    the correction date by an additional year in each successive Integrity
    Act Report and the correction date is now 2000. What is the reason for
    these multiple extensions of the correction deadline?
        Answer. The Agency did consider moving up this target date since
    the closeout of non construction grants was progressing satisfactorily.
    However, Agency decision makers wanted to ensure that all programs and
    Regions had developed post award plans prior to eliminating this as a
    material weakness. Post Award Plans are being developed and
    implemented, and the Agency has closed out 95 percent of its original
    non construction grant backlog.
        Question. A major corrective action milestone to address EPA's
    grants management material weakness calls for the issuance of a policy
    on Project Officer roles with emphasis on post award administration.
    The original target date for completion of this milestone was December
    1997, the current target date is December 1998 and yet the fiscal year
    1998 Integrity Act Report states the Agency has not completed this
    milestone. What is the reason for delay in completing this milestone
    and when will the Agency achieve this milestone?
        Answer. The Grants Office has worked closely with the program
    offices and regions to develop the policy for post award management by
    Headquarters and Regional Offices; the policy was signed on April 5,
    1999. The final policy is a companion to the Grant Management Officer's
    post award policy. It requires each headquarters and regional office to
    develop and implement a post award plan. It will ensure management
    accountability and allows offices to tailor their post award efforts to
    their particular grant programs and grantees. The Plans will be
    reviewed by the Office of Grants and Debarment and will ensure
    coordination between grants specialists and project officers. The final
    policy is broader than originally envisioned and will support better
    grants management in the Agency.
        Question. The Agency, as part of its strategy to address its
    material weakness in grants management, conducted a study to realign
    the Grants Operations Branch to allow more time for post award
    administration. The Agency set December 1998 as the target date to
    implement the recommendations from the realignment study and yet the
    Agency states in the fiscal year 1998 Integrity Act Report that EPA has
    not accomplished this milestone. What are the recommendations and what
    progress has EPA made in implementing these recommendations?
        Answer. The Grants Operations Branch realignment study resulted in
    various recommendations to allow more time for post-award
    administration. These recommendations addressed issues such as
    automation improvement, workload distribution, and staff training. Each
    of the recommendations under this study have been considered and were
    implemented, as feasible. The remaining recommendations are automation-
    related. The automation-related recommendations have been incorporated
    into the development of the Integrated Grants Management System (IGMS)
    which will eventually automate the programmatic and administrative
    grant process from guidance development, application, negotiations,
    award to closeout.
        The implementation of these recommendations has allowed the
    headquarters staff more time for conducting post-award administration
    activities such as baseline monitoring activities, site visits, and
    other outreach activities.
        Question. The Agency has requested each Region and program office
    conduct Management Effectiveness Reviews (MERs) concerning oversight of
    assistance agreements. What will these reviews enable the Agency to
    determine and will they enable EPA grants officers to ensure individual
    grant recipients are not charging the Federal government unallowable
    costs such as litigation expenses? If so, how many MERs did the Agency
    conduct in fiscal year 1999 and how many does EPA expect to conduct in
    fiscal year 2000?
        Answer. The Office of Grants and Debarment (OGD) is the national
    program manager for grants management in the Agency. Management
    Effectiveness Reviews (MER) are self-assessments by each Agency office
    and Region on how they manage their grant programs. OGD develops
    protocols, provides guidance, ensures the MERs are completed and
    corrective actions are conducted by program and regional offices. In
    addition, OGD consolidates the results of the MERs and works with all
    of the regions and program offices to identify needed training,
    policies, etc. These results are considered and incorporated in the
    final assurance letter to Congress.
        MERs are conducted every two years by the offices. OGD works with
    the program and regional offices on a regular basis to ensure progress
    is being made on corrective actions identified during the MER.. Since
    these reviews focus on internal systems, the review of unallowable
    costs by a particular grantee would not be part of the MER process. As
    part of the fiscal year 1999 MER, program and regional offices are
    being asked to evaluate the effectiveness of their post award
    management plans and implementation.
        During fiscal year 1999, the Agency will complete 22 MERs. The MERs
    are conducted every two years. OGD ensures program and regional offices
    address corrective actions. The next round will occur in fiscal year
    2001.
        The Agency will use the Management Oversight Reviews (MORs) to
    measure the results of its progress to eliminate the grants management
    material weakness. What will these reviews enable the Agency to
    determine and will they enable EPA grants officers to ensure individual
    grant recipients are not charging the Federal government unallowable
    costs such as litigation expenses? If so, how? How many MORs did the
    Agency conduct in fiscal year 1999 and how many does EPA expect to
    conduct in fiscal year 2000?
        OGD is the national program manager for grants management. In
    assuring the quality of these operations nationwide, OGD conducts
    oversight reviews (MOR) of its GMOs regularly. The MORs are part of the
    Office's quality assurance function and include a rigorous review of
    how the grants office operate. The MOR protocols review compliance with
    EPA statutes, grant regulations and policies. A select number of grant
    files are reviewed to ensure quality in the GMO's review and award of
    grants. Categories of cost are identified during the pre-award phase as
    part of the applicant's budget. The review team searches these
    documents and ensures GMO staff are performing satisfactory reviews of
    the applicants' budgets. (Expenditure reports from the recipient to EPA
    such as financial status reports merely identify aggregated
    expenditures in accordance with Federal regulations.) Specific concerns
    unique to the particular GMO are addressed during the MOR.
        Each MOR Team is comprised of four individuals including
    Headquarters Policy staff as the lead and grant specialists from
    Headquarters and other regional GMO staff. The MOR team also interviews
    regional program office staff about grants management in the region.
        We performed three MORs during fiscal year 1999, and we anticipate
    performing three in fiscal year 2000. We plan to perform three each
    year so each GMO is reviewed every three to four years.
        Question. A 1995 Inspector General audit examining recurring
    problems in EPA grants management found EPA project officers and grant
    specialists did not review Financial Status Reports (FSR) and many
    grant files did not contain FSRs. Do FSRs enable EPA grants officers to
    ensure individual grant recipients are not charging the Federal
    government unallowable costs such as litigation expenses? If so, how?
    For what percentage of grants in fiscal year 1999 did EPA project
    officers and grants specialist review FSRs and how does EPA know and
    measure this fact?
        Answer. Financial Status Reports (FSR), standardized government-
    wide forms, identify expenditures in aggregated amounts. There is no
    break-out of costs or expenditures by category type, nor is there a
    break down by product, item, or service purchased. Therefore, EPA staff
    cannot use FSRs to identify unallowable costs. Government-wide
    regulations prohibit requesting detailed financial information beyond
    what is authorized in OMB circulars.
        Through May 1999, EPA has reviewed and approved a minimum of 3,400
    final Financial Status Reports. The approval of these reports was
    necessary to the closeout of these grants. These reviews are documented
    in the Agency's grant closeout process and reported in the Grants
    Information Control System.
        Government-wide OMB circulars provide the option of utilizing
    `Reports of Federal Cash Transactions' or `Requests for Advance or
    Reimbursement' if it is determined this information provides more
    timely financial information than an interim FSR. EPA requires these
    reports on a quarterly basis for all grantees who receive electronic
    payments (approximately 85 percent of all non construction grantees).
        Other mechanisms are available to monitor the financial status of a
    grant project. Project officers and grant specialists can monitor the
    amount drawn down under the grant from the Agency's financial system.
    Monitoring drawdowns from the financial management system during the
    life of the grants ensures more timely stewardship of federal funds.
        Question. The same IG audit found EPA was not obtaining single
    audit reports from grant recipients. What information does the single
    audit reports provide EPA project officers and grant specialists? Does
    the financial statement audit enable EPA grants officers to ensure
    individual grant recipients are not charging the Federal government
    unallowable costs such as litigation expenses? If so, how? For what
    percentage of grants in fiscal year 1999 did EPA project officers and
    grants specialists obtain and review FSRs and how does EPA know and
    measure this fact?
        Answer. Under single audit there is a concept of major and non-
    major programs. For a major program, the auditor provides an opinion on
    compliance with Federal laws, regulations and provisions of contracts
    or grant agreements that may have a direct and material effect on each
    major program.
        The single audit provides no specific audit coverage of non-major
    programs. Major programs are selected at each individual grantee using
    a risk-based approach. Using the risk-based approach, an auditor looks
    at not only the dollar value of a program, but also the risk that a
    grantee has not complied with program requirements, based on current
    and prior audit experience, the extent of federal agency and pass-
    through entity oversight, and any inherent risk of non-compliance in a
    federal program.
        Question. For what percentage of grants do EPA project officers and
    grants specialists review FSRs and how does EPA know and measure this
    fact?
        Answer. EPA staff review FSRs as they are received. This fact is
    monitored in EPA's Grants Information and Control System (GICS). The
    date of final FSR receipt is recorded in GICS. The final FSR is one of
    several items required to close out a grant. The GICS will be updated
    to reflect the date the grant is actually closed. While this
    measurement is combined with other actions required for grant closeout,
    EPA knows from this data that the FSRs are being reviewed and approved.
    EPA has closed out 95 percent of its awards.
       grants: oversight of assistance agreements--post award management
        Question. EPA's fiscal year 2000 Annual Performance Plan includes a
    single performance goal for Grants Management. The two parts of that
    goal consist of eliminating the closeout backlog for non-construction
    grants and increasing the number of Grants Management Offices awarding
    grants through the Integrated Grants Management System.
        How does eliminating the closeout backlog for non-construction
    grants address the oversight concerns of thoroughly reviewing grant
    applications, performing site visits, reviewing project status reports,
    obtaining single audit reports, providing final project certifications,
    or enabling EPA grants officers to ensure individual recipients are not
    charging the Federal government unallowable costs such as litigation
    expenses?
        How will ``utilizing electronic commerce to fully automate the
    assistance process from cradle to grave,'' as hoped for in the fiscal
    year 2000 Annual Performance Plan, address the oversight concerns of
    thoroughly reviewing grant applications, performing site visits,
    reviewing project status reports, obtaining single audit reports,
    providing final project certifications or enabling EPA grants officers
    to ensure individual grant recipients are not charging the Federal
    government unallowable costs such as litigation expenses?
        Answer. Several years ago, the Agency began efforts on a major
    reinvention effort--the Integrated Grants Management System. This is
    programmatic and administrative electronic grant system. We are
    currently piloting the initial stages of the system with five pilot
    regions and states. This system will give the Agency the framework to
    track and document all of our work in the areas of pre-application,
    award, post award and closeout. The system will ensure greater
    consistency and standardization nationwide and will enhance
    communication with grantees and across EPA. The system will have links
    to other intergovernmental systems such as the Single Audit
    Clearinghouse. In addition, project officers and grant specialists will
    be able to monitor requirements of the grant, receive copies of reports
    from the grantee and document site visits.
        The Agency has made significant progress in addressing their non
    construction grant closeout backlog. Closeout policies have been
    reviewed and updated; all grants management offices have developed
    strategies to identify barriers to closeout and how they are addressing
    those barriers. As a result, as of the end of May, the Agency had
    closed 95 percent of its original closeout backlog. In addition, the
    Agency is piloting automation tools so that project officers and grant
    specialists can speed up closeout of grants. To closeout a grant, the
    Agency must review and approve the final Financial Status Report, all
    dollars on the grant are either deobligated or expended by the grantee,
    and all deliverables are certified complete by the project officer.
        EPA also continues to participate with other federal agencies on US
    E grants and Federal Commons. The Agency believes that all of these
    systems will help us to save time on processing so that we can focus
    our efforts on the monitoring of grants and grantees.
        The Agency has taken numerous actions which addresses the oversight
    and monitoring concerns related to grants management. The Agency has
    strengthened the training provided to program office staff, placing
    greater emphasis on post award management, and has implemented a
    refresher course which addresses new grants management issues. EPA also
    provides information on its website and automating tools which enhances
    post award monitoring. The website also provides information on Grants
    policies and procedures. The Agency has also increased the training
    provided to our Grants Specialist. Examples of the type of training
    received by the Agency's Grants Specialist includes: post award
    monitoring activities, fraud awareness, OMB Cost Principles, cost
    analysis, and Appropriation Law training.
        In addition to training, the Agency is conducting various post
    award monitoring activities of grant recipients which include on-site
    evaluative visits, on-site technical assistance, technical assistance
    conferences and workshops, and desk reviews. On a biennial basis, all
    regional and headquarters program offices conduct a management
    effectiveness review of their assistance activities to identify
    potential vulnerabilities and areas for improvements.
        Question. The fiscal year 2000 Annual Performance Plan states the
    Agency included $8,568,800 for the Grants Management Key Program in its
    fiscal year 1999 Enacted Operating Plan and $9,679,900 in the fiscal
    year 1999 President's Budget request. What level of resources did the
    Agency devote to this Key Program or equivalent set of activities in
    its fiscal year 1998 Enacted Operating Plan?
        Answer. The total dollars for the Office of Grants and Debarment in
    fiscal year 1998 was $7.5 million.
        Question. How many financial auditors were employed by EPA grants
    organizations (excluding the IG) in fiscal year 1999?
        Answer. Financial auditors (GS-511) within EPA are employed
    primarily by EPA's Office of the Inspector General.
        Question. How must a non-profit group document its non-profit
    status before obtaining a grant from EPA?
        Answer. A non-profit group documents its non-profit status by
    indicating its status in block #7 of its signed application form (SF-
    424). The grants management staff also checks the Cumulative List of
    Organizations (described in Section 170(c) of the Internal Revenue
    Code) known as ``the Blue Book'' and Supplement. If the applicant
    organization is listed in these documents, EPA may award the
    organization a grant. If the applicant organization is not listed in
    the Blue Book, the Grant Specialist will contact the recipient for
    further information and necessary documentation. If it is determined
    the organization is a non-profit organized under 401(c)(4), the Agency
    will not make the award. The Grants Specialist also checks the
    application for the organization's Anti-Lobbying certifications which
    will also indicate the organization's status. The Lobbying
    Certifications will indicate whether the organization lobbies, and if
    so, certify that lobbying is not paid for with Federal funds.
                     epa review of transportation projects
        Question. In a speech delivered in February to a group of
    developers in Boston, Region I Regional Administrator John DeVillars
    noted the Agency's `unwavering commitment to use the full force of
    environmental law to oppose or seek modification of those projects
    which--by their very nature--contribute to sprawl.' Was DeVillars
    speaking for the Agency when he described this `unwavering commitment'?
        Answer. Mr. DeVillars' comments reflect the Agency's commitment to
    address one of the most serious environmental issues this country is
    facing: the deterioration of air and water quality caused by traffic
    growth and nonpoint source pollution. Using the authorities and funding
    that Congress has provided to EPA and the states, we have made
    significant improvements in air and water quality that are attributable
    to controls on point sources of pollution; however, total increases in
    vehicle miles traveled and nonpoint source water pollution are
    threatening to undermine this progress. For example, we are driving our
    cars almost 60 percent more than in 1980 and although car emissions
    have gotten cleaner, EPA estimates that the pollutants emitted by this
    increase in driving will, in 10 to 12 years, reduce the gains we have
    made in recent years in reducing air pollution, unless technology keeps
    pace. EPA does not have--nor ever will--the authority to control the
    number of vehicle miles traveled in this country. But EPA is committed
    to working in partnership with the Department of Transportation and
    others to offer people transportation choices that are less polluting,
    in order to meet our Congressional mandates to protect the quality of
    our air and water. Similarly, over half of our water pollution
    nationwide is now due to nonpoint sources, such as runoff from roadways
    and parking lots. As Mr. DeVillars stated, EPA will use existing
    regulatory authorities in the Clean Air Act, Clean Water Act, and
    National Environmental Policy Act to carry out our statutory
    obligations to ensure that projects are designed in such a way as to
    minimize adverse environmental effects of sprawling patterns of
    development. Finally, EPA also will work to ensure that none of our
    programs or policies are inadvertently encouraging sprawl or the decay
    of our urban centers.
        Question. Which transportation projects has EPA opposed in the last
    five years?
        Answer. One of the authorities that EPA uses to review
    transportation projects is Section 309 of the Clean Air Act. Under this
    section, EPA has the responsibility to comment on the potential impacts
    of federal actions to public health or welfare, or environmental
    quality. One of the significant ways in which EPA carries out that
    responsibility is to review and comment on Environmental Impact
    Statements (EIS) published by the other federal agencies in accordance
    with the National Environmental Policy Act (NEPA). In order to carry
    out EPA's responsibility in a consistent manner, EPA developed and uses
    a rating system to rate draft and draft supplemental EIS. This system
    rates a document both on its potential impacts as well as the adequacy
    of the documentation itself. The adequacy of the document is reviewed
    to see if the agency disclosed all significant potential environmental
    impacts to the public and the decision-maker well enough to make an
    informed decision. With the exception of extraordinary circumstances,
    EPA limits its ability to refer proposed actions to the Council on
    Environmental Quality (CEQ), the agency which oversees implementation
    of the NEPA, to EISs which have received the most stringent EPA ratings
    of either environmentally unsatisfactory or inadequate information or
    both.
        For illustrative purposes, EPA examined its tracking data for the
    previous 5 calendar years (1994 through 1998) for Federal Highway
    Administration draft and supplemental draft EISs. The FHWA EISs
    represent the majority of all transportation projects reviewed by the
    EPA. During the years 1994-1998, EPA staff reviewed a total of 252
    draft or supplemental draft environmental impact statements for
    proposed highway projects. Of those 252, EPA rated 2 as environmentally
    unsatisfactory because the Agency believed the environmental impacts
    were of sufficient magnitude that the project should not proceed as
    proposed and 4 as inadequate for not presenting enough information so
    the reviewer could assess the significance of the potential
    environmental impacts of the proposed action or EPA had identified
    reasonably available alternatives not discussed in the document. All 6
    await final FHWA determination. EPA has not referred any FHWA project
    to the CEQ during this time period. Below is a list of the 6 projects
    mentioned above:
      --Southeastern Expressway Improvements, Chesapeake and Virginia
            Beach, VA
      --CA-125 South Route Location, San Diego County, CA
      --Inter-County Connector Improvement, Montgomery and Prince Georges
            Counties, MD
      --I-880/CA-92 Interchange Reconstruction, Alameda County, CA
      --Cross-Base Highway Project, Pierce County, Washington
      --San Francisco-Oakland Bay Bridge, San Francisco and Alameda
            Counties, CA
        Question. Which transportation projects have EPA grants recipients
    opposed in the last five years?
        Answer. The Agency does not have a data base which contains
    information on the positions taken by EPA grantees on transportation
    projects. The Agency does not administer a grant program designed to
    oppose transportation projects, nor does it award grants for costs
    incurred for lobbying and filing claims against the U.S. Government.
    These costs are unallowable under OMB Circulars relating to grants.
    Additionally, Section 409 of EPA's fiscal year 1999 Appropriation Act
    provides that grant funds may not be used to pay the expenses of, or
    otherwise compensate, non-federal parties to intervene in Federal
    regulatory or adjudicatory proceedings. EPA monitors the activities of
    grantees to fulfill the Agency's fiduciary responsibility to ensure
    that the funds it grants to recipients are used for the purposes
    outlined in the grant award. However, EPA does not keep track of
    activities grantees carry out with their own funds.
        Question. DeVillars credited EPA for stopping construction of the
    Nashua Circumferential Highway in New Hampshire.
        Answer. The Nashua Circumferential Highway was a proposed 12-mile-
    long expressway around the City of Nashua, New Hampshire. Because of
    the proposed highway's significant adverse impacts to exceptionally
    valuable wetlands, wildlife habitat, and water quality, EPA exercised
    its authority under the Clean Water Act to prevent construction of the
    southern segment of the project, and advocated a so-called partial
    build solution entailing construction of up to 7.5 miles of the
    northern portion of the road. The partial-build option will achieve 85
    percent of the transportation benefits of the full-build, at less than
    half the environmental cost and at half the capital cost. EPA's action
    was supported by the City of Nashua and the three other affected towns,
    and the Governor. The New Hampshire Department of Transportation is
    currently developing plans to proceed with the partial-build highway.
        Question. Is it policy of EPA to stop transportation projects? What
    tools does EPA use to stop transportation projects?
        Answer. It is not the policy of EPA to stop transportation
    projects. We do, however, use our statutory authority to ensure that
    projects are designed and built in a manner that minimizes adverse
    impacts to the environment.
                        npdes permitting program funding
        Question. As of March 1998, EPA had not re-issued 38 percent of
    permits for major facilities and 76 percent of permits for minor
    facilities. This led to the Administrator declaring NPDES permit
    backlogs as a new Material Weakness under FMFIA. Why does the fiscal
    year 2000 Annual Performance Plan include only a 1.5 percent increase
    for the NPDES Permitting activity in the Regions? Are these resources
    sufficient to address this problem? The Agency received a 2.6 percent
    increase from Congress for its Environmental Programs and Management
    (EPM) operating budget in fiscal year 1999 and yet EPA cut the
    Headquarters NPDES Permitting activity over 24 percent from fiscal year
    1998 to fiscal year 1999 enacted levels. Why did the Agency, knowing in
    the Spring of 1998 that NPDES permitting backlogs were a candidate for
    material weakness, make this cut?
        Answer. EPA increased the Regional NPDES budget by 23 percent and
    the Headquarters NPDES budget by 45 percent in the fiscal year 2000
    President's Budget. A portion of this increase allows for a multi-
    pronged approach to eliminating backlog in delegated and non-delegated
    States, including (1) direct permit issuance assistance to several
    Regions and States; (2) broader use of tools developed in some Regions
    and States such as general permits, electronic permit programs, and
    streamlined procedures to expedite issuance; and (3) the development of
    strategies in partnership with States for eliminating backlog while
    maintaining high permit quality. As we implement these initiatives, we
    hope to better assess the sufficiency of available resources to
    eliminate the backlog. EPA does not currently have a complete picture
    of the resource needs at the State level, but will develop a better
    understanding through an ongoing resource gap analysis (to be completed
    Fall 1999) and by partnering with high backlog States to develop
    specific State strategies for eliminating backlog. In terms of fiscal
    year 1999, while the Headquarters permitting activity was reduced from
    fiscal year 1998 Enacted levels, total NPDES permitting resources
    (including Regional resources where the bulk of the permitting effort
    is located) rose over 20 percent from fiscal year 1998 Enacted levels.
    It should be noted that the headquarters cut was consistent with the
    overall extramural reduction taken across the water program as a result
    of the EPM general reduction.
        Question. The backlog in EPA issued Major NPDES permits has tripled
    over the last 10 years and the NPDES permit universe will expand in the
    storm water and concentrated animal feeding operation areas. The fiscal
    year 1998 Integrity Act Report stated that without timely permit re-
    issuance, necessary improvements in water quality will not occur. How
    does the timely re-issuance of NPDES permits improve water quality.
        Answer. NPDES permits establish specific, enforceable pollutant
    discharge targets that must be achieved by the permittee to ensure that
    water quality is protected and that technology goals are achieved. If
    the permit is current and properly drafted, it should reflect all
    current and applicable water quality and technology goals. If the
    permittee complies with all of its permit conditions, the environment
    should be protected.
        If, however, the current permit-holder has submitted a timely and
    complete permit application for renewal of its permit, and the
    permitting authority fails to issue a new permit prior to the
    expiration date, the expired permit will generally be administratively
    continued, allowing the conditions and requirements to remain in effect
    until the new permit is issued. Federal regulations permit
    administrative continuances under these circumstances for federally-
    issued permits, as do most states. States and EPA remain able to take
    enforcement actions against violations of these ``administratively
    continued'' permits. In many cases, EPA or the state would reissue the
    same permit levels, in which case, the backlog of these permits poses
    no threat to the environment. In other cases, a new or revised effluent
    guideline, water quality standard or TMDL would cause the permitting
    agency to revise the permit levels. In these cases, the
    ``administratively continued'' permits are less protective of the
    environment.
                             safety of food funding
        Question. The fiscal year 2000 Annual Performance Plan includes a
    substantial funding increase to meet the Agency Objective of Reducing
    Use on Food of Pesticides Not Meeting (Food Safety) Standards. The
    reason this large increase is needed in part, however, is because EPA
    cut this program itself in the fiscal year 1999 Enacted Operating Plan.
    Why, when Congress gave EPA a 2.6 percent increase from fiscal year
    1998 to fiscal year 1999 enacted levels for Environmental Programs and
    Management, did the Agency cut efforts to reduce use on food of
    pesticides not meeting standards by over 16 percent from fiscal year
    1998 to fiscal year 1999?
        Answer. While the Agency did receive a small increase in the
    Environmental Program Management (EPM) appropriation, this increase was
    offset by the combined effect of Cost Of Living Adjustments (COLAs) for
    staff, increases in rent and other infrastructure costs, and by
    congressional set-asides. These factors contributed to reductions in
    numerous Agency programs, including several priority areas such as the
    Agency Objective of Reducing Use on Food of Pesticides Not Meeting
    (Food Safety) Standards.
        Question. In general, are the health risks to adults and children
    from current pesticides which need to be reregistered to meet new
    statutory food safety standards relatively greater than the risks posed
    by new pesticides?
        Answer. Many older chemicals have risk profiles that are not of
    concern, however, a significant number of major chemicals that have not
    yet been completely reviewed through reregistration or tolerance
    reassessment have risk characteristics of concern to the Agency. For
    example, over 5000 of the 9728 food tolerances that need to be
    reassessed under FQPA are in ``Group 1'', meaning that they appear to
    pose the greatest risk to public health. These may include the
    organophosphates, carbamates, organochlorines and pesticides considered
    probable or possible human carcinogens.
        Question. How did EPA's 20 percent cut from fiscal year 1998 to
    fiscal year 1999 enacted levels for the Reregistration Eligibility
    Decisions activity, which contributes to the Agency Objective of
    Reducing Use on Food of Pesticides Not Meeting (Food Safety) Standards,
    affect the Agency's ability to make those decision and improve the
    safety of food produced and consumed by Americans?
        Answer. The Agency continues to hold the safety of our food supply
    as one of its highest priorities. Those activities which most directly
    affect our food safety, such as tolerance reassessments and
    registration of reduced risk pesticides were protected from budget
    reductions to the extent possible. We are continuing to place greater
    emphasis on reregistration of chemicals which have food uses, in
    particular to those which affect children's foods. The reductions to
    the Reregistration program in both Reregistration Eligibility Decisions
    (REDs) and Special Review will affect REDs production in both this year
    and 2000, and will affect both food and non-food use. However the
    extent of the delay in these reregistrations has not yet been fully
    evaluated. Our efforts to make decisions on those chemicals which are
    of highest concern, such as the organophosphates, carbamates and
    carcinogens remain a priority. The Agency continues to work with the
    registrants and other stakeholders in order to maximize our resources
    and minimize the impact of these reductions.
        Question. How did EPA's 40 percent cut from fiscal year 1998 to
    fiscal year 1999 enacted levels for the Special Review activity, which
    contributes to the Agency Objective of Reducing Use on Food of
    Pesticides Not Meeting (Food Safety) Standards, affect the Agency's
    ability to perform those reviews and improve the safety of food
    produced and consumed by Americans?
        Answer. See above.
                          agency performance measures
        Question. The Agency's only performance measures towards GPRA
    implementation in the fiscal year 2000 Annual Performance Plan concern
    completing the measures in a timely manner. Why does the Agency not
    include any qualitative GPRA performance measures or goals such as
    increasing the number of outcome based goals or measures?
        Answer. The Agency is committed to improving its performance
    measures and developing outcome measures and goals where appropriate
    and when data are available. In other words, we are pursuing practical
    improvements in the manner of expressing and measuring performance
    goals, but not in a single-minded manner. Your suggestions that EPA
    could measure its progress in GPRA implementation via the number of
    outcome-based performance goals is an intriguing idea. However, such a
    measure, by itself, would mask several considerations. Among these
    would be the ability to measure prospective outcomes, which varies
    among our environmental programs. Also, each of the Agency's programs
    needs a complementary set of both output and outcome measures and goals
    to effectively manage and assess how individual program activities
    contribute to achieving the Agency's long-term strategic commitments.
    The optimal set of performance measures and goals, therefore, will be
    different for each program.
        Question. The General Accounting Office estimates that outcome
    performance measures make up only 15 percent of the performance
    measures in the fiscal year 2000 Annual Performance Plan and
    Congressional Justification. Does EPA believe the current number of
    outcome measures versus the number of output measures is adequate to
    measure the Agency's impact on the environment?
        Answer. EPA's intended long-term positive impacts on the
    environment are expressed in the EPA Strategic Plan's environmental
    goals (Goals 1-6) and general objectives under those goals. The
    majority of these general objectives articulate the Agency's intent to
    achieve specific environmental outcomes. The Agency is committed to be
    able to measure progress towards achieving these objectives by the
    target year for each strategic objective (e.g., 2005). In the Agency's
    Annual Performance Plan, EPA provides annual performance goals and
    measures for activities the Agency plans to conduct over the year that
    are necessary for achieving the longer-term strategic environmental
    outcome objectives. Where needed, the Agency intends to develop the
    necessary data, analytical methods, indicators and measures to be able
    to assess progress in achieving these longer-term strategic
    environmental outcome objectives. Outcome-oriented annual performance
    measures and goals will be incorporated into future Annual Performance
    Plans as necessary data and analytical methods become available, and
    the Agency expects the percentage of outcome-based performance goals to
    increase.
        Question. How does the Agency believe its actions impact the
    environment and human health positively if the Agency is unable to
    measure change in behavior in the regulated community or the
    environment which result from EPA activities?
        Answer. Both of the measures you cite are certainly important ways
    to gauge the value of environmental programs, but clearly there are
    other kinds of information necessary to grasp the positive impacts of
    EPA's actions. For example, every significant regulatory action entails
    exhaustive consideration and analysis of risk, economic, and societal
    impacts. We acknowledge, however, that better measures of societal
    behavior and environmental trends would certainly help us assess the
    Agency's priorities and performance. This in fact is EPA's whole
    purpose in creating its integrated planning, budgeting and
    accountability framework. Thus, as we have indicated above, we are
    seeking steady improvement in measuring such outcomes, and using these
    measures in performance plans.
        Question. What resources in dollars and FTE does the Agency
    currently devote towards developing performance measures? What level of
    resources are required to develop additional outcome performance
    measures?
        Answer. EPA's accounting system does not specifically track dollars
    and FTE devoted to developing performance measures. In general,
    however, each of EPA's programs identifies the specific data and
    methods required for effective results-based management at all
    organizational levels, thereby incorporating associated resource
    requirements into routine program and project planning. In addition,
    the Center for Environmental Information and Statistics, as part of the
    Agency's new Information Office, is in the process of assessing the
    Agency's long-term strategic information needs.
        Question. What steps is EPA taking to increase the ratio of outcome
    measures versus output measures?
        Answer. As stated above, the Agency expresses its intended long-
    term strategic environmental outcomes in EPA's Strategic Plan's general
    objectives. Specific outcome-oriented annual performance goals and
    measures that evaluate the Agency's progress in achieving these
    environmental outcome objectives will be incorporated into the Agency's
    Annual Performance Plans as data and assessment methods become
    available.
                   enforcement performance goals and measures
        Question. Thirteen of fifteen performance measures in the
    Enforcement and Compliance Assurance program's objective to Reduce
    Noncompliance measure outputs such as inspections, investigations and
    reports generated. Is changing the behavior of the regulated community
    or impacting the environment positively a goal of the Enforcement
    program and if so why does the program not measure more of its
    performance toward these type of goals?
        Answer. Changing the behavior of the regulated community and
    impacting the environment positively are the results which EPA's
    enforcement and compliance assurance program strive to achieve and
    measure. Under the objective about reducing noncompliance, there are
    actually five outcome measures which pertain to environmental impact
    and changing the behavior of the regulated community. They are: percent
    of enforcement actions which require pollutant reductions; estimated
    pounds of pollutants reduced; rates of noncompliance for selected
    environmental problems (which measures compliance behavior of certain
    regulated populations); percentage of significant violators with
    recurring significant violations within 2 years (which measures
    recidivism behavior of the most serious violators); and average time
    for significant violators to return to compliance (which also measures
    behavior of the most serious violators). All five of these outcomes
    measure environmental impact or behavior change which is due, at least
    in part, to the actions of EPA or state enforcement efforts. In
    addition, we are working to develop other measures of environmental
    impact and behavior change for this objective. These additional
    measures are: percent of enforcement actions which lead to changes in
    use or handling of pollutants by facilities; and percentage of
    enforcement cases which lead to improvement in environmental management
    practices and information at facilities.
        Question. All of the performance measures regarding Compliance
    Monitoring Activities are measures of Agency outputs such as
    investigations or inspections. Does the Enforcement program not expect
    these activities will produce a change in behavior by the regulated
    community or improve the environment? If the Agency believes these
    activities will change behavior or improve the environment, how is the
    Agency measuring this improvement?
        Answer. EPA believes that compliance monitoring activities such as
    inspections and investigations contribute to behavior change and
    environmental improvement. EPA's inspection presence contributes to
    improved rates of compliance and individual inspections result in
    changes and improvements at specific facilities. To measure these
    facility-specific changes, EPA's Region II office is conducting a pilot
    project to document results (e.g., changes in environmental management
    practices) achieved through individual objectives. The pilot project
    will be completed by December 1999, the results of the pilot will be
    reviewed, and a decision will be made about whether to implement the
    pilot for the entire national program.
        Question. The performance measure for the Compliance Incentive
    activity, which encourages entities to conduct audits and disclose and
    correct violations, contains only an output measure tracking the number
    of facilities participating in the program. Does the Agency not believe
    this policy produces environmental benefits? If the Agency does believe
    these policies are improving the environment, how is the program
    measuring this performance?
        Answer. The performance measure for compliance incentive activity--
    i.e., the number of facilities that self-disclosed potential
    violations--focuses on an outcome that actually results from a change
    in behavior by a regulated facility. Facilities and companies come
    forward voluntarily to use the audit and self-disclosure policy
    developed and offered by EPA. In addition, we are beginning to measure
    the same kinds of environmental and behavioral change outcomes for
    audit policy settlements that we are currently measuring for completed
    enforcement actions.
        Question. While the Enforcement and Compliance Assurance program
    included a performance measure tracking the increase in Small Business
    Compliance Assistance Center (Center) usage in fiscal year 1999, there
    is no similar measure in fiscal year 2000. Is increasing Center usage
    no longer a goal of the program?
        Answer. The fiscal year 1999 performance measure regarding
    increased usage was designed to capture increased activity from the
    expansion of Compliance Assistance Centers, of which 5 were added in
    fiscal year 1999. There are no new Centers planned for fiscal year
    2000. The fiscal year 2000 Plan, for Goal 9, Objective 2, includes a
    measure of ``Number of facilities reached through targeted compliance
    assistance'' which would include facilities receiving compliance
    through the centers or any other program initiative.
        Question. The fiscal year 2000 Annual Plan and Congressional
    Justification no longer contains performance measures of Federal
    Actions under the National Environmental Policy Act. Is this a function
    no longer engaged in measurable performance?
        Answer. The fiscal year 2000 Annual Plan contains a performance
    plan measure for NEPA implementation under Goal 9, Objective 2, Sub-
    Objective 3. The measure reads ``325 major proposed Federal actions,
    i.e., Draft Environmental Impact Statements (DEIS) to be filed''
        Question. Why are the performance measures under development in the
    National Performance Measures Strategy (Strategy) and scheduled to
    become operational in fiscal year 1999 or at the beginning of fiscal
    year 2000 not in the Agency's fiscal year 2000 Annual Plan?
        Answer. All of the measures scheduled to become operational in
    fiscal year 1999 or fiscal year 2000 under the National Performance
    Measures Strategy are incorporated into the fiscal year 2000 Annual
    Plan. In the Annual Plan, measures being developed under the Strategy
    are sometimes stated more specifically and in terms of a target. For
    example, Set 2 of the Strategy is described as ``Environmental and
    human health improvements from EPA enforcement actions.'' In the Annual
    Plan, we have used two measures from Set 2--percent of enforcement
    actions that require pollutant reductions, and pounds of pollutants
    reduced--and set targets for each.
        Question. Will the Strategy implement Phase II performance measures
    of statistically valid compliance rates and environmental and human
    health improvements by the beginning of fiscal year 2000?
        Answer. EPA is currently working with a statistical consultant on a
    methodology for developing statistically valid rates of compliance. At
    the beginning of fiscal year 2000, EPA regional offices will be asked
    to conduct inspections based on a random and representative sample of
    facilities in selected regulated populations. These random inspections,
    combined with inspections based on other targeting criteria, will be
    used to generate statistically valid compliance rates. The rates will
    be based on all inspection activity conducted through the end of fiscal
    year 2000.
        Question. One EPA official has suggested that the amount of money
    spent in ``supplemental environmental projects'' (SEPS) as part of
    settlements is a good measure of the Enforcement and Compliance
    Assurance Program's impact. In fiscal year 1998, EPA enforcement action
    resulted in $90 million worth of SEPs. Is $90 million in SEPs a good
    return on the $321 million spent under Goal 9 in fiscal year 1998?
        Answer. Money spent in ``supplemental environmental projects'' is
    one of several measures of the environmental impact that EPA
    enforcement actions can achieve. Setting a specific amount of SEP
    dollars as a goal or target to achieve would be an inappropriate
    performance measure, since SEP amounts are a by-product of specific
    cases targeted through criteria involving noncompliance patterns and/or
    environmental risk. In addition, comparing the SEP dollars generated to
    the total amount spent under all of Goal 9 is inappropriate since only
    a portion of the resources under Goal 9 are dedicated to enforcement
    cases.
                             compliance assistance
        Question. Steven Herman, Assistant Administrator for Enforcement
    and Compliance Assurance, stated at a January 1999 conference that
    ``EPA is a law enforcement Agency.'' Is it the position of EPA that EPA
    is a law enforcement Agency?
        Answer. Protecting the public and the environment from risks
    imposed by violations of environmental laws and regulations is, and
    always has been, basic to EPA's mission. Formal law enforcement is one
    important component of EPA's responsibilities and will continue to be a
    central and indispensable element of our efforts to ensure compliance.
    EPA's strong and aggressive enforcement program has been the
    centerpiece of efforts to ensure compliance and has achieved
    significant improvements in human health and the environment.
        Question. If ``EPA is a law enforcement Agency,'' is the Agency
    still committed to non-law enforcement tools such as Compliance
    Assistance which would bring about compliance? Does reducing the
    Compliance Assistance program stem from the belief that ``EPA is a law
    enforcement Agency'' and thus should not been engaged in Compliance
    Assistance programs?
        Answer. EPA is not reducing its compliance assistance program. The
    Agency is actually increasing funding to several important compliance
    assistance activities, such as to the compliance assistance centers and
    for tools development.
        EPA is committed to using the full set of available tools--
    including compliance assistance--in the pursuit of compliance
    assurance. Although formal law enforcement is the cornerstone of our
    efforts, the continuation of serious environmental problems and changes
    in the scope and types of activities and entities that are regulated
    requires EPA to use a range of approaches to motivating environmental
    law compliance. Formal civil and criminal enforcement are supported by
    effective compliance assistance and compliance incentive programs. In
    fact, it is the very success of its formal enforcement program that has
    allowed EPA to develop these complementary programs over the last
    several years.
        Proceeding from the 1994 reorganization of enforcement and
    compliance operations, EPA has built a very robust compliance
    assistance program. The Agency has developed and implemented a new set
    of policies and tools to further improve environmental compliance. EPA
    provides information on federal rules and regulations through the nine
    compliance assistance centers which we are committed to sustaining in
    the future. The Agency has also developed 27 sector notebooks, 18 plain
    language guides, and self-auditing checklists and protocols. EPA has
    been and will continue to work cooperatively and productively with
    those in the regulated community who want to do the right thing but may
    need some assistance to get there.
        EPA's 2000 budget request does not reflect a shift in compliance
    assistance resources to enforcement activities. Through a recent study
    of Regional enforcement and compliance work, we learned that our
    previous methodology identified more workyears providing compliance
    assistance than were actually doing this type of work. EPA's fiscal
    year 2000 budget displays how regional resources have actually been
    applied.
        Question. The fiscal year 2000 Annual Performance Plan states the
    Agency plans to reduce the compliance assistance program with the
    expectation that the states will assume the majority of this work in
    fiscal year 2000. The Agency has cited the inability of the states to
    perform fully their environmental duties as the rationale for a wide
    range of positions including the need to maintain a Federal enforcement
    and compliance assurance presence. Why is the Agency attempting to
    devolve the Compliance Assistance Program to the states if it does not
    trust the states are capable of maintaining the full range of
    environmental programs?
        Answer. As with many of our other environmental protection
    responsibilities, EPA relies on a strong and effective state-EPA
    partnership to provide effective compliance assistance to the regulated
    community. EPA's role has been and continues to be to develop and
    distribute compliance assistance information and tools for business and
    industry. As the primary providers of direct assistance to the
    regulated community, states and localities and other compliance
    assistance providers use or adapt EPA compliance assistance materials
    to reflect specific state or local requirements. We believe this
    relationship has been very successful in improving the regulated
    community's awareness and understanding of its environmental
    obligations.
        This belief was supported by participants from a wide range of
    public and private sector organization who attended recent conferences
    on EPA's compliance programs. These participants confirmed the value of
    EPA's compliance assistance tools and materials and urged us to
    continue developing general compliance assistance tools that are widely
    applicable and that are made widely available through the Internet,
    toll-free hot lines and other appropriate channels. We also heard
    strong support for the view that states are the first-line, on-site
    purveyors of compliance assistance. EPA is continuing to work with the
    states and other assistance providers to develop a strong network that
    exchanges information and tools and minimizes duplicate services.
        Question. The 2000 Annual Performance Plan states an analysis of
    Regional resource information indicated many of the compliance
    assistance resources are actually conducting inspections and pursuing
    cases since the Office of Enforcement and Compliance Assurance (OECA)
    reorganization. How much of these resources were shifted to enforcement
    duties over the years after the reorganization?
        Answer. OECA recently conducted a study of the compliance
    assistance and enforcement work being done in the Regions during the
    1998 and planned for 1999. Results from the study prompted us to
    revisit the methodology previously used to estimate regional resources
    dedicated to compliance assistance activities. We found that the
    previous methodology identified more workyears providing compliance
    assistance than were actually doing this type of work. In order to be
    consistent with the Government Performance and Results Act framework of
    aligning resources with intended use, our fiscal year 2000 budget
    request reflects how our regional resources have actually been utilized
    between compliance assistance and enforcement (rather than a shift from
    compliance assistance to enforcement.)
        Question. What compliance assistance guidance and tools development
    would the Agency not perform if it made its proposed cuts in this area
    under the fiscal year 2000 Annual Performance Plan?
        Answer. EPA will focus its efforts on developing widely applicable
    compliance assistance information and tools related to national program
    concerns. We would look to the states and other public and private
    compliance assistance providers to develop and disseminate compliance
    assistance tools that address a situation specific to a geographic area
    or localized industry. Further, we would devote a greater portion of
    our staff resources to in-house compliance tool development from
    contract management responsibilities.
        Question. What compliance assistance would the Agency not provide
    Federal Facilities if EPA made the proposed cuts under the fiscal year
    2000 Annual Performance Plan?
        Answer. EPA will continue to provide compliance assistance to
    Federal facilities through its new on-line compliance assistance center
    and through the development of guides, manuals and other compliance
    assistance tools. On-site assistance activities conducted by the
    Regions, including environmental management reviews and pollution
    prevention opportunity assessments, would be reduced. Conferences,
    workshops and training for Federal facilities also are likely to be
    impacted, although this may be somewhat offset by regional staff using
    in-house resources in lieu of contract support efforts.
        Question. An Agency Task Force on Innovative Approaches to
    Environmental Protection recommended EPA adopt a holistic Agency-wide
    strategy for compliance assistance that encompasses the full range of
    the regulatory program, from rulemaking through compliance and
    enforcement. The program of general compliance assistance would enable
    EPA to develop a compliance assistance approach that included a
    compliance guide and a self-audit checklist for each new major
    regulation, develop a set of delivery options for each tool and
    evaluate the effectiveness of each tool.
        How much would it cost per year to develop compliance assistance
    tools as part of the rulemaking package for every major new regulation?
        How much would it cost per year to deliver compliance assistance
    tools to the regulated community and to organizations likely to have
    contact with the regulated community as part of the rulemaking for
    every major regulation?
        How much would it cost per year to: (1) begin wider dissemination
    of compliance assistance and pollution prevention information and tools
    to State, local, tribal and private compliance assistance providers;
    (2) develop a clearinghouse of compliance assistance materials and
    tools; (3) begin developing a national network of federally-funded
    business and environmental assistance programs by convening a national
    meeting in 1999 to identify general principles for collaboration; and
    (4)convene a national Compliance Assistance Forum to share information
    with participants on recently-developed compliance assistance
    materials, get stakeholder input in setting priorities for development
    of compliance assistance materials, and facilitate exchange of tools.
        Answer. To date, the report drafted by the Agency Task Force on
    Innovative Approaches to Environmental Protection has not received
    final approval from Administrator Browner and is still being revised.
    Also, we intend to get the input of other public and private compliance
    assistance providers in setting priorities for development of
    compliance assistance materials. Therefore, it would be premature to
    offer estimates of the resources required to implement this report
    since its final content is unknown.
                  small business compliance assistance centers
        Question. How many and which of the Small Business Compliance
    Assistance Centers (Centers) have submitted multi-year operating plans
    to the Agency? What is the total cost of all the Centers in fiscal year
    2000 as submitted by the Centers to EPA in their multi-year operating
    plans? What is the total EPA funding requested in fiscal year 2000 by
    the Centers in their multi-year operating plan?
        Answer. In 1998, the Center Grantees were asked to develop five-
    year operating plans in order to initiate discussions on long-term
    planning. The five-year operating plans developed by the grantees
    describe the overall plans for the individual Centers, outline the
    Center goals, and present strategic plans over the five-year period.
    All nine Centers are addressed in the operating plans. Through this
    planning exercise, the grantees identified their options, needs, and
    desires to maintain and enhance their Centers. Projected funding
    requests for fiscal year 1998 through fiscal year 2002 were identified
    in the plans, but there was never a commitment made that the requested
    funds would be available or received. That was understood during the
    development of the operating plans. Instead, the five-year operating
    plans are a planning tool which project an fiscal year 2000 total
    operating cost of approximately $2,960,000 for the nine Centers, which
    assumes contributions from EPA, in-kind contributions from the
    Grantees, and revenue-generating proposals as well. Of this amount,
    approximately $1,596,000 was specifically requested in EPA to fund the
    Centers in fiscal year 2000.
        Question. What level of funding does EPA include in its fiscal year
    2000 President's Budget Request for Center Operating costs? What levels
    of funding has EPA verbally indicated at the staff level it will
    provide each of the Centers in fiscal year 2000?
        Answer. The President's fiscal year 2000 Budget includes a request
    of $1,500,000 to fund EPA's portion of Center operating costs in fiscal
    year 2000. EPA staff have not verbally provided the Center grantees
    with an indication of the amount of funding that EPA will provide to
    each Center in fiscal year 2000.
        Question. What indications has EPA received from the Centers as to
    whether they will be able to meet their goals of self-sufficiency in
    fiscal year 2000 and beyond? Does EPA believe the Centers will meet
    their non-EPA contributions towards self-sufficiency in fiscal year
    2000 and beyond?
        Answer. EPA does not believe the Centers will achieve self-
    sufficiency in fiscal year 2000, and has serious doubts as to whether
    the Centers can achieve self-sufficiency beyond fiscal year 2000. The
    Centers are exploring various mechanisms to generate funds to support
    Center operations. For example, various Centers have attempted to
    generate funds through a Web site registration fee, seeking industry
    contributions, and selling advertising space and compliance assistance
    tools. To date, such activities have generated minimal revenue compared
    to what is needed to maintain the Centers. In addition, it has been
    argued that activities which require payment conflict with the Centers'
    mission to provide readily available compliance assistance information
    to small businesses.
        Question. Will EPA allow Centers to close if the Centers are unable
    to meet their self funding goals and EPA funding is insufficient to
    meet Center operating costs? Will EPA allow Centers to become inactive
    or otherwise unable to provide updated information to compliance
    assistance clients?
        Answer. In the fiscal year 2000 EPA President's budget, the
    viability and maintenance of the nine Centers is assured. Although we
    cannot be certain of out-year budgets at this time, we view the Centers
    as a priority. To best meet the needs of the customers of the nine
    Centers, it is critical that EPA be provided flexibility with regard to
    the funding allocations for each individual Center. The Agency takes
    into account a variety of factors, such as national program priorities,
    available funding, client needs, costs of different Center services,
    changes in sector requirements on an annual basis, and Web site usage
    trends to appropriately allocate annual funds to each of the nine
    Centers.
        Question. How many visitors did the Centers have to their websites
    in fiscal year 1999? How many ``hits'' are the Centers' websites
    currently receiving per month?
        Answer. The Centers have experienced over 150,000 user sessions in
    the first six months of fiscal year 1999. Since January 1999, the
    Centers have experienced an average of 405,000 ``hits'' per month. We
    believe that the number of user sessions, the number of visits to the a
    site (not the number of pages visited or hit), is the most accurate
    figure to use to gauge Centers' usage.
        Question. How many frequent Centers website visitors are taking
    some positive action in their facilities concerning environmental
    compliance? What percentage of total frequent website visitors does
    this represent?
        Answer. In fiscal year 1998, on-line surveys were posted on five
    Centers for two months to assess use rates and user satisfaction of the
    Centers. Of the center users, 905 responded to the surveys
    (representing a 6-15 percent survey response rate.) Eighty-five percent
    of the users who completed the surveys (surveyed users) stated that
    they visit the centers at least monthly, and nearly one third of the
    surveyed users stated that they visit the centers weekly. Survey
    respondents also identified behavioral changes that resulted from their
    use of the Centers. Of the 214 survey responses addressing behavioral
    change, 81 percent stated that they took an action as a result of using
    the Centers. For example, Center users contacted a vendor, requested
    technical assistance, contacted a regulatory agency, changed a process,
    obtained a permit, or changed waste handling practices.
        Question. It is estimated that because of their small size, EPA and
    state regulators are unable to and thus will not visit or inspect more
    than 200,000 of the 500,000 auto service and repair establishments.
    Likewise, EPA and/or state regulators will not visit between 90 and 95
    percent of printers because they are small quantity generators and
    regulators are appropriately targeting larger facilities. Does EPA have
    any statistics on the number or percent of facilities in the other
    sectors covered by Centers which EPA will not reach because of their
    size or other factors?
        Answer. The Agency targets industry sectors (sectors) for
    inspections based upon the sector's compliance history and impact on
    the environment, such as pollutant releases and risk. In addition,
    facilities may be inspected based on tips and complaints from the
    public; the length of time since last inspected; demographic
    considerations; new regulatory requirements which impact the facility;
    facility classification or size; and other considerations. The Agency's
    fiscal year 2000/2001 OECA Memorandum of Agreement Guidance identifies
    the following national EPA priorities for fiscal year 2000/2001 based
    on the factors listed above: (1) Clean Water Act--wet weather; (2) Safe
    Drinking Water Act--microbial rules; (3) Clean Air Act--New Source
    Review/Prevention of Significant Deterioration; (4) Clean Air Act--air
    toxics; (5) Resource Conversation and Recover Act--permit evaders; (6)
    petroleum refinery sector; and (7) metal services (electroplating and
    coating) sector.
        In general, the Agency tends to target larger facilities for
    inspections, while small businesses tend to be targeted for compliance
    assistance activities unless they are the subject of a citizen
    complaint or place the community at risk due to their practices. The
    establishment of the nine Centers has enabled the Agency to reach a far
    greater number of small businesses than could be accomplished through
    EPA site-visit activities. This was one of the reasons for establishing
    the Centers. But for the printed wiring board manufacturing sector, the
    sectors covered by the Centers are comprised of numerous facilities,
    many of which are small businesses. As with the auto service and repair
    and printing sectors, limited resources do not allow EPA and state
    regulators to annually visit or inspect a majority of the facilities
    within these sectors. For example, EPA estimates that (1) 50 to 60
    percent of the transportation sector covered by the Transportation
    Environmental Resource Center are not inspected annually; and (2) 70
    percent and 50 percent of the chemical preparation and industrial
    organic chemical manufacturers respectively are not inspected annually.
    State activities are generally not reported to EPA on a sector basis.
          agency audit policy: self disclosure of potential violations
        Question. What percentage of disclosures under the Audit Policy
    disclosed paperwork or record keeping violations versus disclosures of
    environmental violations as measured by recent study of the audit
    policy?
        Answer. Eighty-four percent of the disclosures evaluated involved
    violations of reporting, record-keeping, or labeling requirements. I
    should note that many violations of emission or discharge standards are
    required to be identified by prescribed monitoring (e.g., through stack
    testing or daily sampling). Because such violations are identified and
    reported through required monitoring rather than through voluntary
    audits, they are not eligible for relief under either EPA's policy or
    state audit laws.
        Question. If a goal of the Enforcement and Compliance program is to
    have 75 percent of concluded enforcement actions require environmental
    or human health improvements, why does the current Audit Policy
    emphasize paperwork or record keeping violations?
        Answer. While EPA is committed to obtaining human health or
    environmental improvements from concluded enforcement actions, this
    term encompasses those cases that EPA initiates after independently
    identifying a violation. We have generally not considered violations
    that are voluntarily disclosed and corrected under our audit policy to
    be ``enforcement actions'' in the traditional sense. For example, these
    disclosures are separately tracked in our docket, and many cases can be
    resolved by issuing a letter indicating that noncompliance has been
    corrected. As noted above, many violations of discharge and emission
    requirements are required to be monitored and reported, and are
    therefore not eligible for relief under either EPA policy or state law.
    Many so-called ``paperwork requirements are mandated by laws
    established by Congress, and operate to prevent spills, serious
    accidents or other mishaps. The audit policy has proved to be an
    efficient means to obtain voluntary compliance with such requirements.
        Question. Would changes in the type of penalties reduced by the
    Audit Policy produce more disclosures and thus prompt correction of
    environmental violations as opposed to violations of paperwork or
    record keeping requirements?
        Answer. EPA is considering non-penalty-related changes to the Audit
    Policy that we hope will encourage additional disclosures. Our recent
    proposal in the Federal Register suggests that disclosure time from
    point of discovery be extended from 10 to 21 days, and that a multi-
    facility corporation not necessarily be disqualified from the policy
    for disclosures made at a facility even where an investigation has
    occurred at another of its facilities. EPA is also encouraged by the
    results of targeted outreach and views it as a mechanism for
    encouraging disclosure of more substantive violations. It is our
    experience that the greatest gains under the Audit Policy are made when
    EPA reaches out to a specific industry sector, in some cases
    identifying recently-enacted regulations or those that may be prone to
    noncompliance within that sector, and invites the sector to audit and
    disclose. For example, EPA's outreach effort with the
    telecommunications industry resulted in violation disclosures and
    corrections at over 700 facilities.
        It is unclear, however, that changes to the Audit Policy will
    necessarily affect the volume of disclosures made by regulated
    entities. The recent National Conference of State Legislatures study
    found no statistically significant difference in auditing rates based
    on whether the state in which the facility operates has an
    environmental audit law, audit policy, or no law or policy. It follows
    that changes to an existing policy may have a similarly insignificant
    effect.
        Question. What percentage of disclosures made under the Audit
    Policy have been made under Federal programs which are not delegated to
    the states?
        Answer. Ninety-two percent of the disclosures made to EPA involve
    programs for which EPA has lead responsibility. In general, we would
    expect most disclosure to be made directly to the state agencies that
    are authorized to administer federal programs, and have taken steps to
    avoid inconsistency and confusion, and thereby encourage disclosures at
    the state level. EPA has worked closely with states such as Texas,
    Ohio, Michigan, South Dakota, and Minnesota to assure that state audit
    immunity laws provide incentives to disclose while meeting minimum
    requirements necessary for authorized federal programs. Other states,
    such as California, Florida and Pennsylvania, have worked with EPA to
    develop appropriate policies to encourage self-disclosure and
    correction.
        Question. What is the average number of pages of information EPA
    has obtained from entities disclosing violations under the audit policy
    to prove the audit was conducted properly and that the violation was
    properly repaired?
        Answer. Although EPA does not keep data on the length of disclosure
    documents, typically entities disclose in several pages of text, which
    often includes an elective analysis of how the disclosure meets the
    conditions of the Audit Policy. EPA encourages disclosures to use a
    checklist, available on OECA's website, to assist in providing relevant
    information. EPA frequently receives phone calls from prospective
    disclosures requesting a chart or format for their disclosure.
        Question. The Spring Audit Policy Update states that approximately
    470 entities at more than 1,800 facilities disclosed violations under
    the Audit Policy. What percentage of the total number of entities or
    facilities committing violations in the same period do these numbers
    represent?
        Answer. EPA does not have access to records that would indicate the
    total number of violations that have occurred at all facilities over
    the past three years. Clearly, the audit policy disclosures are a small
    fraction of that total. As stated above, many violations are required
    to be monitored under specific requirements of regulations or permits
    and are not discovered through voluntary audits. These include, for
    example, violations of discharge limits at major facilities permitted
    under the Clean Water Act.
        Question. Why have less than one-third of disclosures made under
    the Audit Policy resulted in settlements?
        Answer. EPA has granted penalty relief for approximately half of
    the facilities covered by disclosures. The difference between the
    number of facilities disclosed and the number of facilities provided
    settlement may fall into one of several situations: (1) the disclosure
    has not yet been resolved through settlement; (2) the disclosure did
    not meet the conditions of the Audit Policy; (3) upon further analysis,
    EPA determined that a violation did not occur; or (4) the entity
    disclosed to EPA the identity of several facilities at the onset of a
    corporate-wide audit believing that the audit would reveal violations
    at all facilities, and upon conducting the audit discovered violations
    at some but not all of the facilities. EPA is taking steps to best
    manage the facilities in the first category. For example, EPA is making
    use of self-certification and unilateral letters of determination for
    certain types of cases, such as those involving fewer violations. EPA
    encourages the use of disclosure checklists by the disclosures so that
    the disclosure includes all of the information needed for EPA to
    determine policy applicability and resolve cases in a timely fashion.
    In addition, EPA now has a national audit policy coordinator to field
    questions from Regional offices and the regulated community, and is
    adapting its data systems to better track pertinent case information,
    both of which are changes that we expect will expedite processing in
    many cases.
        Question. Does the Agency believe the amount of environmental
    improvement which could be obtained through the elimination of all
    penalties outweigh the value of those penalties currently collected by
    the Agency under the current Audit Policy? How does the Agency measure
    this belief?
        Answer. The Audit Policy strikes a critical balance in EPA's
    enforcement program by rewarding parties who voluntarily and timely
    disclose and correct violations, while ensuring that no regulated
    entities gain an unfair business advantage by avoiding compliance with
    legal requirements. EPA believes that elimination of all penalties in
    Audit Policy cases would likely result in decreased environmental
    improvement by disrupting the balance that the Audit Policy strikes.
    Elimination of all penalties would provide a disincentive for entities
    to be proactive in environmental compliance and would provide financial
    incentives for those entities less diligent in environmental
    compliance.
                          enforcement accomplishments
        Question. Why did civil enforcement activity in the areas of
    administrative penalty order settlements, administrative non-penalty
    orders--cases concluded, EPA civil referrals to Department of Justice
    (DOJ) and civil judicial settlements all decrease from fiscal year 1997
    to fiscal year 1998?
        Answer. The Environmental Protection Agency's enforcement program
    experienced a slight decrease in traditional enforcement outputs
    between the 1997 and 1998 fiscal years, as measured by civil judicial
    referrals and settlements, and civil penalties collected. Inspections
    and administrative orders actually increased somewhat over that period.
        Overall, we do not believe that the small decrease in civil
    judicial activity between fiscal year 1997 and 1998 is particularly
    significant. To some extent, it reflects the cyclical nature of the
    case development process. For example, several large settlements
    totaling nearly $100 million in penalties were not entered until just
    after the 1998 fiscal year ended, and so were not reflected in last
    year's accounting.
        We believe that an increased emphasis on cases that offer the
    greatest environmental benefit could have some impact on the total
    number of referrals, as such actions are more complex and require more
    resources. The value of injunctive relief rose from $1.89 billion to
    $1.98 billion between 1997 and 1998, reflecting a trend toward
    development of more significant cases. Our settlement with
    manufacturers of heavy duty diesel engines will reduce emissions of
    nitrogen oxides by 1.3 million tons, or 6 percent of the total national
    inventory of NOX pollutants. We have attached a summary of
    the environmental results obtained through enforcement actions, which
    reflect our commitment to making progress in reducing actual pollutant
    loadings.
        Question. Why did major criminal enforcement outputs such as
    referrals, sentences and fines decrease from fiscal year 1997 to fiscal
    year 1998?
        Answer. The outputs for EPA's criminal enforcement efforts
    fluctuate somewhat from year to year based on the type and mix of cases
    being prosecuted by the Department of Justice (DOJ). Generally there
    has been a consistent trend in the growth of all outputs.
        A number of the criminal enforcement outputs increased slightly
    from fiscal year 1997 to fiscal year 1998, while others decreased. The
    number of defendants indicted during this period rose 8.7 percent from
    232 individual and 90 corporate defendants in fiscal year 1997 to 257
    individual and 93 corporate defendants in fiscal year 1998.
    Additionally, the number of criminal cases initiated in fiscal year
    1998 rose by 15.4 percent from 551 in fiscal year 1997 to 636 in fiscal
    year 1998.
        Two of the outputs referred to in the question are not under the
    direct control of EPA's criminal program. The Federal Judiciary
    determines what the individual sentences are to be and the amount of
    the fine in accordance with the Federal Sentencing Guidelines. The
    total amount of jail time defendants were sentenced to serve decreased
    11.7 percent from 195.8 years in fiscal year 1997 to 172.9 years in
    fiscal year 1998. Fines decreased from $169.3 million to $92.8 million.
    This is due primarily to the fact that the fiscal year 1997 total
    includes one fine for $75 million from a particularly egregious case
    where a barge carrying fuel oil sank off Puerto Rico fouling the
    beaches at the height of the tourist season.
        The number of criminal cases referred to DOJ decreased in fiscal
    year 1998 by 4.3 percent from 278 in fiscal year 1997 to 266 in fiscal
    year 1998. This decrease is attributable to a shift in emphasis to more
    complex, resource intensive investigations that require multiple agent
    involvement. As we continue to train more state and local environmental
    enforcement personnel, the EPA criminal program is concentrating on
    more complex inter-regional investigations. As a result there is an
    increase in the quality of cases and a decrease in the quantity of
    cases. State and local criminal investigators are handling the more
    routine and localized violations. The Criminal Investigation Division's
    Special Agents have been directed to place their emphasis on cases that
    involve both significant environmental harm and culpable conduct. Our
    expectation is that this level of referrals to DOJ will remain fairly
    constant into the future.
        Question. Is the Agency emphasizing more difficult, complex, multi-
    state actions which produce fewer outputs such as cases concluded or
    penalties achieved? Do these complex and multi-state actions produce
    greater environmental improvements than casework which might produce
    higher output totals?
        Answer. Traditionally, EPA has enforced the environmental laws by
    bringing actions against individual facilities for violations of a
    single statute. Over the past few years, the Agency has broadened its
    enforcement efforts to address non-compliance by single companies at
    their facilities in more than one state, under one or more of the
    environmental laws. Although these complex actions may produce fewer
    discrete cases, the environmental benefits and resource efficiencies
    gained greatly outweigh the results which could have been obtained by
    pursuing violations at each of these facilities individually. The total
    penalties achieved are appropriate to resolution of the violations
    alleged; however, the scale of these actions provide enhanced
    opportunities for agreements by companies to perform supplemental
    environmental projects, which tend to mitigate the final penalty number
    reported.
        In addition to increasing the environmental benefits gained, it
    should be noted that these multi-state cases also exemplify the
    uniquely effective role of federal enforcement. Single states do not
    have the resources or legal ability to address nationwide environmental
    violations in a systematic and coordinated way, or to fashion the
    national, comprehensive settlements now being achieved by the Agency.
        An example of the benefits attained through a multi-state approach,
    even for violations of just one statute, is the 1996 settlement with
    the Georgia Pacific Corporation for alleged failure to comply with the
    Clean Air Act regulations at 26 of the corporation's engineered wood
    products facilities. The company had ignored its legal responsibility
    to obtain permits and to report air emissions accurately, causing
    annual excess emissions of more than 5,000 tons of volatile organic
    compounds (``VOCs,'' the precursors to smog and ozone) into the
    environment. As a result of EPA's national enforcement action, Georgia
    Pacific paid $6 million in penalties, applied for the appropriate state
    air permits at 19 facilities, and installed state-of-the-art pollution
    control equipment--designed to reduce VOC emissions by about 90 percent
    --at 11 of the 26 facilities, mostly located in the Southeast. An
    additional total of $5.25 million was committed for supplemental
    environmental projects, including funding critical research on air
    pollution in the Southern Appalachians. Finally, the company agreed to
    perform comprehensive clean air audits at all 26 of its wood products
    facilities nationwide and monitor compliance limits on a daily basis.
        EPA has also obtained substantial benefits from complex, multimedia
    enforcement actions to address violations of two or more environmental
    statutes.
        On April 15, 1999, EPA filed in federal court the second, final
    phase of a national agreement with ASARCO, Inc., a national mining and
    smelting company. The first phase of this agreement was completed in
    January 1998. The entire settlement represents the first time that the
    federal government has entered into a consolidated agreement that
    resolves violations of different environmental statutes at more than
    one of a company's facilities. Texas and Arizona were co-plaintiffs in
    this agreement.
        This comprehensive approach to resolution of ASARCO's environmental
    liabilities protects public health and the environment by reducing the
    release of certain heavy metals, such as arsenic, mercury and lead,
    which can be toxic to both humans and wildlife. For example, the
    company has agreed to clean up the environmental impacts at its Montana
    operation that resulted from 100 years of smelting activities and to
    operate a subsidiary in Texas as a permitted, lawful recycling facility
    for metal plating and finishing wastes, one of only three in the
    nation. It also builds environmental safeguards for the future: A major
    and unique commitment by ASARCO in this historic agreement is the
    establishment of a five-year environmental management and compliance
    auditing program involving 6,000 employees at its 32 operating
    facilities nationwide.
        Only a complex, consolidated approach to resolution of a company's
    environmental liabilities will create sufficient opportunity to obtain
    corporate-wide improvements and nation-wide environmental protections.
    NESS also allows the Agency to use its limited enforcement resources
    more efficiently in a manner that complements, but does not duplicate,
    the enforcement agendas of state governments. For example, instead of
    numerous government agencies each taking separate actions under one
    environmental law against individual facilities of a national
    corporation, only a single action is initiated. The program reduces
    costs, improves performance, and provides the opportunity for
    partnering between state and federal government and industry.
        Another example is EPA's October 1, 1998, consent decree with
    Ashland, Inc. which resolves multimedia violations found at Ashland's
    three petroleum refineries, located in Kentucky, Minnesota, and Ohio.
    EPA alleged that Ashland had violated the CAA, CWA, RCRA, EPCRA, and
    TSCA. In addition to penalties Ashland will pay $14.9 million to
    perform supplemental environmental projects (``SEPs''). One SEP is an
    innovative project that will restore 274 acres of rare prairie grass
    ecosystem in Minnesota and donate the land to the State; this tract is
    the largest unprotected native prairie in the Twin Cities area.
        The corrective actions Ashland is undertaking includes improvements
    to the wastewater drainage system at its Ohio facility to prevent the
    release of volatile organic pollutants into the atmosphere, upgrades to
    the wastewater treatment system at the Kentucky plant to reduce the
    release of harmful chemicals into the Big Sandy River, and the
    installation of a series of wells to prevent the release of petroleum
    contaminants into the Mississippi River in Minnesota. Ashland is also
    required to reduce particulate releases and improve the recovery of
    sulphur dioxide at the Ohio refinery. Sulfur dioxide is an air
    pollutant that can affect human health, especially that of asthmatics,
    harm vegetation and aquatic life by acidifying lakes and streams. The
    company will also undertake air monitoring and analysis in the Tri-
    State area of Kentucky, Ohio, and West Virginia.
        Question. In fiscal year 1998, EPA enforcement actions required
    chemical or pollutant reductions or eliminations in almost a third of
    all cases. This is well below the fiscal year 2000 performance goal of
    75 percent of enforcement actions requiring environmental or human
    health improvements. How does the Agency intend to pursue more cases
    which require environmental improvements and less cases which do not
    produce improvements but may concern paperwork or record keeping
    requirements?
        Answer. EPA is working hard to improve its selection of enforcement
    priorities and its specific targeting efforts to focus on those
    violations that present the greatest threats to human health and the
    environment. Our priorities for fiscal year 2000 and 2001, for example,
    which were developed in consultation with EPA program offices as well
    as states, focus on reducing nitrogen oxides and other criteria air
    pollutants from unpermitted operations, toxic air emissions, the
    illegal and unsafe handling of hazardous waste, and ``wet weather''
    flows of raw sewage and other contaminants from sewer collection
    systems. These priorities will lead to actions that result in
    significant environmental improvements; as noted above, our settlement
    with manufacturers of heavy duty diesel engines will reduce illegal
    nitrogen oxide emissions by 1.3 million tons.
        In the meantime, EPA must still take actions that serve to identify
    and avoid environmental or human health risks before they become much
    worse. For example, risk notification requirements under various
    environmental laws serve to warn emergency personnel of the presence of
    toxic materials at particular sites, and the absence of this
    information has resulted in injury or death to firefighting personnel.
    EPA is exploring how best to measure the value of actions that prevent
    accidents or other serious risks, as opposed to responding to events
    after pollution has already been released or residents near a facility
    have been forced to evacuate their homes. The Agency has been
    particularly successful in working with the regulated community to
    encourage voluntary disclosure and correction of violations in return
    for eliminating or greatly reducing penalties. For example, since
    January 1998, we have concluded settlements with 11 telecommunications
    companies, under the Audit Policy, that have led to correction of
    Emergency Planning and Community Right-to-Know Act (EPCRA) and/or Clean
    Water Act (CWA) Spill Prevention Control and Countermeasure (SPCC)
    Violations at more than 700 facilities.
                     reinventing environmental information
        Question. Provide the status as of Q2/fiscal year 1999 of each REI
    milestone for implementation of data standards and electronic reporting
    into the national systems including an identification of any milestones
    which the Agency has missed or expects to miss as of the Q2/fiscal year
    1999 and any actions, strategies or efforts to achieve missed
    milestones or avert missing of milestones the Agency expects to miss.
        Answer. Although some interim milestones have been revised as the
    work dictates, the data standards development program is on schedule to
    be completed by February 2001. Based upon our current work, we are
    hopeful that we may in fact beat this date by some months.
    Implementation of data standards and electronic reporting in EPA
    information systems is on schedule to meet the REI Action Plan date of
    Quarter 2, fiscal year 2003.

    ------------------------------------------------------------------------
                                                       Status
    ------------------------------------------------------------------------
    Status of Data Standards:
        Date Standard.................  Final
        Industrial Classification.....  Final
        Facility Identification.......  Interim
        Latitude/Longitude............  Interim
        Chemical Identification.......  Interim
        Biological Identification.....  Interim
        Electronic Reporting Standards  Draft standards for all systems
                                         (scheduled 12/31/99)
    ------------------------------------------------------------------------

        Question. Describe by Goal, Objective, Sub-Objective, Key Program,
    Office, and Activity, the level of resources including dollars and FTE
    assigned or loaned to REI efforts in fiscal year 1998, proposed in the
    fiscal year 1999 President's Budget, included in the fiscal year 1999
    Operating Plan, spent in fiscal year 1999 to date, and proposed in the
    fiscal year 2000 President's Budget.
        Answer. See the attached table.
        [GRAPHIC] [TIFF OMITTED] T05AP29.025

        Question. Identify and describe the GPRA or Agency performance
    measures in fiscal year 1999 and fiscal year 2000 which incorporate REI
    commitments.
        Answer. There are two Agency performance measures in fiscal year
    1999 and fiscal year 2000 which incorporate REI commitments: the One
    Stop Program and Facility ID.

    ------------------------------------------------------------------------
                                    Fiscal year 1999      Fiscal year 2000
               Measure                 commitment            commitment
    ------------------------------------------------------------------------
    One Stop Program............  By 1999, the Agency   By 2000, the Agency
                                   will streamline and   will streamline and
                                   improve the           improve the
                                   information           information
                                   reporting process     reporting process
                                   between state         between state
                                   partners and EPA by   partners and EPA by
                                   increasing the        increasing the
                                   number of             number of
                                   participants in the   participants in the
                                   One Stop program to   One Stop program
                                   29 states.            from 29 to 38
                                                         states.
    Facility ID.................  By 1999, establish a  By 2000, increase
                                   National Facility     Facility ID file
                                   ID file with          accuracy by
                                   accurate              establishing a
                                   information for       National Facility
                                   30,000 facilities     ID file with
                                   that report to the    accurate
                                   TRI.                  information for
                                                         100,000 facilities.
    ------------------------------------------------------------------------

          small business regulatory enforcement fairness act (sbrefa)
        Question. With the ongoing dismantling of the Office of Policy and
    the potential for that office to lose its Presidential appointee, what
    plans does EPA have for the group which conducts Agency SBREFA
    activities including the panel process? Will EPA ensure that this
    activity is afforded the resources and attention necessary to
    successfully perform its function?
        Answer. To date, no final decision concerning the Office of Policy
    has been made. EPA is proud of its record of outreach to small entities
    subject to environmental regulation. Along with SBA and OMB, the Agency
    has completed 15 Small Business Advocacy Review Panels, and the Agency
    has been fairly recognized for the energy and care we have devoted to
    our responsibilities under SBREFA. Because not only the public
    interest, but also the specific work of the Agency, benefits
    conspicuously by the inclusion of small entities in our policy
    decisions, we are strongly committed to maintaining the set of
    services. EPA will continue to devote the attention and resources
    appropriate to an excellent job of including small entities in the
    regulatory decisions that affect them.
                                   project xl
        Question. As of April 30, 1999, how many Final Project Agreements
    (FPA) has EPA implemented?
        Answer. As of April 30, 1999, EPA had 11 FPAs in implementation and
    12 proposals in the final stages of development (when the details of
    FPAs are hammered out). The Agency and its state partners are also in
    the process of reviewing and giving serious consideration to 18
    additional proposals. In addition, we are working with potential
    project sponsors on developing written proposals for another 19
    promising project suggestions and are holding initial discussions with
    sponsors on 20 more ideas.
        Question. As of April 30, 1999, what is the total amount of dollars
    spent by EPA on contracts to solicit, find, encourage or obtain Project
    XL participants?
        Answer. At the end of 1997, EPA took stock and found that most XL
    project proposals had been submitted to the Agency by companies. In
    order to identify a wider variety of XL project sponsors and ideas,
    particularly in areas where the Agency wanted to see innovative
    thinking occur (such as environmental technology, source reduction, and
    product life cycle), EPA issued two Requests for Proposals, one in
    Headquarters and one in Region I in Boston. The objective was to select
    three or four outside organizations which could work effectively as co-
    sponsors, coordinators, or facilitators and help create the wider
    variety of projects EPA was seeking. In Headquarters, we selected 3
    organizations to help us achieve that objective: (1) the Denver
    Research Group in collaboration with the National Conference of Black
    Mayors, which proposed to develop an Environmental Management System
    for businesses in the Greater St. Louis Metropolitan region; (2) ML
    Strategies, working with the Santa Fe Council on Environmental
    Excellence, which proposed to bring ideas developed by a consortium of
    New England universities to fruition, involving improved ways to manage
    wastes from thousands of small research laboratories; and (3) the
    Minnesota Center for Environmental Advocacy, an environmental group,
    which proposed to work with the Mayo Clinic to reduce the hospital's
    toxic waste, especially mercury and dioxin. Region I selected The
    Conservation Law Foundation that proposed to identify and develop
    especially community-sponsored XL projects. The total amount spent on
    these four small purchase orders by April 30, 1999, was $195,050.
        The effort was successful in that the small contracts have
    resulted, so far, in one Final Project Agreement to be signed in June,
    several promising projects still under development, and one project
    that had been facilitated by the XL program, but did not need to be
    implemented under XL to be completed.
        EPA's regional office in Texas spent approximately another $7,000
    for contractor assistance in planning and facilitating the XL program
    share of a marketing workshop covering all of Region 6's reinvention
    programs. This effort resulted in one project currently being developed
    into a proposal. The combined efforts of the Office of Reinvention and
    the two regions to use contractor support to develop proposals amounts
    to $202,050.
        The Office of Reinvention in Headquarters spent an additional
    $55,000 for contractor support over the past two years to assist it
    with general XL marketing activities, such as writing and designing a
    marketing brochure, developing a database of potential project sponsors
    to be contacted, organizing a meeting with consulting firms that might
    be interested in Project XL, writing fact sheets, and assisting with
    large mailings.
        In summary, the total amount of dollars spent by EPA on contracts
    by April 30, 1999, to solicit, find, encourage or obtain Project XL
    participants was $257,050.
        Question. Of the FPAs EPA is currently implementing, how many
    originated through assistance from a contractor?
        Answer. All of EPA's XL projects in implementation originated
    before EPA started to use contractor support for developing proposals.
    However, EPA is expecting to sign a Final Project Agreement in June for
    the New England Labs project that was developed through one of our
    small purchase order contracts, and several more are in the pipeline.
                                 npdes backlog
        Question. EPA has declared the backlog in the National Pollutant
    Discharge Elimination System (NPDES) program a material weakness. In
    Region 10, for example, there were 1,000 NPDES permit applications
    waiting to be processed of which 70 percent were over 4 years old. Why
    do we have this backlog?
        Answer. EPA estimates that approximately 28 percent of major NPDES
    permits and between 28 and 47 percent of minor NPDES permits are
    currently expired. Of these, approximately 3.7 percent of majors, and
    between 16 and 34 percent of minors, have been expired for more than 5
    years. As noted, EPA Region 10 has a higher than average backlog rate;
    approximately 60 percent of majors, and 72 percent of minors.
        A number of reasons have been identified for the existence and
    persistence of permit backlog. Among them are the: expanding universe
    of facilities requiring NPDES permit coverage, e.g., the addition of
    Concentrated Animal Feeding Operations (CAFOs) and Storm Water to the
    NPDES program; the increasing complexity of the NPDES permitting
    program due to State adoption of numeric water quality standards, Total
    Maximum Daily Load (TMDL) requirements, and more complex industrial
    operations; increasing involvement (e.g., hearings, challenges,
    appeals) of outside parties in permit development and issuance slowing
    the overall process; and high staff turnover and training limitations
    at the State and Regional level. EPA is currently investigating the
    degree to which the above-cited reasons are impacting the program at
    various levels by examining permitting efficiencies and resource needs
    and gaps. Targeted efforts are also underway in several Regions and
    States to clean up incorrect permit expiration data, and to accelerate
    issuance of NPDES permits.
        Question. What is the potential impact to the environment of not
    eliminating the backlog?
        Answer. Environmental impacts occur when unacceptable levels of
    pollutants are discharged from an industrial or municipal facility.
    Such discharges may occur whether or not an NPDES permit has been
    issued, or whether the permit is current or expired (backlogged). The
    importance of the permit, however, is that it establishes the specific,
    enforceable pollutant discharge targets that must be achieved by the
    permittee to ensure that water quality is protected and that technology
    goals are achieved. If the permit is current and properly drafted, it
    should reflect all current and applicable water quality and technology
    goals. If the permittee complies with all of its permit conditions, the
    environment should be protected.
        If the current permit-holder has submitted a timely and complete
    permit application for renewal of its permit, and the permitting
    authority fails to issue a new permit prior to the expiration date, the
    expired permit will generally be ``administratively continued'',
    allowing the conditions and requirements to remain in effect until the
    new permit is issued. States and EPA remain able to take enforcement
    actions against violations of these ``administratively continued''
    permits. In many cases, EPA or the state would reissue the same permit
    levels, in which case, the backlog of these permits poses no threat to
    the environment. In other cases, a new or revised effluent guideline,
    water quality standard or TMDL would cause the permitting Agency to
    revise the permit levels. In these cases, the ``administratively
    continued'' permits are less protective of the environment.
        Question. Will the budget request allow EPA to eliminate the
    backlog? How much money would be required to eliminate the permit
    backlog in non-delegated States and in delegated States?
        Answer. Our budget request allows for a multi-pronged approach to
    eliminating backlog in delegated and non-delegated States, including
    direct permit issuance assistance to several Regions and States;
    broader use of tools developed in some Regions and States such as
    general permits, electronic ``permit wizard'' programs, and streamlined
    procedures to expedite issuance; and the development of strategies in
    partnership with States for eliminating backlog while maintaining high
    permit quality. As we implement these initiatives, we hope to
    significantly reduce the backlog and better assess better the
    sufficiency of available resources to eliminate the backlog. EPA does
    not currently have a complete picture of the resource needs at the
    State level, but will develop a better understanding through an ongoing
    resource gap analysis (to be completed Fall 1999) and by partnering
    with high backlog States to develop specific State strategies for
    eliminating backlog.
        Question. In the STAG account, the request included $115.6 million
    for State water quality management grants (CWA section 106) and $19
    million for water quality cooperative agreements (CWA section
    104(b)(3), the same levels provided in the fiscal year 1999
    appropriation. States use these grants to support a variety of CWA
    implementation activities, including permitting, standard setting,
    monitoring, and enforcement. How will EPA work with States to ensure
    that NPDES-delegated States use these resources to address their permit
    backlogs? How will EPA determine if States are devoting sufficient
    resources to this problem?
        Answer. EPA will be developing backlog reduction strategies in
    partnership with the States that will address State-specific needs,
    examine and pilot new approaches, examine inefficiencies in the
    existing process, and set fixed targets and goals for permit issuance
    while maintaining high permit quality. Working through the giant
    negotiation process, the Agency will work to ensure that the States are
    developing a level of resources commensurate with their strategies and
    program targets and goals.
        Question. If permit backlogs are such a chronic problem, what new
    approaches is EPA looking at, such as the self-certification program
    the State of Massachusetts has piloted called Environmental Results
    Program?
        Answer. EPA realizes that the ever-expanding scope and complexity
    of the NPDES program has led to systemic resource shortfalls and
    backlogs in many States. Solutions may require bold experimentation and
    the widespread adoption, in certain cases, of new programs that have
    been successful in some States. EPA is examining a suite of
    innovations, including the increased use of electronic ``permit
    wizard'' programs, technical exchanges and fora between permit writers
    in various States, and the piloting of programs such as New York
    State's Environmental Benefits Permit Strategy (EBPS), which provides
    greater efficiency by separating and prioritizing administrative and
    technical permit issuance tasks.
        Question. How will the new NPDES permit requirements for animal
    feeding operations impact the backlog?
        Answer. Over the past 25 years, the focus of the NPDES permit
    program has been the control of industrial and municipal point sources
    of pollution. To date, efforts have been directed mostly toward the
    more traditional point sources with discrete discharge outfalls.
    Sources such as concentrated animal feeding operations are not new to
    the NPDES program, but are point sources that have been within the
    scope of the NPDES program for many years. As the more traditional
    point sources have implemented appropriate controls, sources such as
    CAFOs have become sources from which controls would yield the greatest
    environmental benefit. As EPA and States identify and address these
    types of sources, the universe of facilities required to be covered
    under an NPDES permit will continue to expand. It is likely, however,
    that permitting authorities will choose to permit most concentrated
    animal feeding operations under general NPDES permits. Since general
    permits allow the coverage of large numbers of facilities under a
    single permit, the increase in administrative burden to the overall
    permit program will be lessened.
        Question. Please provide a breakout of the budget request for NPDES
    permitting for new permits versus updating existing permits.
        Answer. EPA estimates that approximately 1,300 existing major
    permits and 12,500 existing minor permits expire in an average calendar
    year. While no precise estimates on new individual permits are
    available, the Agency believes that these numbers are small (perhaps 20
    majors, and 500 minors) relative to existing permits. The NPDES budget
    request is intended to address all aspects of permitting, including new
    permits and re-issuance of expired permits. The budget request also
    supports Agency efforts to more accurately characterize the NPDES
    universe and to identify issues affecting the permit backlog. This
    includes providing assistance and guidance to States and Regions for
    management of Compliance data and develop backlog reduction strategies.
                               cwap: added funds
        Question. With respect to the Clean Water Action Plan, what
    assurances does EPA have that the added funds the agency is spending in
    the first year of the program are having their intended effect? What
    assurances can the agency provide that the public will get a good
    return on that investment and on the additional CWAP funds being sought
    for fiscal year 2000?
        Answer. The fiscal year 1999 funds added for CWAP were primarily
    for grants to states under Section 319 of the Clean Water Act ($95
    million incremental funds)--plus $20 million for section 106 state
    program management grants. The section 319 funds are being awarded on
    schedule, i.e., during the spring of 1999, for work that will take
    place later in 1999 and into 2000. Although the funds are just being
    awarded, we already have some assurances that the funds will be
    targeted at the highest priority needs. In making the incremental funds
    available to states, the CWAP envisioned targeting those funds to
    watersheds which the states and tribes identify as priorities for
    restoration, based on Unified Watershed Assessments (UWA's), which were
    to be prepared by the states and tribes. All of the states and many
    tribes now have completed their UWA's.
        Likewise we have asked the states to upgrade their section 319
    programs as a pre-requisite to receiving incremental funds in the
    future. We are already seeing many states and tribes upgrading their
    Section 319 programs to incorporate nine key elements which were
    identified in national guidance, which was developed in cooperation
    with the Association of State and Interstate Water Pollution Control
    Agencies (ASIWPCA). This upgrading of states' non-point source programs
    provides further assurance that CWAP funding is having and will
    continue to have the intended effect. Moreover, as we review states'
    non-point source program workplans, as well as project-specific and
    place-specific proposals for spending the incremental Section 319
    funds, we see these plans and projects clearly indicating that the
    funds will be used for the CWAP's intended purposes, i.e., for
    development and implementation of watershed restoration action
    strategies--with the inclusion of multiple agencies and other
    stakeholders in both the planning and implementation phases.
        EPA and other federal agencies have been working with tribal,
    state, and local partners to implement the more than 100 key actions in
    the CWAP. The first anniversary report highlights the progress made
    toward implementation of the Action Plan and outlines the agenda for
    future years. Accomplishments in the first year include the development
    of a national animal feeding operations strategy, development of a
    multi-year strategy for the development and implementation of nutrient
    criteria for specific waterbodies across the country, installation of
    EPA's Beach Watch Website that provides the first national listing of
    beach water quality monitoring information, and development of
    watershed priorities through Unified Watershed Assessments. In 2000 and
    future years, federal agencies will continue to monitor progress toward
    key actions and the four major objectives of the CWAP--improve
    information and citizens' right-to-know, address polluted runoff,
    enhance natural resources stewardship, and protect public health. The
    Agencies will also be developing comprehensive performance measures to
    measure the net results of CWAP in future years, taking into account
    the fact that it usually takes a few years to implement improvements
    and to see the water quality benefits of those improvements.
                    tmdl program: internal cost assessments
        Question. EPA has reportedly done some internal cost assessments of
    anticipated revisions to the TMDL program. What are the Agency's
    current cost estimates, in terms of impacts on states and the EPA? How
    will the cost of the TMDL program affect implementation of other core
    water quality activities? What state and EPA activities are being
    delayed or deferred as a result of current emphasis on TMDLs?
        Answer. The Administration is still developing proposed revisions
    to the regulations governing the TMDL program required by Section
    303(d) of the Clean Water Act. Part of this process involves estimating
    additional costs of complying with any revisions. A final determination
    on State costs has not been made.
        The regulatory proposals are based on the consensus recommendations
    of a Federal Advisory Committee for TMDLs. Four State Environmental
    Department Secretaries or Deputy Secretaries were members of this
    Committee and signed the final report presented to the Administrator in
    July 1998. We expect to propose changes to the TMDL program in late
    summer 1999; we expect final regulations sometime next year.
        EPA anticipates that the implementation of the current TMDL program
    can be borne by States and EPA with the support of the President's
    Budget proposal for fiscal year 2000, without either delaying or
    deferring other ongoing core water quality activities. The
    implementation of any final revised TMDL regulations will occur in
    later fiscal years. Working with the States, EPA has undertaken a water
    quality gap analysis project to examine the future funding that States
    need to effectively manage their water quality programs and will use
    that analysis to inform future budget requests.
                              tmdl: sound science
        Question. Stakeholders agree that sound scientific judgments are
    and will continue to be required for developing and implementing TMDLs.
    This includes scientific judgments as to the levels of pollutants that
    are safe for aquatic life in a waterway and calculation of the quantity
    of pollutants discharged that will not impair a waterway and how load
    limitations are allocated among sources. Yet many are concerned that
    needed technical and scientific information is inadequate. What
    resources is EPA devoting to assist states in this regard?
        Answer. Resources supplementing State TMDL efforts are found in
    state water pollution control grants under Clean Water Act Sec. 106, in
    Sec. 319 state nonpoint source grants, and in EPA's operating
    resources. Section 106 grants, for which the Agency has requested
    $115.5 million in 2000, support a wide range of water pollution control
    activities including permitting, water quality planning and standard
    setting, assessment and monitoring, and TMDL development and
    implementation. While EPA does not generally request (nor allocate to
    states, Tribes or interstate agencies) specific resource levels for the
    various eligible activities within the Sec. 106 budget, EPA's 1998
    request did include an increase to support TMDL activities. We continue
    to emphasize the importance of establishing and maintaining adequate
    TMDL programs from within available Sec. 106 resources. Beginning in
    1999, states are permitted to use up to 20 percent of their Sec. 319
    allocation to upgrade and refine their nonpoint source programs and
    assessments. A prominent example of potentially eligible Sec. 319
    activities is the development of TMDLs to help implement Watershed
    Restoration Action Strategies developed by states for high-priority
    watersheds. Aside from this direct state grant funding, EPA also
    requests resources to be used by EPA in direct and indirect support of
    states' TMDL efforts. At approximately $15 million in the 2000 request,
    these resources support technical assistance on specific TMDLs,
    training of state personnel, development of national guidance and
    policy, and backstopping state efforts as necessary to meet TMDL
    development deadlines.
        Question. How will EPA ensure the scientific soundness of TMDLs?
        Answer. EPA is devoting a significant portion of its ecological
    research program to better understanding the levels of pollutants that
    are safe for aquatic life in a waterway, quantifying pollutant
    discharges from non-point and atmospheric sources, developing
    mathematical models that accurately calculate safe pollutant loads from
    point, non-point, groundwater, and atmospheric sources of pollution,
    identifying effective means for restoring aquatic ecosystems to sound
    health, and monitoring actual progress toward that goal. Specific
    examples include the development of biocriteria (indicators for
    determining the health of aquatic ecosystems based on the species
    present in the water body), landscape ecology (using satellite imagery
    to assess the impact on land use and land cover on non-point source
    pollutants to surface waters), the Environmental Monitoring and
    Assessment Program (EMAP)which is developing monitoring methods in
    Eastern U.S. coastal waters and inland waters in the Western U.S., as
    well as the Coastal Monitoring program, which has the potential for
    providing baseline information for TMDL's in estuaries. In addition,
    the Multimedia Integrated Modeling System (MIMS) will be a next-
    generation modeling system that will link air, water, groundwater, and
    biological models in highly realistic configurations.
        More specifically, ORD is conducting near-term research on
    improving the scientific basis for setting TMDLs for sediment,
    nutrients, pathogenic organisms, and temperature. The results of this
    work will be incorporated into a nationally-applicable advanced
    problem-solving software framework that will permit easier use by the
    states, including automated links to land use, meteorological and
    aquatic organism effects data bases. This work is being conducted
    primarily in the Savannah River. Our scientists are also working
    directly with program offices to demonstrate cross-media TMDLs for
    mercury in Florida and Wisconsin. The completion of these regional
    demonstration models are anticipated within the next two years and the
    results will provide important feedback on our ability to apply these
    techniques nationwide.
        Finally, EPA's Science to Achieve Results (STAR) program is
    supporting TMDL development through it's Water and Watersheds
    partnership with NSF and USDA by soliciting research that will improve
    our understanding of watershed processes relevant to TMDLs and of
    analytical methods for determining how changes in the management of
    upland and riparian areas affect the quality of water bodies,
    especially with respect to mercury pollution, a widespread and growing
    pollution problem in more than half of the states.
        EPA insures the quality of all of it's scientific research through
    a rigorous process of peer review, both prior to initiating research
    efforts and of all research products. The STAR grants program relies on
    its competitive grants process to identify the very best researchers
    and research ideas.
                state grants: fiscal year 1999 funding increase
        Question. EPA officials have said that the fiscal year 1999 funding
    increases for state grants (especially $95 million additional for
    section 319 nonpoint pollution management grants) will be directed to
    projects in priority watersheds, as identified by states in watershed
    assessment reports prepared in 1998. However, because the time frame
    for preparing those assessments was very short from June to October 1,
    1998), there is some question about their quality and thoroughness.
    What procedures will EPA use to oversee distribution of grant funds to
    priority watersheds to ensure that funds are targeted to those with
    highest need of restoration.
        Answer. On December 4, 1998, EPA issued guidance on ``Funding the
    Development and Implementation of Watershed Restoration Action
    Strategies under Section 319 of the Clean Water Act.'' The primary
    purpose of this guidance is to clarify the requirement for application
    of incremental funds to priority watersheds (i.e., those for which
    watershed restoration action strategies are to be developed). The
    guidance calls for a clear indication in each Section 319 workplan of
    ``which grant activities will be implemented using the base funds and
    which projects will be supported by the incremental funds.'' Likewise,
    the guidance requires that ``subsequent reports (e.g., grantee
    performance reports or annual nonpoint source progress reports under
    Section 319(h)(11) should similarly clearly distinguish these
    activities.''
        We are also using the Section 319 Grants Tracking System (GRTS),
    where states input detailed information about Section 319 grants, to
    include information specific to projects supported by the incremental
    funds. We are confident that the combination of extensive guidance,
    specific tracking, and continuing adherence by states to standard grant
    monitoring and reporting requirements will ensure the proper
    application of the incremental funds.
                               children's health
        Question. EPA is planning to fund eight research centers that will
    help communities to reduce threats to environmental health. Other than
    research, exactly what kinds of activities are being funded in the
    communities by these centers?
        Answer. EPA, NIEHS and CDC are supporting eight Centers for
    Children's Environmental Health and Disease Prevention Research, each
    of which will conduct multi-disciplinary basic and applied research in
    combination with community based prevention research projects designed
    to provide critical knowledge that will eventually help to decrease the
    prevalence, morbidity, and mortality of environmentally-related
    childhood diseases. All of the funded center projects are research
    activities. Five of the centers will research asthma; three will
    research health effects associated with pesticide exposure. A
    requirement for research funding for the centers is that each center
    support one project that develops, implements, and evaluates a
    community based intervention/prevention program. Community based
    prevention research studies are being designed with active community
    involvement and are primarily intended to develop and test the
    effectiveness and feasibility of various intervention strategies in
    reducing exposures to environmental contaminants that contribute to
    childhood illnesses. In fiscal year 2000, EPA will support an
    additional research center, which will research developmental
    disorders.
        The overall theme and nature of the community based prevention
    research activities for each of the eight established Centers are as
    follows:
    ASTHMA CENTERS:
        University of Iowa School of Medicine.--Theme: The Etiology and
    Pathogenesis of Airway Disease in Children from Rural Communities.
    Prevention Research Component (Rural Iowa communities): Multi-component
    Intervention Study of Asthma in Children from Rural Communities. The
    goal of this study is to develop, implement, and test a multi-component
    model for the prevention of asthma among rural children.
        University of Southern California.--Theme: Respiratory Disease and
    Prevention. Prevention Research Component (Los Angeles): Asthma In
    Children: A Community-based Intervention Project will determine whether
    a comprehensive health education program using IPM techniques for
    cockroach control will result in reduction of dust mites or cockroaches
    in children's homes and clinical improvements in asthma.
        Johns Hopkins University.--Theme: Asthmatic Child in the Urban
    Environment. Prevention Research Component (Baltimore, MD): Randomized,
    Controlled Trial of Home Exposure Control in Asthma will test the
    effectiveness of intervention methods to reduce hazardous exposures and
    their adverse health effects.
        University of Michigan School of Public Health.--Theme:
    Environmental influences on asthma in children. Prevention Research
    Component (Detroit, MI): aim is to test methodologies that reduce
    exposure of children to environmental contaminants in their homes and
    neighborhoods that trigger asthma, thereby improving asthma related
    health status and reducing asthma-related medical care utilization.
        Columbia School of Public Health.--Theme: Comprehensive community
    based assessment and reduction of environmental risks to infants and
    children. Prevention Research Component (South Bronx): Community-based
    intervention project will test: effectiveness of community education in
    raising awareness of environmental health risks and changing behaviors;
    effectiveness of maternal education in reducing exposure to secondhand
    smoke; effectiveness of household allergen reduction; and antioxidant
    dietary supplementation to reduce asthma-related biomarkers.
    PESTICIDE CENTERS:
        University of California at Berkeley.--Theme: Exposures and Health
    of Farm Worker Children in California. Prevention Research Component
    (Salinas Valley, Monterey County, CA): Initiate and evaluate the impact
    of a ``Healthy Home'' intervention on the reduction of pesticide
    exposure to children.
        Mount Sinai Medical Center.--Theme: Environmental Toxicants and
    Neuro-developmental Impairment in Inner City Children. Prevention
    Research Component (East Harlem): The goal of the prevention research
    component--Growing Up Healthy in Harlem--is to test methodologies that
    reduce exposures of inner-city children and their families to
    pesticides in city housing through the technique of Integrated Pest
    Management (IPM) and reduce exposure to PBS through dietary
    modification.
        University of Washington School of Public Health and Community
    Medicine.--Theme: Understanding the biochemical, molecular, and
    exposure mechanisms that define children's susceptibility to pesticides
    and the implications for assessing pesticide risks to normal
    development and learning. Prevention Research Component (Yakima Valley,
    WA): Reducing Take-home Pesticide Exposures in Children of Farm Workers
        Question. What statutory authority has EPA identified for this
    overall [children's health] initiative? What authority do you cite for
    the activities related to the control of asthma?
        Answer. EPA's Office of Children's Health Protection was
    established in 1997 in response to Executive Order 13045, which
    mandates that Executive Branch departments and agencies make children's
    environmental health and safety a priority. The role of the office is
    to promote and coordinate a variety of cross-media activities related
    to children's environmental health that are carried out by numerous EPA
    offices implementing many environmental statutes, which are identified
    below. Through the office, the Agency also has ongoing efforts to
    coordinate children's environmental health and safety activities with
    other Federal departments and agencies. Specific activities may be
    authorized by one or more of these statutes. The primary authorities
    for asthma related activities are specifically identified.
      --Radon Gas & Indoor Air Quality Research Act (asthma)
      --Clean Air Act, Section 103 (asthma)
      --Toxic Substances Control Act, Section 10 (asthma)
      --Federal Insecticide, Fungicide, and Rodenticide Act, Sec. 20
            (asthma)
      --Clean Water Act, Section 104
      --Food Quality Protection Act
      --Solid Waste Disposal Act, Section 8001
      --Safe Drinking Water Act, Section 1442
      --Pollution Prevention Act
      --National Environmental Education Act
        Question. Although there is some evidence that asthmatic symptoms
    are aggravated by air pollution, is there any scientific evidence that
    air pollutants, either criteria pollutants or hazardous air pollutants
    cause asthma?
        Answer. While exposure to outdoor air pollutants is not currently
    thought to be a cause of asthma, evidence indicates that exposure to
    air pollution is associated with exacerbation of asthma-related
    symptoms. For example, increases in ambient ozone concentrations have
    been associated with increases in hospital admissions for respiratory
    causes for individuals with asthma, worsening of symptoms, decrements
    in lung function, increase in lung inflammation, and increased
    medication use (EPA-452/R-96-007, June 1996). Epidemiological research
    has associated increased incidence of adult-onset asthma for those
    individuals who have had childhood asthma, living in communities with
    higher long-term ambient ozone concentrations. (McConnell et al., 1999)
    Community epidemiology studies have also indicated that ambient
    particulate matter levels can be associated with altered lung function
    and increased respiratory symptoms in asthmatic patients, as well as
    increases in hospital admissions for asthma. (Thurston et al., 1997;
    Schwartz et al., 1994) Evidence for decreased lung function has also
    been found in chamber studies of mild asthmatics with exposures to
    environmental tobacco smoke. In addition, exposures to particulate
    matter or ozone have been shown to have a ``priming'' effect for
    responsiveness to allergens, with the pollutant exposure leading to
    heightened responses to allergens among allergic asthmatics (Koenig, et
    al., 1988; Kreit, et al., 1989).
        House dust mites, cockroaches, mold and animal dander have been
    identified as the principal indoor allergens that trigger asthma
    symptoms. Reducing exposure to these allergens has been shown not only
    to reduce asthma symptoms and the need for medication, but also to
    improve lung function. Environmental tobacco smoke (also called
    secondhand smoke) is an important irritant that can trigger an asthma
    episode and possibly potentiate the effects of allergens.
        Question. Does EPA plan to develop or distribute already developed
    educational material on asthma before NAS completes its study of the
    relationship between various environmental pollutants and asthma?
        Answer. An asthma attack is one of several health endpoints that
    have been associated over the past several years with indoor air
    contaminants, including secondhand smoke and allergens such as dust
    mites, cockroach allergen, animal (i.e., pet) dander, and mold. There
    is consensus within the scientific community that reducing exposure to
    secondhand smoke and allergens should reduce the frequency and severity
    of respiratory illnesses in children, including but not limited to
    asthma. The National Asthma Education and Prevention Program (NAEPP)
    Expert Panel 2 Report (NIH Publication No. 97-4051, July 1997)
    specifically recommends avoidance of secondhand smoke and other
    allergens. Information developed by EPA and many other sources to help
    people make informed, voluntary decisions to reduce their children's
    (and their own) exposure to these and other contaminants is widely
    available and being widely disseminated through many different
    channels, including government, non-profit and industry networks.
        The report is a follow-on study to a 1993 Institute of Medicine of
    the National Academy of Sciences (IOM/NAS) report on Indoor Allergens
    that helped to focus attention on the links between the growing problem
    of asthma and indoor air pollution. The study now being conducted by
    the NAS addresses only indoor pollutants rather than all environmental
    contaminants, and is scheduled to be completed in the Fall of 1999.
        The NAS report is expected to help to consolidate an extensive body
    of already published scientific literature into a concise summary of
    what is, and is not, currently known about the role that indoor
    pollutants play in the induction and exacerbation of asthma. The report
    will include less studied contaminants such as pesticides, particles,
    nitrous oxides and other chemicals and irritants. While the report is
    expected to help further refine existing guidance and information on
    effective prevention strategies and identify critical information gaps,
    there currently exists a consensus among the scientific community that
    disseminating exposure reduction information will help protect children
    as well as adults from indoor contaminants.
                  clean air partnership fund: grants to cities
        Question. EPA is requesting $200 million for a new Clean Air
    Partnership Fund for grants to cities, states and tribes together with
    the private sector to demonstrate ways to reduce air pollution. How did
    EPA establish $200 million as the amount requested for the fund?
        Answer. EPA is requesting $200 million in fiscal year 2000 for the
    Clean Air Partnership Fund based on years of discussions with potential
    grants recipients concerning the air quality improvement challenges
    they face. The $200 million request will provide a significant new
    source of support for innovative, integrated air quality improvement
    demonstrations that currently are not being implemented.
                        office of information management
        Question. EPA has decided to create an office of information
    management, which is to be operational by the end of summer. Will this
    office have the authority including purse-string controls to compel
    other EPA offices to follow through on the policies and procedures it
    sets forth on disseminating EPA data? How will EPA overcome potential
    resistance to centralized policies, after 30 years of free reign for
    the individual program offices of data systems?
        Answer. In October 1998, The Administrator made the decision to
    create a new information office as the result of recommendations made
    by an Agency-wide task force of senior managers representing both
    national programs and Regions. In making this decision, she accepted
    the position of the task force that the Agency and its stakeholders
    would benefit from more centralized responsibility for its information
    policy and activities. This broad internal consensus has enabled the
    Agency to move quickly to create a new organization that pulls the
    information life cycle into one place with a customer focus. It will
    provide a single, coherent, and coordinated strategy for information
    collection, management, use, and dissemination. It will have authority
    to review major investments in data collection and information
    technology and to develop and implement policy on key information
    issues such as data dissemination.
        To better assure commitment to, understanding of, and compliance
    with the Agency-wide information policies that the Office will develop,
    the Deputy Administrator has been meeting regularly with Agency senior
    managers to develop a means by which the National Program Manager for
    information can meet directly with the senior leadership of the Agency
    on a continuing basis. This mechanism, while still being refined, will
    create a council of Assistant and Regional Administrator level leaders,
    staffed by the new information office, that will provide a forum to
    discuss and resolve information policy issues, develop effective
    strategies for policy implementation, and review progress in key areas.
             office of information management: implementation plan
        Question. EPA has not yet developed an information plan to show how
    the agency intends to achieve its visions and goals--even while the new
    office is supposed to be in operation in a few months. EPA has
    indicated it will have a plan at the end of September, after the office
    is operational. Shouldn't you have this plan in place before setting up
    the office? Will the plan lay out the EPA's information management
    priorities, and the resources needed to accomplish them? Can you tell
    us now what the priorities of the office will be?
        Answer. The new information office will provide leadership to
    develop an information plan (technically referred to as an information
    architecture) for the information and information technology to support
    EPA's mission. Developing this type of plan at an Agency-wide level is
    a relatively new approach to information management across government
    and is very complex, but the value is clear: this planning approach
    provides a better mechanism to effectively and efficiently plan our
    information and technology investments on a multi-year basis. We will
    identify and coordinate information needs, with anticipated burden
    reduction for existing requirements, coordinate technology investments,
    and improve public access to and ability to use information from
    multiple sources.
        As a first step in this effort, EPA will develop a high-level plan
    to define the information needed to support our public access mission.
    We will build upon the current work in identifying emerging information
    needs and opportunities for burden reduction to determine both priority
    information needs for public information and critical data needs for
    implementing EPA's programs. This approach will be coordinated with
    improvements in the Agency Strategic Plan and work on core performance
    measures under the National Environmental Performance Partnerships
    program. EPA will combine the results with other architecture planning
    processes across our other mission areas as the new organization builds
    this capacity. We will then be in a position to identify high and low
    priority needs, opportunities to increase effectiveness and lower
    costs, make plans on a multi-year basis to acquire needed information
    and technology, and phase out unneeded or outdated information and
    technology.
        Developing the Information Plan will involve many parts of the
    Agency not just the new Information Office. We will also work closely
    with our State partners and with all of our information customers to
    ensure that the Information Plan is something the Agency can and will
    use to improve our information practices to improve our service
    internally and externally. While the Plan will not be completed before
    the new Information Office is fully operational, its development will
    be one of the highest priorities of the new office. The Agency does not
    believe that the plan need be fully developed in order for the new
    office to begin its critical work. Indeed, the ability of the Agency to
    work through a single office to address all aspects of information
    collection, management and dissemination will help us develop an
    Information Plan that is of high quality and utility.
        As we develop the Plan, we will be able to do an increasingly
    better job of setting information priorities that reflect an Agency-
    wide perspective, rather than a stovepipe, program-by-program
    perspective. We will also be working to identify the resources needed
    to accomplish those priorities.
        In addition to developing an Information Plan, we have identified
    several important top-level goals for the new Information Office. These
    goals are:
        Integrate information.--Increase the effectiveness of environmental
    information by better integrating and coordinating the information
    collected, its management, and its synthesis into products for
    decision-makers and the public.
        Strengthen information partnerships.--Increase the extent and
    effectiveness of information partnerships, including leveraging
    information technology investments, to meet the needs of our varied
    information managers and customers. This starts with States and tribes,
    and extends to other federal, local, international agencies, and
    private organizations.
        Enhance information quality.--Increase the value of environmental
    information for all stakeholders by seeking customer feedback and
    systematically improving its usability, clarity, accuracy and
    reliability. This includes development of compatible data standards and
    ensuring that quality is known and appropriate for intended uses.
        Foster information-based decision-making.--Evaluate data and
    communicate its utility to improve environmental decision-making.
    Generate new trend and outcome information that promotes adaptive and
    forward-looking environmental management by decision-makers at all
    levels.
        Reduce burden.--Increase the efficiency of information collection
    by reducing unnecessary EPA, State, and stakeholder cost and burden of
    collecting and using information
        Strengthen EPA's information infrastructure.--Increase the
    efficiency, effectiveness and coherence of the information
    infrastructure. This involves strategic investment in technology,
    increasing the reliability (Y2K) and integration of installed
    technology, and enhancing information security.
        Expand American's right to know about their environment.--Enable
    easy access to a wealth of information about the state of their local
    environment to expand citizen understanding and involvement and give
    people tools to protect their families and their communities as they
    see fit. Increased information transparency among scientists, public
    health officials, businesses, citizens, and all levels of government
    will foster greater knowledge about the environment and what can be
    done to protect it.
      office of information management: reporting burden reduction and rei
        Question. Among the many issues this office will address is
    reporting burden. Reducing the burden of reporting redundant or
    unnecessary information is important not only to the regulated
    community but also to regulators. What goals have been set for easing
    the reporting burden, especially for small businesses?
        Answer. EPA seeks reporting burden reductions from three categories
    of respondents: (1) state partners reporting information to EPA, (2)
    regulated entities who report information to the Agency and the states,
    and (3) users of information provided by EPA. While efforts to reduce
    reporting obligations continue at the program level, we hope to
    identify larger burden reduction opportunities through implementation
    of the REI data standards and electronic reporting.
        In addition, EPA and the states intend to critically examine the
    data needed for programmatic and public access purposes. EPA is
    creating an automated capability to portray the full range of EPA
    reporting requirements. With this, EPA, the states, and regulated
    entities can get a better picture of reporting obligations, and can
    look at this burden sector-by-sector to identify burden reduction
    opportunities.
        With respect to state reporting burden, EPA and its state partners
    are creating a process to explore burden reduction ideas on a state-by-
    state basis. We will make sure that reporting requirements yield high
    quality, needed information at the lowest possible costs. All of these
    efforts will pursue alternatives to current reporting approaches,
    including whole facility reporting.
        EPA has adopted the Paperwork Reduction Act goal of reducing
    paperwork burden by five percent each year, although in recent years
    reductions have been offset by increases due to implementation of the
    Toxic Release Inventory, other right-to-know programs, and by new
    statutory requirements. EPA does not have a separate burden reduction
    goal for small business but does place a high priority on reducing or
    minimizing burden on them. EPA has begun a dialogue with a group of
    small business representatives to explore additional opportunities for
    reducing reporting burden and to ensure that REI and other reporting
    initiatives are well aligned with small business needs.
                              rei: data standards
        Question. REI involves developing data standards, including a
    uniform identifier for a regulated facility. EPA has been trying to
    develop such a standard as far back as 1994. Why is it taking so long
    to develop this fundamental element for achieving the plan's stated
    data integration goal? What assurance can you give us that you will be
    able to meet the September 1999 target set for completing this and all
    other standards required by the plan?
        Answer. The REI Facility Identification data standard was approved
    as an interim data standard in February 1998. Since that time, EPA has
    been working with states to refine the standard to ensure that it meets
    all of EPA's stakeholders needs. The final standard is scheduled to be
    issued by September 30, 1999. Business rules for implementing the
    standard are being developed in conjunction with the states.
        This is a difficult data standard because it represents a
    fundamental change in the way EPA and the states conduct business. In
    addition to a standard facility identification number, the standard
    contains basic information about the facility such as name, address,
    locational information, and industrial classification. These data
    elements are defined, collected, and used differently by EPA programs
    and by each state. Reaching agreement of standard definitions and
    practices has required a long process of discussion and negotiation
    that is nearing completion.
        The REI program was designed to provide the resources and
    management attention to standards development to ensure that they will
    be completed. EPA expects to meet the three year REI milestone for
    standards development and five year milestone for implementation in EPA
    information systems. Although some interim milestones have slipped, the
    entire data standards program is on track to complete development by
    December 31, 1999, more than one year ahead of the schedule in the REI
    Action Plan. Two of the six standards are already final and the other
    four standards have been issued as interim.
                  data quality: error correction plan strategy
        Question. A year ago EPA committed to putting together a strategy
    to ensure data quality, including an error correction process which is
    well-defined, efficiency (sic) and transparent. [Fred Hansen memo of
    Apr. 29, 1998] This still has not been done. When will EPA have an
    error correction plan in place, and will EPA discontinue the practice
    of not checking the accuracy of data before putting it on the Internet?
    Will EPA begin taking responsibility for the quality of the data it
    puts out, rather than simply blaming the sources from which the data
    came?
        Answer. EPA's data quality strategy, which was developed in
    response to Fred Hanson's memo of April 29, 1999, includes a framework
    for an error correction process. On April 1, 1999, Peter Robertson,
    acting Deputy Administrator, wrote a memo accepting the strategy and
    restating the Agency's commitment to data quality. Responsibility for
    leadership on data quality rests with the new information office. The
    new information office, which is expected to be operational by
    September, 1999, will contain a quality staff and a quality board that
    will have overarching responsibilities for quality-related activities
    across the Agency. Implementation of an error correction process is a
    high priority for the new information office.
        EPA does check the quality of data for which it has direct
    responsibility before putting it on the Internet. For example, Toxic
    Release Inventory (TRI) data, which is submitted directly to EPA by
    facilities, is put through rigorous quality control before being
    released to the public.
                     data quality: stakeholders involvement
        Question. Will EPA begin involving stakeholders in discussions
    about plans to put information out, particularly for purposes other
    than that for which it was collected?
        Answer. EPA is already involving stakeholders in plans to develop
    new information. For example, EPA's Center for Environmental
    Information and Statistics and the EMPACT program have routinely
    consulted stakeholders about their information needs, access
    preferences and feedback on proposed information products (e.g., EPA
    web site, CEIS web site and EMPACT project reports and communications).
        In addition, EPA has committed to an Early Action Project for the
    new Information office which will address a number of issues relating
    to the development of new data and information products for release to
    the public.
        The Agency will soon begin to engage states, tribes and
    stakeholders on issues such as prior notification of new products,
    processes for involving state partners and stakeholders in product
    development, and provision of metadata and interpretive context.
                        data quality: states involvement
        Question. Given that much of EPA's data comes from the states, what
    specifically is being planned with the states to ensure that EPA's
    information management and data quality plans are workable.
        Answer. EPA is working with states through the Environmental
    Commissioners of States (ECOS). EPA is a partner with states on the
    ECOS Information Management Workgroup. The workgroup has developed a
    vision and operating principles and has chartered several teams to
    jointly deal with information management issues (e.g., facility
    identification). EPA will continue to work through ECOS and other
    mechanisms to ensure that information management and data quality plans
    are workable.
                 data quality: fiscal year 2000 budget request
        Question. Specific funding requests could not be identified in
    EPA's budget for data quality and security concerns. How much of EPA's
    fiscal year 2000 budget request specifically would go to ``data
    quality'' and ``information systems security''? What specifically is
    requested for fiscal year 2000 to address critical data gaps, and how
    does this compare to fiscal year 1999? What role will the new office
    play in identifying and prioritizing data
        Answer. In fiscal year 1999 approximately $175 thousand was used to
    address data gaps and in fiscal year 2000 approximately $250 thousand
    will be needed to continue and build on the work relating to data gaps
    in the new Information Collections Office. The fiscal year 2000 Office
    of Information Resources Management security budget is $1,481 thousand.
        The new Information Office will integrate various aspects of
    information management, policy and technology at EPA. Although the
    Agency's program offices will retain many of their information
    responsibilities, the new office will lead the creation of a
    coordinated and consistent policy and information framework. One area
    in which this coordinated and consistent policy function will apply is
    in the identification and prioritization of data gaps. A critical step
    in addressing data gaps is the development of an information plan which
    will serve as an architecture for the information and information
    technology necessary to support EPA's mission. In part, the information
    plan will determine both priority information needs for public
    information and critical data needs for implementing EPA's programs
    Working with the offices across the Agency, our state partners and all
    of our information stakeholders, the new Information Office will have
    the lead for developing the information plan. The information plan
    effort will build upon current work in identifying emerging information
    needs and opportunities for burden reduction.
         data quality: computer security centralized validation process
        Question. With respect to computer security concerns, when will EPA
    establish a centralized validation process to ensure required aspects
    of the information system security are properly planned for and
    documented throughout the Agency, as recommended by the Inspector
    General?
        Answer. In response to the Inspector General's recommendation to
    establish a centralized validation process, EPA agreed to require its
    Primary Organization Heads (Assistant Administrators, Regional
    Administrators, the Chief Financial Officer, the General Counsel, and
    the Inspector General) to certify their security planning activities
    annually to the Chief Information Officer. Primary Organization Heads
    certify that workable information security plans have been implemented.
    To make this decision, Primary Organization Heads rely on EPA's Senior
    Information Resource Management Officials (SIRMOs) to first approve in
    writing that each security plan adequately addresses the security
    controls required for the protection of the general support system or
    major application. Prior to approving security plans, SIRMOs are
    responsible for ensuring that independent reviews are conducted for
    each plan.
                    data quality: empact initiative funding
        Question. EPA has requested funding under EMPACT for a ``state of
    the art scientific information system'' that it identifies as currently
    in development (p. VII-6). Please explain this initiative and the
    specific funding request associated with it. Also, how much is being
    spent in this and prior fiscal years on this effort? Will additional
    funds be needed in the outyears?
        Answer. While EMPACT and work to develop a state-of-the-art
    scientific information system both are captured under the Agency's
    Empowerment Goal, the information system is not a part of the EMPACT
    program. The effort to develop a scientific information system resulted
    from a 1997 Office of Research and Development (ORD) commitment to
    improve the coordination of its science information management
    activities. The ORD publication, ``Strategic Plan for ORD: Information
    Management Component'', published in 1997, sketched out several
    management options that could be employed to achieve ORD's information
    management goals and objectives. Of these, ORD management selected the
    development of a Science Information Management Coordination Board
    (SIMCorB) as the preferred option. On the SIMCorB are representatives
    from each of ORD's research laboratories and centers.
        One of the first activities undertaken by SIMCorB was the
    development of an implementation plan that would modify EPA's research
    environment so that strategic information management (IM) goals would
    be met. Project plans were developed in four areas, one of which was
    development of a Science Information Management System (SIMS) to
    support Agency science activities.
        The Board evaluated existing IM activities and systems and
    determined that an existing IM effort, the Environmental Information
    Management System (EIMS) \1\, formed an appropriate foundation upon
    which to build the SIMS.
    ---------------------------------------------------------------------------
        \1\ EIMS stores and maintains descriptive information about
    documents, datasets, databases, models, images, web pages and
    multimedia products in a relational database. Descriptive information
    stored within EIMS is consistent with the Federal Geographic Data
    Committee (FGDC) metadata content standards for spatial data. EIMS is
    scheduled to become a node of the National Spatial Data Infrastructure
    (NSDI) during the summer of 1999.
    ---------------------------------------------------------------------------
        In fiscal year 2000, EIMS will begin its modification to become
    SIMS, with system augmentation continuing through 2003. Eventually,
    SIMS will be the foundation of the research electronic
    ``collaboratory''. Through SIMS, individual investigators located
    anywhere in the Agency's research laboratory system will be able to
    participate in all the activities of the science project life cycle
    (communication, planning, analysis, publication and archival) as if
    they were collocated.
        The following table reflects the four-year research and development
    investment in this activity under the Agency's Empowerment Goal.
    Figures represent estimates through the fiscal year 2000 President's
    Budget Request. We expect to provide outyear support for system
    augmentation under the base research program.

                              [Dollars in millions]
    ------------------------------------------------------------------------
                                                      Fiscal year
                                         -----------------------------------
                                            1997     1998     1999     2000
    ------------------------------------------------------------------------
    EPA/ORD.............................     $0.1     $0.4     $0.4     $0.4
    ------------------------------------------------------------------------

                             data quality: cerlcis
        Question. Beginning in 1990, concerns have been raised by the I.G.
    as to the quality of data contained in CERCLIS database. EPA staff
    still must verify the accuracy of data used for the mandated Superfund
    annual report because CERCLIS data still cannot be relied on. Why is it
    taking EPA so long to correct this problem?
        Answer. Earlier reviews by the OIG did indicate some data quality
    issues with the CERCLIS database, but their recent work in this area
    has documented considerable improvements. In 1990, the OIG issued an
    audit report ``CERCLIS Reporting'' and a subsequent follow-up report in
    March, 1992, ``Special Review on Follow-Up of CERCLIS Reporting and
    Post-Implementation'', which included numerous recommendations to
    improve the quality of data and reporting of information through the
    CERCLIS database. Through 1993, EPA took corrective actions which
    improved report program documentation, enhanced the CERCLIS report
    library central coordination effort to more effectively monitor the
    change control process, and established a third party testing team and
    new testing procedures.
        During the OIG's review last year of the fiscal year 1995-97
    Superfund Annual Reports to Congress (SARC), the OIG implied that
    numerous discussions between Headquarters and Regional staff were
    needed to verify the accuracy of CERCLIS data. This statement was also
    included in the OIG's January, 1998 response back to Dick Armey's
    August, 1998 request of the OIG's Top Ten Concerns at EPA. However, the
    OIG was not aware that the data used for the SARC originated from a
    frozen database for the specific year being reported. Although the
    SARC's are being issued late, the data sets included in the reports
    were unchanged from the frozen database of the reported year. The OIG
    subsequently understood this process, and issued their final report
    without any criticism of the quality of CERCLIS data. On the contrary,
    the OIG's final report praised EPA for having adequate controls over
    data entry procedures into the CERCLIS database. The OIG also cited
    their December, 1997 audit ``Superfund Construction Completion
    Reporting'', in which they stated ``that the source documentation
    supported 100 percent of the construction completion accomplishments,
    one of the Agency's main indicators of site progress. The information
    EPA reported was accurate, and Congress and the public can rely upon
    the information.''
        Question. What specifically is planned for fiscal year 2000?
        Answer. We will continue our ongoing data quality efforts on
    CERCLIS which consist of the following: supporting the designated data
    sponsors through national work group meetings, participating in the
    biweekly data quality conference calls, organizing national meetings
    with the Information Management Coordinators where data quality issues
    are identified and discussed, and enhancing the CERCLIS system with
    features that support data integrity, i.e., Smart Screens which help
    the user correctly identify the required data.
        Question. When can the concerns the I.G. has identified be
    resolved?
        Answer. The OIG's concerns have been resolved based on the OIG's
    final report which contained no criticism of the quality of CERCLIS
    data but rather praised EPA for having adequate controls over data
    entry procedures into the CERCLIS database. Through 1993, EPA took
    corrective actions which improved report program documentation,
    enhanced the CERCLIS report library central coordination effort to more
    effectively monitor the change control process, and established a third
    party testing team and new testing procedures.
                              data quality: rcris
        Question. In 1993 the I.G. reported that EPA's RCRIS system did not
    contain accurate and timely information. There continue to be problems,
    6 years later, as outlined in 3 1999 OIG reports. Since RCRIS data
    accuracy problems have been long recognized and RCRIS is an important
    information system, what is EPA doing to finally improve RCRIS?
        Answer. The Office of Solid Waste and Emergency Response (OSWER) is
    committed to using RCRIS as the sole source of data to monitor progress
    towards the GPRA goal of safe waste management for hazardous waste
    facilities. Working with the EPA Regional offices, we have initiated a
    series of efforts to improve both the data system and the data it
    contains. Significant improvements have already been made, and more are
    expected, in particular toward the end of 1999.
        Our first step, starting in 1998, was to have a team work with
    Regional contacts (the Regions in turn worked with the States) to
    establish and verify a GPRA baseline ``universe'' of operating permit
    and post-closure facilities in the RCRIS database. Our approach
    involved revisions to the data system parameters followed by two rounds
    of checking the data, and identifying and correcting discrepancies.
    These efforts resulted in a significant improvement in the quality of
    the RCRIS data showing what facilities are in the GPRA baseline
    universe.
        With the GPRA baseline defined, we are currently working with our
    Regional contacts to further refine a method to use RCRIS to accurately
    determine progress towards GPRA goals. Once these refinements are
    incorporated into RCRIS, the Agency will clean up the unit-specific
    data in RCRIS. Correcting the unit-specific data is a significant
    undertaking which should result in a major improvement in overall data
    quality.
        RCRIS is also an accurate and up-to-date source of national
    information on Corrective Action activities and results. Over the last
    two years the accuracy of Corrective Action information has been
    materially improved by focusing our maintenance efforts on a few key
    areas and ensuring that implementers get feedback on the quality their
    data.
        Tim Fields, Acting Assistant Administrator for OSWER, recently
    issued a memorandum to the Regional Administrators entitled ``Improving
    the Accuracy of RCRA Corrective Action Program Data'' (2/11/99). This
    major effort is largely completed and significant improvements in the
    RCRIS data can be seen currently. Since a significant amount of the
    RCRIS corrective action data is implemented by States, prior to issuing
    the memorandum a meeting was held in cooperation with Association of
    State and Territorial Solid Waste Management Officials (ASTSWMO) to
    include all States with significant influences on national RCRIS data
    quality and have them participate in the collective effort to improve
    the quality of RCRIS data. Additionally, to focus and increase the
    effectiveness of the RCRIS cleanup efforts the corrective action
    program identified a limited number of key program activities
    (Environmental Indicators and other key program milestones) that need
    to be cleaned up and maintained through time.
        Our Environmental Indicator (EI) codes (our sole measures for GPRA)
    are relatively new and are constantly being used to illustrate the
    progress in specific Regions and States. Over the last year graphical
    charts which directly compare Regional and State EI results to their
    neighbors have been made available to Regional and State regulators.
    These graphs have significantly increased the recognition of the
    importance of having accurate national data and have resulted in
    significant improvement in, and increase of, RCRIS EI data. We are
    planning increased public access and awareness of corrective action EI
    progress through the use of Regional/State maps showing facility
    locations that are linked to RCRIS records showing EI status. The
    corrective action Program is using only national RCRIS data for annual
    planning, and for giving credit for accomplishments. This approach
    helps ensure the accuracy of the national RCRIS data.
        In addition, modernization of current systems is underway to make
    data more directly accessible to program personnel via the Internet.
    Key management reports are already available to EPA and States now, and
    additional features are in development with implementation to be
    completed by May of 2000.
        Finally, OSWER in conjunction with other EPA offices, is working
    with States to assess future information needs through the Waste
    Information Needs initiative (WIN). This is a multi-year process to
    evaluate stakeholder requirements and ensure senior management
    direction for future investment in new technology and prioritization
    for data collection and quality.
        The Office of Enforcement and Compliance Assurance (OECA) is
    nearing completion of Quality Management Plans (QMPs) for the
    compliance and enforcement data contained in RCRIS. The QMP will
    consist of: Data Quality Objectives (DQOs), that identify the level of
    quality needed to support OECA decisions; a Quality Assurance Project
    Plan, which ensures that data meets the standards set by the DQOs;
    Standard Operating Procedures for collection and quality assurance of
    the data used to support OECA decisions; and a Baseline Data Audit, to
    be used as a baseline from which we will measure progress toward
    improved data quality.
        OECA is proposing to embark on a multiyear modernization effort to
    integrate core compliance and enforcement data from each media program,
    into a single data system. This effort, which is contingent upon
    receiving Agency funding, would ensure that hazardous waste compliance
    and enforcement data is integrated with other media data on a common
    platform with as much definitional standardization as is practicable.
              data quality: state water quality assessment report
        Question. Recently issued OIG reports and ongoing audits found that
    state water quality assessment reports were not complete, accurate and
    timely. The state reports are entered into EPA's STORET database, which
    is the basis for the national report on water quality. What plans does
    EPA have to work with the states to address these problems.
        Answer. Many States enter into STORET the actual water quality data
    they use in developing the assessments they provide in their State
    305(b) reports. In developing the national report on water quality, we
    analyze and summarize the State assessments provided in their 305(b)
    reports rather than generate the national report from the STORET data
    base.
        EPA continues to work with the States on the quality and national
    consistency of their 305(b) reports. For the first time, in 1998, all
    50 States submitted 305(b) reports. Both EPA and the States recognize
    the continuing need both to improve the quality of the assessments and
    to increase the number of actual waterbodies monitored over time.
    Working with the States, EPA issued new 305(b) guidance in 1997 that
    should help improve both the State 305(b) reports and the national
    summary report generated from the State reports. Improvements will
    include more comprehensive coverage of waters and georeferencing of
    305(b) information to identify and map specific waterbodies, including
    whether they meet water quality standards, and to enable long-term
    tracking of trends. As it usually takes at least one full reporting
    cycle for the States to incorporate new guidance into their operations,
    we hope to see improvements starting with the year 2000 State and
    national summary 305(b) reports. EPA will continue to work with the
    States on the implementation of this new guidance.
        In the fiscal year 2000 President's Budget, EPA continues its $20
    million investment in Section 106 Grants so that states and tribes have
    more resources available for monitoring activities to reduce point and
    nonpoint source pollution, including permit issuance for CAFOs and
    assessment improvements.
                         data quality: grant management
        Question. Numerous IG reports, Congressional hearings, and your own
    annual certification to the President under the Federal Managers'
    Financial Integrity Act have identified serious grants management
    problems at EPA. While the agency plans next year to work on closing
    out the backlog of thousands of inactive grants, EPA has yet to change
    the way its grant officers do business. What steps are you taking to
    change the way EPA personnel do business and prevent further
    mismanagement of grants funds? What incentives do EPA staff have to
    ensure that grant agreements are followed? Are additional incentives
    needed, and is so, what form would they take?
        Answer. The Agency has taken a number of significant actions to
    ensure proper management of grants. The Agency has implemented a policy
    which requires employees to be trained and certified before serving as
    a Project Officer for an assistance agreement. The Agency has trained
    over 4,000 employees over the past five years.
        The Agency has strengthened the training provided to program office
    staff; placing greater emphasis on post award management in the
    Agency's Assistance Project Officer Training Course. In addition, EPA
    has developed and is conducting a refresher course which addresses new
    grants management issues and provides information on our website and
    automation tools.
        The Agency has developed several policies for grants management and
    program office staff to strengthen grants management. For example, the
    Agency issued a closeout policy to address non-construction grant
    backlog and to eliminate future backlogs. This policy requires each
    Grants Management Office to identify specific impediments to grant
    closeout and develop an annual plan to address these barriers.
        Also, the Agency has issued post award management policies for the
    Grants Management Offices and headquarters and regional program offices
    to clearly define performance expectations, accountability, and
    guidelines for post award management. The policies also require the
    development and implementation of post award management plans that
    addresses the unique requirements of each organization.
        Various post award monitoring activities of grant recipients
    continue to be conducted. Monitoring activities include baseline
    monitoring (day-to-day monitoring activities under all grants); on-site
    evaluative visits (evaluation of specific grants and grantee financial,
    procurement, systems); on-site technical assistance; technical
    assistance conferences and workshops (Agency Outreach); and desk
    reviews. Also, on a biennial basis the Agency conducts Management
    Effectiveness Reviews (MERs). All regional and headquarters program
    offices conducted a self-assessment review of their assistance
    activities to identify potential vulnerabilities and areas for
    improvement. The first MER occurred in 1997, and Offices and Regions
    are now conducting their 1999 MERs.
        The Agency continues to conduct management oversight reviews (MORs)
    of the Grants Management Offices to assess how they are managing their
    grant operations. As part of these reviews, the MOR review team will
    conduct an assessment of post award management and closeout plans.
        Information resources management and technology in the assistance
    area have been increased. All assistance-related policies have been
    placed on the Agency's Intranet. Grants management and program office
    staff may monitor grant expenditures on their projects electronically.
    The Agency may access the Single Audit Clearinghouse database at the
    Department of Commerce Bureau of Census. This electronic capability
    helps in the post award monitoring and management of grants.
        The original closeout backlog of non-construction grants has been
    reduced by 95 percent and EPA will eliminate the closeout backlog by
    the Congressional deadline of July 2000.
        Moreover, the Agency continues to work in partnership with the
    Inspector General to identify specific grant or grant program areas for
    audit where we have questions (e.g., grantee financial management
    systems, practices, or performance).
        Assistance agreements with our environmental partners are a
    critical component of meeting the Agency's public health and
    environmental goals and objectives. To demonstrate the importance of
    ensuring that grants are managed and fulfill our environmental mission,
    EPA has developed tools for both programs and staff. First, each
    Program and Regional Office has been asked to develop and implement
    post award management plans. These plans will be coordinated and
    assessed by the national program manager for grants. All programs and
    regions also conduct self assessments biannually to ensure that grants
    are effectively managed in their organization. Second, the Agency is
    working with staff (both program and grants) to ensure they have the
    training and tools to perform their jobs. Employees must be trained and
    certified before serving as project officers. In addition, EPA is
    developing automation tools such as the Integrated Grants Management
    System to reinvent and strengthen grants management. The Agency
    believes that this approach (better trained staff, stronger grants
    oversight, and automated systems) will advance the Agency's public
    health and environmental mission.
        Grants managers in the Agency will be working with the Office of
    Reinvention to identify additional incentives and opportunities for
    streamlining which will result in strengthened grants management.
                grants management: post award management policy
        Question. Each year EPA has reported in its Integrity Act report
    that is has extended by another year the date it hopes to correct the
    grants problems. And, the fiscal year 2000 Budget Request indicates EPA
    has yet to develop a policy addressing post-award management of grants
    even though the Agency committed to issuing this policy in 1997. What
    hasn't this been a higher priority?
        Answer. EPA has been working steadily over the last four years to
    strengthen grants management and has made considerable progress. One of
    the Agency's highest priority in addressing grants management issues
    was to develop and implement a policy that required training. Over the
    last five years, the Agency has trained over 4,000 project officers,
    and we recently developed a refresher course which addresses new grants
    management issues and provides information on websites and automation
    tools.
        The Agency has also developed new policies addressing closeouts and
    post award management for both the grants and program offices. In
    addition to developing new policies, the grants offices have initiated
    various oversight and assistance reviews with grantees.
        The Agency has made significant progress to eliminate the closeout
    backlog of non-construction grants. Overall, the Agency has eliminated
    approximately 95 percent of the original backlog of nearly 20,000 and
    is committed to eliminating the non-construction grants closeout
    backlog by July 2000 as announced by the Deputy Administrator at a July
    1996 Congressional Hearing.
        In addition to the focus on training, policies and procedures, and
    closeouts, the Agency has made a commitment to streamline and reinvent
    the grants process by developing and implementing a paperless,
    programmatic and administrative system, which fully automates the
    grants process. The Integrated Grants Management System will strengthen
    our relationships with our environmental partners, enhance our post
    award and closeout management, and improve the speed and user-
    friendliness of the grant process.
                     grants management: statutory authority
        Question. This past September, EPA's Inspector General found that
    EPA lacked statutory authority for 44 percent of the grants the IG
    reviewed. In one area, the IG found that EPA was awarding grants for
    economic development studies, environmental justice and technical
    assistance under a research provision of CERCLA. What is EPA doing to
    correct this major deficiency?
        Answer. In September 1998, the Office of Inspector General issued
    audit report E3AMF8-11-0008-8100209 entitled Statutory Authority for
    EPA Assistance Agreements. The OIG recommended that the Agency obtain
    clarifying authority to fund assistance agreement activities questioned
    in the audit. The Agency has received clarifying authority in the
    fiscal year 1999 Appropriation for Federal Insecticide, Fungicide, and
    Rodenticide Act (FIFRA) Section 23 which authorizes assistance to
    States and Indian Tribes for cooperation, aid, and training. The Agency
    has also requested clarification of FIFRA Section 20 (assistance for
    research and monitoring activities) and the Toxic Substances Control
    Act (TSCA) Section 10 (assistance for research, development,
    collection, dissemination, and utilization of data) in the fiscal year
    2000 President's request to Congress. The Agency is also requiring
    documentation in the decision memorandum which explains how the
    proposed workplan relates to the authorizing statute. The Agency has
    completed action on the OIG recommendations and the audit has been
    closed.
                             compliance assistance
        Question. EPA is requesting only $19 million for compliance
    assistance activities. This is a reduction of almost $5 million below
    the current level. While EPA professes to believe these programs are
    important--and despite that these programs have been very successful in
    helping small businesses comply with complex environmental
    regulations--they have been held at roughly $20 million for many years.
    According to your budget (p. IX-30), compliance assistance is being cut
    `` with the expectation that the states will assume a majority of this
    work in 2000.'' Wouldn't it be wasteful for 50 states to develop
    compliance tools for the same rules, and unrealistic to expect states
    or private entities to develop these tools when EPA is the interpreter
    of its own rules?
        Recent documents EPA has put out suggest EPA believes these
    programs are quite effective, and I understand EPA has taken some steps
    to quantify the effectiveness of these programs. Is this true, do you
    agree they are effective, and if so, why is EPA proposing to cut the
    programs?
        Answer. Rather than indicate a shift in program emphasis, the
    apparent decrease in resources requested in the fiscal year 2000 budget
    for compliance assistance reflects how our regional resources have
    actually been used between compliance assistance and enforcement.
    Results from a recent study of the compliance assistance and
    enforcement work done in the Regions prompted OECA to revisit the
    methodology used to estimate the regional resources dedicated to
    compliance assistance activities. We learned that our previous
    methodology identified more workyears providing compliance assistance
    than were actually doing this type of work. We intend to continue what
    we believe has been a strong and innovative compliance assistance
    program.
        EPA's role has been and continues to be to develop and distribute
    compliance assistance information and tools for business and industry.
    As the primary providers of direct assistance to the regulated
    community, states and localities and other compliance assistance
    providers use or adapt EPA compliance assistance materials to reflect
    specific state or local requirements. We believe this relationship has
    been very successful in improving the regulated community's awareness
    and understanding of its environmental obligations. We intend to expand
    these outreach efforts by working more closely with compliance
    assistance providers, especially with state and local governments.
        Participants at our recent conferences on EPA's compliance programs
    confirmed the value of EPA's compliance assistance tools and materials
    and urged us to continue developing general compliance assistance tools
    that are widely applicable and that are made widely available through
    the Internet, toll-free hot lines and other appropriate channels. We
    also heard strong support for the view that states are the first-line,
    on-site purveyors of compliance assistance. EPA is continuing to work
    with the states and other assistance providers to develop a strong
    network that exchanges information and tools and minimizes duplicate
    services.
        We believe that our compliance assistance tools have increased the
    regulated community's understanding of environmental requirements. For
    example, working with industry associations and other organizations, we
    have set up nine Compliance Assistance Centers through Internet web
    sites, toll-free telephone lines, and fax mail, each directed toward a
    specific industry or government sector. During 1998, the five existing
    Compliance Assistance Centers logged over 190,000 user sessions and
    responded to over 3,600 toll free phone calls and questions via e-mail.
    In addition to the Centers usage, EPA Regional offices in fiscal year
    1998 collectively reached almost 250,000 regulated entities through
    compliance assistance outreach mechanisms including telephone hotlines,
    workshops and training sessions, on-site visits and compliance
    assistance tools. Notable examples of these tools include the 28 sector
    notebooks, which are industry sector profiles containing information on
    the overall compliance history, applicable federal requirements,
    industrial processes, pollutants generated, pollution prevention
    approaches, and cooperative programs designed to improve the
    environmental performance of the industry. Since 1995, over 300,000
    copies have been distributed in printed and electronic form. Moreover,
    eighteen plain language guides and several compliance checklists have
    been prepared for selected sectors, including the food processors,
    paints and coatings, and automotive sectors.
                             gao: superfund program
        Question. Superfund/GAO has continued to list the Superfund program
    as a high-risk program, subject to fraud, waste and abuse. GAO cites
    concerns in the area of inadequate contractor oversight, overcapacity
    of contractors, cost-recovery concerns, and other issues. What specific
    actions is EPA taking to ensure that next year, Superfund is not on the
    list of high-risk programs?
        Answer. As indicated previously to GAO, the Superfund program
    continues to maintain a high level of regional and headquarters
    management attention and oversight over its contracts. Over the past
    few years, EPA has strengthened management over its Superfund contracts
    and has taken steps to assure that it has the appropriate contracting
    capacity to meet present and future cleanup requirements. Some of the
    specific steps we have taken include: (1) reduced the number of
    contracts from forty-five Alternative Remedial Contracting Strategy
    (ARCS) contracts to nineteen Response Action Contracts (RACs), (2)
    reduced the base level of effort hours in several of the more recently
    awarded RACs (e.g., in Regions 2, 3, 9 and 10), (3) reduced the number
    of new RACs awards in Regions 4, 9 and 10 to one per region, instead of
    two per region, and (4) transitioned work efficiently and expeditiously
    from expiring ARCS contracts to new RACs. In addition, we are
    monitoring national RACs capacity utilization on a continuing basis and
    developing quarterly reports for senior management review. These
    reports have shown an overall positive trend with more technical work
    being ordered through RACs and program support cost percentages
    decreasing. Finally, we are taking steps to assure that decisions to
    exercise options to extend the periods of performance under RACs are
    based on sound programmatic and business considerations and well
    documented both in the regions and at headquarters.
        In the cost recovery area, GAO has focused on indirect cost rates
    and performance measures for the cost recovery program. GAO has
    consistently noted that, because of the indirect rates that are being
    used, EPA is unable to recover most of its indirect costs. GAO also
    notes that EPA's existing cost recovery measures are inadequate, and
    suggests the development of another measure.
        In 1982, the Agency established a very conservative methodology for
    charging indirect costs to sites for possible cost recovery, because
    CERCLA statute was not explicit on recoverability of indirect costs and
    EPA has had to rely on case law to clarify the statute.
        EPA attempted to further clarify its authority and be more
    aggressive in recovering indirect costs in a 1992 proposed rule. That
    effort was withdrawn when the proposal drew significant opposition on
    numerous issues including the proposed indirect rate methodology. At
    the same time, Congressional committee members were also critical of
    EPA for not using its enforcement discretion, such as providing orphan
    share at sites with non-viable parties or parties with limited ability
    to pay, to improve the fairness of the Superfund program.
        EPA began a second rule making effort in 1995, just before becoming
    aware of OMB's new government-wide cost accounting standards (July
    1995). Because the OMB standards provided both methodology and
    authority, EPA decided to revise the indirect rate methodology using
    the new Federal cost accounting standards.
        EPA has provided GAO with a draft of the revised methodology and is
    awaiting GAO comments. The new methodology is also being reviewed by a
    private accounting firm to ensure that it is consistent with the new
    standards. The new methodology is expected to be operational in early
    2000.
        In response to prior GAO recommendations, in 1994 EPA established a
    new performance measure requiring cost recovery Statue of Limitation
    (SOL) cases to be addressed in a timely manner. To do this EPA
    establishes site specific annual targets for all cases with total costs
    greater than $200,000 and SOLs that will expire during the upcoming
    fiscal year and beyond. Regions are not required to address all SOL
    cases and are encouraged to bring additional cases each year
    particularly where PRP financial viability may be changing or high
    dollars are at stake. A majority of the cost recovery cases are removal
    actions which are addressed within 3 years of removal completion. Cost
    recovery for remedial actions is generally pursued after the remedy is
    selected. If parties do not agree to conduct the response or pay past
    costs, EPA generally brings a cost recovery case within 2-3 years of
    the initiation of the remedial action.
        EPA currently uses a variety of ``tools'' to manage the enforcement
    program. EPA reduces the need for cost recovery by maximizing the
    number of PRP conducted cleanups, the value of PRP cleanups since the
    inception of the program is approximately $13.1 billion. The Agency has
    been very successful at this, compelling PRPs to conduct more than 70
    percent of new cleanup work at NPL sites. The overwhelming success rate
    for cases that are brought indicates that cases are being filed in a
    timely manner and that they are well documented.
        Question. How high a priority is this for EPA?
        Answer. OSWER declared the contract issue an Agency-wide weakness
    in its fiscal year 1997 Annual Assurance Letter through the FIMFIA
    process. The corrective actions and progress made to address these
    issues are regularly monitored by OSWER's Assistant Administrator.
                  gao: contract capacity program support costs
        Question. The General Accounting Office in its testimony today
    states that the Environmental Protection Agency has too much contract
    capacity and is spending too much in program support costs as a result.
    The Environmental Protection Agency spends on average about 28 percent
    of total costs, compared to the Environmental Protection Agency's
    target of 11 percent. What are the Environmental Protection Agency's
    plans to address this and make better use of Superfund resources?
        Answer. The Office of Solid Waste and Emergency Response has taken
    steps to assure that the Superfund program has the appropriate
    contracting capacity to meet present and future cleanup requirements.
    Specifically, we have (1) reduced the number of contracts from 45
    alternative remedial contracting strategy contracts to 19 response
    action contracts, (2) reduced the base level of effort hours in several
    of the more recently awarded response action contracts in Regions 2, 3,
    9, and 10, (3) reduced the number of new response action contracts
    awards in Regions 4, 9 and 10 to one per region, instead of two per
    region, and (4) transitioned work efficiently and expeditiously from
    expiring alternative remedial contracting strategy contracts to new
    response action contracts.
        In addition, we are actively monitoring national response action
    contracts' capacity utilization on a continuing basis and developing
    quarterly reports for senior management review. We will issue a
    national policy on response action contracts' options analysis in June
    1999, which will outline guidelines in assessing the exercise of
    response action contracts' options. These guidelines will assure that
    Agency decisions to exercise options to extend response action
    contracts are based on sound programmatic and business considerations,
    and are well documented both in the regions and at headquarters.
        As we previously indicated in our comments on the General
    Accounting Office's draft report, we are concerned that the General
    Accounting Office's findings on program support costs may be
    overstated. The General Accounting Office's analysis included two newly
    awarded contracts and three additional contracts that had been in place
    for only a year or less. At the time of the General Accounting Office's
    review in September 1998, the Agency did not have sufficient time to
    assign substantial technical work to these contracts. Since that time,
    our management reports have shown a positive trend, both in terms of
    reductions to program support percentages and increased contract
    capacity utilization for these contracts; this is also true for
    response action contracts overall. In several cases, the regions have
    used innovative methods, such as fix pricing their program support work
    assignments, to lower their program support costs. We continue to
    believe that as more technical work is ordered through response action
    contracts, the program support percentages will decrease.
        Question. The General Accounting Office says, Our reviews over the
    years have consistently shown that without sustained high level
    management attention, the Environmental Protection Agency has not
    always succeeded in implementing and sustaining contract reforms. Will
    the Environmental Protection Agency leadership make Superfund contract
    improvements a top priority?
        Answer. With much effort on the parts of both the program/regional
    and contracting personnel, the Environmental Protection Agency
    continues to make many positive steps to improve our contract
    management. The Environmental Protection Agency senior leadership has
    and continues to make Superfund contract improvements a top priority.
    The Office of Solid Waste and Emergency Response had previously
    developed a corrective action strategy and milestones relating to
    independent Government cost estimates as part of the fiscal year 1998
    Integrity Act process. We believe that completion of these milestones
    will serve to improve the quality of independent Government cost
    estimates.
        The Agency's senior managers continue to focus attention on any
    areas that represent potential vulnerabilities in contract management.
    In order to ensure that the Agency relationship with its contractors
    remains an appropriate one, the senior managers agreed that the
    following steps will be taken during fiscal year 1999: (1) program/
    regional offices would identify all contracts where the contractor is
    working at a Government facility and evaluate whether this was
    appropriate and necessary, and if not, relocate the place of
    performance to an off-site location; program/regional offices would
    determine, which, if any, of their contracts were most susceptible to
    improper personal relationships, programs/regional offices would
    perform management effectiveness reviews on those with the greatest
    risks.
        Additionally, the Office of Administration and Resources
    Management/Office of Acquisition Management is also launching two new
    initiatives to improve Superfund contracting. The first initiative will
    require contracting officers to specify the Environmental Protection
    Agency's requirements in more performance-focused terms rather than the
    Environmental Protection Agency long practiced method of specifying the
    professional and technical level of contractor personnel assumed to be
    required to accomplish the contract mission. The second initiative will
    prohibit the specification of program management costs as a separate
    cost element, unless the contractor can demonstrate that this method of
    charging is consistent with its normal accounting practice. The
    Environmental Protection Agency hopes to build on these initiatives in
    the future with additional initiatives.
        Lastly, the Environmental Protection Agency has recently taken
    steps to revitalize the Superfund Senior Regional Management and
    Acquisition Council. The Superfund Senior Regional Management and
    Acquisition Council is a bi-annual conference, co-chaired by the Office
    of Solid Waste and Emergency Response and the Office of Administration
    and Resources Management/Office of Acquisition Management to promote
    quality in contracts management, share Regional successes, and new
    ideas for managing Superfund contracts, and resolve cross-cutting
    acquisition issues. Participants on the Superfund Regional Management
    and Acquisition Council are generally one senior representative from
    each of the Region's Waste Management Divisions, Environmental Services
    Divisions and the Assistant Regional Administrator for Planning/Policy
    and Management Offices. Headquarter offices that are represented
    include the Office of Solid Waste and Emergency Response, the Office of
    Administration and Resources Management, Office of Enforcement and
    Compliance Assurance, and the Office of the Inspector General. The
    Superfund Senior Regional Management and Acquisition Council provides
    guidance and direction to those Superfund program managers implementing
    recommended improvements in Superfund contracts planning procurement,
    and management processes that promote consistent approaches to managing
    high quality cleanup projects.
        Question. How will the Environmental Protection Agency use the
    Contracts 2000 initiative to address some of the recurring contract
    management issues the General Accounting Office has identified and what
    re the specific time frames for implementing improvements through
    Contracts 2000?
        Answer. The Environmental Protection Agency agrees that the
    Contracts 2000 effort is a very important strategic initiative.
    Contracts 2000 is a strategic planning effort to develop the structure
    of the Superfund contracting program following the Long-term
    Contracting Strategy. Phase I, the strategy, was completed with the
    issuance of a decision memorandum signed by Tim Fields, Acting
    Assistant Administrator, Office of Solid Waste and Emergency Response,
    and Betty Bailey, Director, Office of Administration and Resources
    Management/Office of Acquisition Management on February 5, 1998. We
    will issue the Contracts 2000 Strategy Report in June 1999, which will
    expand on the issues and decisions that support the strategy outlined
    in the memorandum.
        The implementation phase began in February 1998. The implementation
    work group has been developing the implementation plans that each
    region will submit for management approval. The workgroup has also
    considered ongoing acquisition initiatives, such as performance based
    contracting and multiple award contracting. Sub-work groups began
    developing the statements of work for those classes of contracts
    expiring by the end of fiscal year 2000.
        We will issue the Contracts 2000 Implementation Framework in June
    1999. The framework will include the roles and responsibilities for
    reviewing and approving regional Contracts 2000 implementation plans,
    and the components that need to be addressed by these plans, such as
    implementation charts, acquisition strategies, and timetables.
    Contracts Class Implementation charts, showing the number of contracts,
    size, and type for each region, and the structure and management of the
    contracts, will be published throughout the 1999 year as they are
    approved by the Environmental Protection Agency management.
        Question. Is the Environmental Protection Agency working to develop
    new and more effective ways to build more competition into the
    Environmental Protection Agency's contracting process? Please describe.
        Answer. In some classes of Superfund contracts, the Contracts 2000
    workgroup identified where and how the Environmental Protection Agency
    can increase the industrial base through sector contracting. For
    example, as part of the planning for the Superfund technical assessment
    and response team contracts, the Environmental Protection Agency
    regions have submitted initial plans for awarding more than one
    contract per region. In almost every region, it is expected that one
    solicitation will be a full and open competition and one or more will
    be set-aside for small businesses or small disadvantaged businesses.
        Additionally, under this class of contracts, the new requirements
    for price evaluation adjustment for small disadvantaged business
    concerns and the small disadvantaged business participation program
    will apply in the full and open competitions. The Environmental
    Protection Agency plans to include as part of the technical evaluation,
    an evaluation of each potential offeror's commitment to the Agency's
    goal for participation by small, HUBZone small, women-owned and small
    disadvantaged businesses as team members and/or subcontractors, as well
    as an offeror's participation in the Agency's Mentor-Protegee program
    as a mentor firm. In accordance with the requirements of the Small
    Business Contracting Program and the Agency's Office of Small and
    Disadvantaged Business Utilization policies, the successful offerors,
    if not small businesses, will be required to submit acceptable
    subcontracting plans. Our administrative contracting officers will
    monitor the contracts to ensure that the subcontracting plan is
    enforced to provide participation by small, HUBZone small, women-owned
    and small disadvantaged businesses to the maximum extent possible
    consistent with efficient performance.
        Question. Has the Environmental Protection Agency lowered its
    contract management costs through its recent practice of using the Army
    Corps of Engineers to manage about 40 percent of its cleanup work? Is
    the Environmental Protection Agency giving consideration to using the
    Corps additional workload to manage, in view of its expertise in this
    area? If not, why not?
        Answer. One of the major elements of the Contracts 2000 strategy is
    the continued use of the U.S. Army Corps of Engineers to manage large,
    complex remedial actions. Specific advantages we derive from the
    relationship include an ability to leverage limited Environmental
    Protection Agency technical resources, Corps' personnel add an
    additional federal presence at our sites, and they can perform
    inherently governmental construction/contract management functions. The
    Environmental Protection Agency uses commercial contractors to perform
    the remaining response activities as well as construction oversight and
    remedial actions under $15,000,000.
                      gao: rcra corrective action program
        Question. The Environment and Public Works Committee recommended
    shifting $27 million from the Superfund program to the RCRA corrective
    action program. Many sites under the RCRA corrective action program are
    Superfund-caliber. What do you think about his recommendation?
        Answer. We believe funding included in the President's year 2000
    budget is adequate to keep the program on track to meet our 2005 GPRA
    Environmental Indicator goals (By 2005, Human exposure will be
    controlled at 95 percent of RCRA high priority contaminated hazardous
    waste facilities, and releases to groundwater will be controlled at 70
    percent of these facilities). However, the Agency is currently
    conducting an internal mid-year review to determine accomplishments to
    date. Part of that review will focus on whether accomplishments to date
    and projected commitments will ensure that we achieve our 2005 targets.
    This approach directly reflects the revision process outlined in GPRA
    and OMB guidance and other materials. The Agency believes that
    resources requested for EPA and State oversight in the fiscal year 2000
    President's Budget are adequate to keep the program on track to meet
    the fiscal year 2005 goals.
        Question. Could we achieve more public health protections by
    shifting these funds?
        Answer. The Agency believes there are fundamental differences
    between the RCRA Corrective Action and Superfund programs that do not
    support resource comparisons. Unlike Superfund where roughly 25 percent
    of cleanups are funded through the Trust Fund, RCRA cleanups are 100
    percent owner/operator funded. EPA and State RCRA Program grant
    resources fund oversight by EPA and State regulators but no actual
    cleanup. In addition, while Superfund is primarily a Federal program
    wherein EPA maintains overall responsibility for cleanups (even where
    States manage cleanups under cooperative agreements with EPA), the RCRA
    cleanup program is formally delegated to, and run by 33 of the States
    in lieu of EPA.
        Question. GAO's testimony states ``Given that the Superfund program
    is now almost 20 years old and that most of the sites are in
    construction and moving toward completion, we would expect to see a
    trend where spending on cleanups is increasing and administrative costs
    are decreasing due to the changing workload mix and program
    efficiencies. Since this is not the case, EPA may have opportunities to
    achieve more administrative efficiencies in the program and therefore
    manage a reduction in its Superfund program through such efficiencies
    rather than by reducing actual cleanup workload.'' Do you agree?
        Answer. EPA has committed to the completion of 85 constructions per
    year through fiscal year 2005. This commitment is based on maintaining
    the current pace of work and current funding levels. If no new sites
    are added to the National Priorities List (NPL), at the end of fiscal
    year 2005, approximately 200 sites will await completion of
    construction. Assuming the completion of 85 constructions beyond fiscal
    year 2005, it will take an additional 2 to 3 years to complete
    construction of sites currently listed on the NPL.
        Based on a GAO survey, 1,789 sites in the Comprehensive
    Environmental Response, Compensation, and Liability Information System
    have been identified as potentially eligible for placement on the NPL.
    EPA and State officials have identified at least 232 of those sites as
    strong candidates for the NPL. Our current level of funding supports 30
    to 40 listings a year. Based on an annual average of 26 additions to
    the NPL over the past six years, it will require almost 9 years to list
    all 232 sites. Completion of constructions will take considerably
    longer.
                     government performance and results act
        Question. GAO has determined that only about 40 of EPA's roughly
    320 performance measures are true results-oriented measures. The rest
    are traditional outputs, such as the number of permits issued or
    reviews conducted, and in the area of right-to-know, the number of web
    site hits. Why has EPA been slow to adopt results-oriented performance
    measures that directly address environmental and public health
    protections?
        Answer. The Agency is committed to improving its performance
    measures and developing outcome measures and goals where appropriate
    and when data are available. However, development of results-based data
    and methods requires close consultation and coordination with our
    partners in the States and Tribes. In many cases, results-based
    performance measures can only be developed after necessary analytical
    methods and monitoring/data management systems have been developed and
    implemented. In addition, there is often a significant lag time between
    the collection, reporting, and analysis of environmental data. In
    summary, we recognize that our current performance measures are largely
    output-oriented; we are working to increase the number of outcome-
    oriented measures.
        Question. What specific efforts are planned to increase the number
    of true performance measures, and how high a priority is this?
        Answer. EPA is fully committed to the principles of results-based
    management. Each EPA program is continuously evaluating the type and
    quality of data and analysis needed to improve its effectiveness and
    efficiency. Through the National Environmental Performance Partnership
    System, together with the States and Tribes, the Agency is developing
    better compliance tracking and program performance data, thereby
    enhancing our ability to develop outcome measures. For example, the
    Office of Research and Development, working together with EPA's
    regional offices and our partners in the States, has begun an
    initiative to provide ambient monitoring data for the entire U.S.
    coastline. In addition, the Center for Environmental Information and
    Statistics and the Agency's new Information Office are in the process
    of assessing the Agency's long-term strategic information needs.
        Question. To what extent is the lack of data the reason EPA has not
    developed a large number of real performance measures?
        Answer. Insufficient data is the most limiting factor. Results-
    oriented performance measures typically require extensive monitoring
    data for the results to be statistically valid. Some programs have such
    data (e.g., for air quality) but most do not. These data-sets need to
    be collected in a comprehensive manner, usually over some period of
    years, to support reliable analyses of environmental conditions and
    trends. In recent years, the Agency has invested in better systems for
    collecting and analyzing environmental data, and more work is planned
    to provide the data needed to assess performance as required by GPRA.
                                gao: reinvention
        Question. Reinvention. GAO has cited EPA's so-called reinvention
    efforts a major management challenge, yet many of these efforts are key
    to implementation of innovative and more effective means of improving
    the environment. Reinvention efforts in general are aimed at achieving
    better environmental results through the use of innovative and flexible
    approaches, which we all agree makes sense. GAO has listed a large
    number of concerns, such as achieving ``buy in'' among the agency's
    rank and file, achieving agreement among stakeholders, and an uneven
    record in evaluating the success of initiatives. What is your response
    to these concerns?
        According to a recent ``Inside EPA'' article, an EPA-commissioned
    study of the Common Sense Initiative has found that ``the CSI
    principles have not yet reached into the heart of EPA's operations, and
    there remain strong concerns among participants that the agency has
    given up trying to drive a broader institutional embrace of reinvention
    concepts. CSI has as yet made little progress in addressing broad
    regulatory changes.'' Does EPA agree with the conclusions of your
    contractor's review? What plans does EPA have to address these
    concerns?
        Please describe what new ``reinvention'' initiatives are underway,
    such as the Sustainable Industry program, and the budget request
    associated with these initiatives, and explain how these new
    initiatives differ from and build on older initiatives such as CSI.
    Have sufficient resources been requested to follow through on
    initiatives which have already been started?
        Answer. Several evaluations of the Common Sense Initiative (CSI)
    were completed in its four-year history (1994-1998) and EPA has been
    responsive to all of the findings and recommendations from these
    reviews. In February 1997, an independent contractor issued its review
    of CSI. Subsequently, in July 1997, the General Accounting Office (GAO)
    released their evaluation of CSI. EPA actions as a result of these
    evaluations included: better defining CSI's goals and expected results,
    clarifying how the Council and Sector Subcommittees will accomplish
    their work, and developing Council and Subcommittees result-oriented
    performance measures. With the completion of the CSI experiment in
    December 1998, a four-year evaluation of the initiative was
    commissioned and results of that evaluation were announced in mid-April
    1998. While we agree with some of the recent contractor's review, EPA
    has not given up on the institutional embrace of sector concepts, nor
    do we believe that CSI has resulted in little progress toward
    addressing regulatory changes.
        CSI's completion did not represent the conclusion of Agency
    sponsored sector-based, multi stakeholder work, rather it represented
    the transition to new actions for sector-based environmental solutions.
    An Agency-wide Sector Action Plan has been prepared based on the CSI
    experience. The Plan was approved by the CSI Council and EPA senior
    management last Fall and is currently being implemented. The goal of
    the Plan is to incorporate sector strategies into Agency core
    functions, where appropriate, to solve environmental problems. Further,
    the Plan will build EPA management capacity to conduct sector work and
    involve external stakeholders to craft sector-based solutions. The
    sector plan addresses many of the independent contractor's findings
    about the Agency's long term commitment to implementation of CSI
    activities.
        Nearly 30 recommendations were generated through the CSI
    experiment. Some are resulting in permanent regulatory changes, while
    others are focused on implementing longer term, next generation
    environmental policy tools such as voluntary, performance-based
    regulatory systems. The combination of EPA efforts in responding to
    these recommendations with the multifaceted approach in the Sector Plan
    will result in a deeper acceptance of using the sector approach in
    solving environmental problems.
        The Sustainable Industry (SI) Program was created prior to the
    launching of the CSI experiment and continues to operate as an
    ``incubator'' for Agency-wide sector activities. CSI accelerated the
    early SI program activities with the metal finishing sector to the
    successful development of the Strategic Goals Program, a first-of-its-
    kind, performance based, non-regulatory process. In the transition of
    CSI sector work in the Sector Plan, EPA has committed through existing
    resources to complete unfinished Sector projects, as well as support
    new projects that may be identified during fiscal year 1999 and fiscal
    year 2000. Three former CSI sectors--metal finishers, printers, and
    petroleum refiners--have ``works-in-progress'' that will be supported
    with these resources. In addition, the Agency has established, through
    the Federal Advisory Committee Act, a new Sector Committee to help
    transition former CSI activities into core Agency functions, as well as
    maintain accountability to external stakeholders on our sector work. It
    is expected that sufficient resources have been requested to complete
    these and other initiatives, which have already been started.
                              better america bonds
        Question. The President's budget would give EPA a new role of
    allocating bond allotments for environmental projects through the
    Better America Bonds initiative.
        (1) Why do we need this new program, given the existing funding
    mechanisms such as the Land and Water Conservation Fund?
        (2) What experience does EPA have in reviewing state and local
    proposals for such activities as land acquisition?
        (3) What would be the costs to EPA of administering this program,
    and which program office would be responsible?
        (4) What will be the cost to the taxpayer of issuing all $9.6
    billion in bonds over their entire 15-year life span?
        (5) How does EPA plan to provide oversight for the program to
    ensure that environmental goals are accomplished?
        Answer. (1) The Land and Water Conservation Fund (LWCF) is
    primarily focused on federal land acquisitions whereas the Better
    America Bonds is a new financing tool for communities to preserve and
    enhance green space, protect water and clean up brownfields.
        Both the LWCF and Better America Bonds provide a financial means
    for communities to acquire lands or interest in lands for the
    preservation of open space and the protection of water quality. LWCF is
    used to acquire open spaces for recreation purposes or habitat
    protection. Better America Bonds can be used for this and other
    purposes including protecting water quality and cleaning up
    brownfields. The two programs provide different funding mechanisms for
    land acquisition thereby giving communities the flexibility to choose a
    mechanism that is most appropriate for them.
        The Clean Water State Revolving Fund (CW-SRF) and Better America
    Bonds have similar goal of protecting water quality but they meet this
    goal in different ways. The vast majority of CW-SRF resources fund
    traditional wastewater treatment plants. Such projects would not be
    eligible under the Better America Bonds program. Many communities will
    have different water quality needs that the Better America Bonds
    program can help address. Water quality projects that would potentially
    qualify for a Better America Bonds include wetlands restoration,
    purchase of land critical to watershed protection, settling ponds and
    the creation of planted or forested buffer strips along waterways.
        The proposed Better America Bonds program would not only be about
    50 percent less costly to communities than tax exempt bonds but would
    also be significantly less costly than most CW-SRF loans.
        This proposed program would be another tool that communities would
    have to address environmental problems.
        (2) As the agency responsible for protecting public health by
    cleaning up our air, water and land, and ensuring that all Americans
    have access to a clean and healthy environment, EPA is best suited to
    help communities meet the stated goals of the program--protecting water
    quality, cleaning up brownfields for reuse, and preserving green space.
    The Better America Bonds program builds upon EPA's successful existing
    programs that work with communities to improve local water quality and
    to clean up brownfields sites so that they can be returned to
    productive community use.
        Furthermore, the Agency currently manages various bond-related
    programs such as the Clean Water State Revolving Fund and maintains an
    Environmental Finance office. The Agency would draw upon the
    significant expertise in these and other programs to run the Better
    America Bonds program. Finally, parts of this program will be managed
    by the Treasury Department (including enforcement by the Internal
    Revenue Service.)
        To ensure a broad range of expertise, EPA will chair a panel of
    departments and agencies including HUD, USDA, Interior, FEMA, and
    Treasury. EPA will work closely with them on the design of the program,
    the selection criteria, the application process, and the awarding of
    bonding authority.
        (3) The Agency intends to administer this program in a cost
    effective manner and anticipates being able to absorb administrative
    expenses with existing agency resources. The Agency did not seek any
    new resources in EPA's fiscal year 2000 budget request to run this
    program.
        There are several factors supporting this approach. First, as
    stated by the Administrator, EPA does not intend to issue any
    regulations for this program. Instead, EPA will develop basic guidance
    documents to assist communities in applying for bonding authority.
    Second, the program will involve several current Agency programs such
    as the Brownfields office, various water quality programs, and our
    Environmental Finance Office.
        (4) The Treasury Department has designed this tax credit bond so
    that the subsidy to the communities will in present value terms equal
    approximately half the value of the bond. In other words, the
    cumulative tax expenditure for this program should be approximately
    $4.8 billion (in present value terms) over the entire life span of the
    bonds. This tax expenditure will be incurred over a period of time that
    will be longer than 15 years. (The proposal calls for five years of
    bonding authority. Furthermore, communities have up to three years to
    issue the bonds and use the proceeds. Therefore some Better America
    Bonds could be retired 23 years after the start of the program.)
        (5) As with other types of bonds, the Internal Revenue Service will
    monitor communities' compliance with the requirements of the program.
    During the fifteen year term of the bond, if 95 percent of the proceeds
    fail to be used for a qualifying purpose or if the use changes to a
    disqualified use, no further credits would accrue and issuers would be
    obligated to reimburse the federal government for any credits accruing
    prior to that date. If a settlement cannot be reached with the issuer,
    the federal government would have the right to recover past credits
    from the bondholders. Problems like this are very rare with respect to
    tax-exempt bonds and we expect that to be the case with Better America
    Bonds. In addition, EPA will stand ready to provide technical
    assistance to communities that request it, as they implement their
    programs.
                         environmental justice programs
        Question. EPA Environmental Justice Programs. Last year at this
    time you indicated that you would have a final resolution on the
    Interim Guidance that EPA put forward to resolve environmental justice
    complaints. In fact, you indicated that a FACA committee had been set
    up and that you were targeting December 1998 to have a final guidance
    in place. Can you tell me what the status of this situation is, as it
    appears that there is no final guidance or rulemaking from the agency?
        Answer. In March 1998, Administrator Browner established a Title VI
    Implementation Advisory Committee (``Title VI Advisory Committee'').
    That Advisory Committee was comprised of representatives of state,
    tribal, and local governments, businesses, environmental justice
    groups, and other interested stakeholders. The Title VI Advisory
    Committee was asked to focus primarily on possible guidance to EPA
    assistance recipients such as state permitting agencies and make
    recommendations to help them design programs that will address concerns
    under Title VI of the Civil Rights Act of 1964, as amended (``Title
    VI'') early in the permit process. EPA believes that such an approach
    will enable potentially impacted communities to be involved in the
    permit process in a meaningful manner while also providing state and
    local decision-makers and businesses sufficient clarity regarding the
    process.
        EPA committed to the Title VI Advisory Committee that it would not
    issue revised Title VI guidance until after the Committee completed its
    deliberations. The Title VI Advisory Committee was originally scheduled
    to conclude its work in December 1998. However, the Committee requested
    additional time to develop their final recommendations. EPA agreed and
    the Committee completed its work in March 1999 and submitted its final
    report with recommendations to the EPA Administrator in April 1999.
        Issuance of the Interim Guidance for Investigating Title VI
    Administrative Complaints Challenging Permits (``Interim Guidance'') in
    February 1998, opened a continuing dialogue with stakeholders that is
    helping to shape the Agency's revised guidance. Participants in the
    dialogue include state and local officials, business leaders, and
    community leaders. As part of the process for finalizing the Interim
    Guidance, EPA is reviewing the Title VI Advisory Committee
    recommendations and public comments. EPA also will hold a series of
    focus group sessions with representatives of various stakeholder groups
    to receive more feedback. Later this year, the Agency intends to issue
    a draft revised guidance for additional public comment.
        Question. One of the concerns raised last year was that by going
    through the guidance process verses rulemaking that there were several
    procedural steps that may be left out. For example, working with the
    SBA on small business panels to determine the impacts of such a policy
    on small business. Can you tell me if you are not going through a
    rulemaking process, why not? What steps are you planning to take that
    will ensure that important steps are not left out of this process? Are
    you working with SBA?
        Answer. EPA will not be issuing its revised Title VI guidance using
    formal or informal rulemaking procedures. The revised guidance is
    intended only to provide a framework for the processing by the Office
    of Civil Rights (``OCR'') of complaints filed under Title VI by
    updating the Agency's procedural and policy framework to accommodate
    the increasing number of Title VI complaints that allege discrimination
    in the environmental permitting context. It will not create any new
    substantive rights, nor establish any binding legal requirements.
    Accordingly, the revised Title VI guidance is expressly exempted from
    the notice-and-comment rulemaking requirements of the Administrative
    Procedure Act (``APA'') by section 553(b)(3)(A). Nonetheless, as
    described in more detail later, EPA intends to publish the draft
    revised guidance in the Federal Register and solicit written public
    comment, as well as hold a series of listening sessions after the draft
    revised guidance is published to obtain more feedback.
        With respect to impacts on small entities, including small
    businesses, because the guidance will establish no binding legal
    requirements, there is no regulatory impact to any entity of any size.
    The analytical requirements of the Regulatory Flexibility Act, as
    amended by the Small Business Regulatory Enforcement Fairness Act, only
    apply to certain regulations that impose an impact on those small
    entities directly regulated by a proposed or final regulation. Mid-Tex
    Electric v. FERC, 773 F.2d 327 (D.C. Cir. 1985); Motor & Equipment Mfg.
    Ass'n v. Nichols, 142 F.3d 449 (D.C. Cir. 1998). That is not the case
    here.
        Question. What steps are you taking to ensure sufficient public
    input?
        Answer. Since the issuance of the Interim Guidance in February of
    1998, EPA has taken a number of steps, including establishing the Title
    VI Implementation Advisory Committee, to ensure appropriate input from
    stakeholders, including state, tribal, and local officials, business
    representatives, and environmental justice groups. Over the past year,
    EPA staff have met with representatives from industry, environmental
    justice communities, and states, tribal, and local governments to
    discuss their concerns about environmental justice and Title VI issues.
    The Administrator met with representatives from the U.S. Conference of
    Mayors in Detroit last summer and met with representatives from the
    Environmental Council of the States (``ECOS'') in the fall to discuss
    their issues and concerns on this important subject.
        EPA has established a cooperative agreement with ECOS, which will
    be used to develop a state approach to environmental justice issues,
    including developing effective working relationships with the
    environmental justice community. The states are currently planning a
    meeting with national environmental justice representatives, as a
    result of this cooperative agreement.
        As EPA moves toward finalizing the guidance, we will continue
    meeting with individual stakeholder groups, such as ECOS, local
    officials, and environmental justice groups, to discuss issues of
    concern to them relative to the internal Title VI guidance.
    Additionally, EPA will sponsor a series of diverse, stakeholder focus
    groups to discuss issues and concerns prior to publication of the draft
    revised guidance for public comment. In addition to soliciting written
    comments on the draft version of the revised guidance through
    publication in the Federal Register, EPA will hold a series of public
    listening sessions across the country to receive public comments.
        Question. Will this document go to OMB for review? What about
    inter-agency review?
        Answer. The Office of Management and Budget (OMB) routinely reviews
    agency regulations. However, EPA has determined that this not a
    regulation. On occasion, OMB also asks to review non regulatory
    guidance that an agency produces. At this time, OMB has not asked to
    see this guidance. EPA, however, has consulted with the Department of
    Justice (DOJ) prior to issuing the Interim Guidance, and is currently
    coordinating with DOJ and the Council on Environmental Quality as the
    guidance is being revised.
        Question. Do you envision this guidance as binding? Do you plan to
    submit it to Congress under the Congressional Review Act as tendered in
    a legal opinion by the GAO?
        Answer. Like the Title VI Interim Guidance, the revised Title VI
    guidance will be non-binding and is intended only to provide a
    framework for the processing by EPA's Office of Civil Rights (``OCR'')
    of complaints filed under Title VI. The revised guidance, like the
    Interim Guidance, will have no binding legal effect. Since its passage,
    EPA consistently has interpreted the Congressional Review Act (``CRA'')
    as applying only to agency actions containing binding legal
    requirements. Policy statements and guidance documents are not binding
    and have no binding legal effect on the public; generally, they are
    intended to provide information regarding an EPA regulation or
    enforcement position that may be useful to both EPA employees and the
    public. Accordingly, EPA does not believe the revised Title VI guidance
    is subject to the CRA.
        The General Accounting Office (``GAO'') concluded that the Interim
    Guidance was subject to the CRA, in part, because EPA inadvertently
    used mandatory language in the Interim Guidance; thus, GAO believed
    that the ``new steps in the procedure for handling disparate impact
    assessment [are] mandatory. They clearly alter the existing regulation
    and give to recipients significant rights that they did not previously
    possess for obtaining dismissal of the complaint.'' (Letter of Robert
    P. Murphy to The Honorable David M. McIntosh, dated January 20, 1999.)
    The GAO letter noted that, although the first part of the Interim
    Guidance ``largely confirms requirements that largely exist in EPA
    regulations,'' the Interim Guidance altered the existing regulation to
    give recipients rights that they did not previously possess for
    obtaining dismissal of the complaint. GAO did note that EPA's position
    that the Interim Guidance was not a rule was stronger with respect to
    the second part of the guidance entitled ``Impacts and Disparate Impact
    Analysis.'' GAO concluded that, although the guidance stated the five
    steps that OCR would follow in conducting its analysis:

              ``[I]t can be argued that these steps are the kinds of steps
            that statisticians would be expected to follow in conducting a
            disparate impact analysis. Also, OCR has broad discretion in
            deciding how to proceed in conducting each of the steps of the
            analysis, a factor courts often consider in determining whether
            a binding rule affecting substantive rights exists under the
            APA.'' \1\
    ---------------------------------------------------------------------------
        \1\ Id. At 6.

        As stated previously, EPA did not intend for the Interim Guidance
    to create new substantive obligations, nor does EPA agree with GAO that
    it did so. EPA only intended to provide a framework for the processing
    by OCR of complaints filed under Title VI. EPA intends to draft the
    revised Title VI guidance in a manner that clearly indicates it is non-
    binding in nature. Mandatory language will be deleted, and a notation
    will be prominently displayed indicating that EPA is free to deviate
    from the guidance on a case-by-case basis, as appropriate. Accordingly,
    since it will not be a binding substantive rule, EPA does not believe
    it is subject to the CRA. Nevertheless, the Agency intends to submit
    courtesy copies of the revised Title VI guidance to both Houses of
    Congress and GAO when it is issued.
        Question. What consideration has been given to letting States set
    up their own environmental justice programs to resolve Title VI
    complaints and providing Federal oversight in this regard verse
    establishing a new large Federal program to decide these individual
    siting and permitting cases which are decisions which should be handled
    at the State and local levels?
        Answer. Title VI of the Civil Rights Act of 1964, as amended (Title
    VI) prohibits recipients of federal financial assistance (e.g., states,
    universities, local governments) from discriminating on the basis of
    race, color, or national origin in their programs or activities. Title
    VI allows persons to file administrative complaints with the federal
    departments and agencies that provide financial assistance alleging
    discrimination based on race, color, or national origin by recipients
    of federal funds. OCR is responsible for the Agency's administration of
    Title VI, including investigation of such complaints.
        EPA has a responsibility to enforce Title VI and ensure that EPA
    assistance is not being used to subsidize discrimination based on race,
    color, or national origin. This prohibition against discrimination
    under Title VI has been a statutory mandate since 1964 and EPA has had
    Title VI regulations since 1973. It is important to note that the
    Department of Justice has recently reiterated its position that Federal
    agencies may not delegate to states the authority to determine
    compliance with Title VI. While recognizing that limitation, EPA will
    explore suggestions to encourage states and local governments to
    perform various preventive measures, including the discussion on this
    topic in the Title VI Advisory Committee's report.
        Question. Has the EPA analyzed State programs to see what works and
    what doesn't work? Has the agency thought about a template or model
    which could be used for States to set up their own programs?
        Answer. The focus of the Title VI Advisory Committee was primarily
    on possible guidance to EPA assistance recipients, such as state
    permitting agencies, and make recommendations to help them design
    programs that will address Title VI concerns early in the permit
    process (i.e., external guidance). The directors of the environmental
    agencies for Michigan, New Jersey, Texas, Maryland, and Oregon were
    members of the Title VI Advisory Committee. Formal presentations on the
    approaches taken in Texas and New Jersey were made to the Committee and
    the efforts of other states were discussed. The report of the Title VI
    Advisory Committee's recommendations were delivered to the
    Administrator in April. The Report contains eight consensus principles
    of the Committee, as well as a template intended to serve as a model
    for state and local governments that elect to establish environmental
    justice programs. It also contains the members' differing views
    regarding the implications of the range of policy options available to
    EPA as it develops its Title VI program.
        Moreover, EPA has been supporting the development of programs to
    address environmental justice and Title VI issues, as well as
    facilitating communication among states and local governments on
    effective approaches. For example, we are working with the
    Environmental Council of the States (``ECOS'') through a cooperative
    agreement which will be used to develop an effective state approach to
    environmental justice issues. The starting point for ECOS's work under
    the cooperative agreement is its 1998 Proposed Elements of State
    Environmental Justice Programs. ECOS is currently planning a meeting
    with national environmental justice representatives to discuss the
    proposed elements. Part of this work should facilitate the development
    of a working relationship between state agencies and the environmental
    justice community.
        Additionally, EPA's Office of Environmental Justice has established
    the State and Tribal Environmental Justice (STEJ) Grants program to
    provide assistance to states and tribes as they work to achieve
    environmental justice and/or ensure their programs comply with Title
    VI. For fiscal year 1998, EPA awarded five STEJ grants for a total of
    $500,000 to Texas, Tennessee, New Jersey, Vermont, and the Kalispel
    Tribe of Indians. EPA is currently reviewing applications for fiscal
    year 1999, for which another $500,000 in STEJ grant funds are
    available.
        Question. How many Title VI claims are at the agency now? How are
    these have been resolved in the last year? Last year we included report
    language asking that these claims be resolved as expeditiously as
    possible and I would like to know how this is being done?
        Answer. As of April 30, 1999, a total of 75 Title VI administrative
    complaints raising environmental justice concerns have been filed with
    OCR. Between April 1998 and the end of April 1999, OCR accepted five
    complaints for investigation, bringing the total number of complaints
    accepted for investigation to 22. Three of those 22 complaints have
    been dismissed--one of which was the Select Steel complaint for which
    EPA issued a decision in October 1998. Informal resolution is currently
    ongoing for two other complaints. Moreover, EPA is currently actively
    investigating three complaints. During the past year, OCR rejected
    seven complaints because they did not meet Title VI jurisdictional
    requirements (e.g., untimely; alleged discriminatory actor is not EPA
    recipient). The total number of rejected complaints as of April 30th
    was 32 and EPA had 21 complaints for which a determination to accept or
    reject has not yet been made.
          safe repainting, sampling tech course, eng. octane additives
        Question. The Committee added $2 million in the fiscal year 1999
    for lead outreach and technical studies on ``safe repainting''. What is
    the status of those efforts? Are any funds requested in fiscal year
    2000? What progress has been made developing the sampling technician
    course to reduce the cost and expand the availability of visual
    inspection and dust sampling? When will the course be completed?
        Answer. The Agency is planning to conduct various lead outreach and
    technical activities with these funds. The sampling technician course
    has been initiated through an existing contract mechanism and work is
    anticipated to begin this month. Both courses are scheduled for
    completion by December 1999. Other activities include: (1) development
    of a renovation and remodeling course curriculum, (2) conduct of
    analyses to support policy decisions in the development of a national
    renovation and remodeling infrastructure, (3) enhancements to the
    existing laboratory accreditation program to allow for accreditation of
    labs using newer cost effective technologies as these methods are
    developed and become available for use by sampling technicians and
    during renovation and remodeling activities, (4) assessment of
    technologies to reduce the cost and improve the efficiency of
    identifying lead-based paint during repainting and renovation and
    remodeling activities, and (5) outreach efforts to inform the public
    about ``safe repainting''. In addition, the agency is considering using
    some of the funds available as grants to answer specific ``safe
    repainting'' or renovation and remodeling technical questions. The
    Agency is not seeking additional funding in fiscal year 2000.
        Question. What is the status of EPA's efforts to evaluate existing
    data to examine the effectiveness of additives to reduce engine octane
    demand? What is EPA's assessment of the importance of additives that
    control combustion chamber deposits in reducing octane demand and
    improving fuel economy?
        Answer. In the final rule on the certification standards for
    deposit control gasoline additives (July 5, 1996, 61 FR 35309), EPA
    extensively evaluated the potential impacts of combustion chamber
    deposits (CCD) and vehicle octane requirement increase (ORI) on
    gasoline vehicle emissions and fuel economy. At that time, EPA
    concluded that there was insufficient evidence that ORI should be
    reduced to prevent an adverse impact on fuel economy. EPA also
    concluded that there was inadequate evidence that a reduction in ORI
    would result in a cost-effective reduction in total energy use or
    emissions from gasoline refineries and motor vehicles.
        The final rule also concluded that there was inadequate information
    on the impacts of CCD on emissions, fuel economy, and driveability to
    draw conclusions regarding the costs and benefits of requiring
    additives for CCD control. It was also noted that no appropriate
    performance test procedures and standards exist for evaluating the
    impact of additives on CCD.
        Since the publication of the final rule, EPA has continued to
    evaluate information on these issues as it has become available.
    Despite considerable effort by industry to evaluate additive impacts on
    CCD and the impact of CCD on emissions, EPA finds the situation
    fundamentally unchanged. The Coordinating Research Council (CRC), a
    cooperative investigative group funded by the automotive and petroleum
    industries, is currently undertaking an extensive test program to
    evaluate additive impacts on CCD. EPA plans to review the results from
    this program when they become available approximately one year from
    now. EPA hopes that the results of this program will facilitate the
    Agency's further evaluation of whether CCD control is necessary and
    feasible.
                       gpra: performance based management
        Question. What specific steps have you taken as head of the agency
    to achieve performance based management within your agency, as required
    by the Government Performance and Results Act?
        Answer. The Agency has moved aggressively to meet and exceed the
    requirements of GPRA. In 1995, EPA embarked on a far-reaching effort to
    fundamentally change past approaches to planning, budgeting,
    performance measurement, and accountability. This entailed core changes
    to budget and financial management structures and the implementation of
    processes to link budgeting and management accountability. The Agency
    created a new Planning, Budgeting, Analysis and Accountability (PBAA)
    process that is intended to dramatically improve EPA's ability to
    achieve results.
        The new PBAA process has four specific purposes: (1) to develop
    goals and objectives for accomplishing the Agency's mission; (2) to
    improve the link between long-term planning and annual resource
    allocation; (3) to enhance our ability to use human health and
    environmental risk information in setting priorities; and (4) to better
    assess our accomplishments and provide feedback for making future
    decisions. While this effort will take several years to fully
    implement, the Agency is making real progress in the short term while
    we build for the future. The new PBAA process comprises several steps,
    including:
        A Strategic Plan, which describes EPA's strategic mission, long-
    term goals, and specific shorter-term (i.e., 5 years or more)
    objectives that the Agency will meet in achieving the goals.
        Annual Performance Plans and Budget Requests, which are derived
    from the Strategic Plan and ongoing strategic planning efforts, serves
    as the basis for budget decisions. They describe annual performance
    goals, measures of outputs and outcomes, and activities aimed at
    achieving the annual performance goals and making progress toward
    longer-term goals and objectives.
        Annual Performance Reports, required by GPRA six months after the
    end of each fiscal year, which will assess the progress EPA has made
    toward achieving its goals and report on the Agency's success in
    accomplishing its annual performance goals.
                        gpra: accountability of managers
        Question. How are your agency's senior executives and other key
    managers being held accountable for achieving results?
        Answer. Accountability is a crucial element of the Agency's overall
    planning and budgeting framework. The Agency has established senior
    management teams for each of its strategic goals. These teams assess
    progress being made to achieve the goals, and develop recommendations
    for changes in approach or emphasis needed to ensure that our strategic
    goals and objectives are met. In addition, the Agency's National
    Program Managers, working with the senior leadership in the Regions,
    develop annual goals and performance measures that support achievement
    of the Agency's long-term strategic goals and objectives. EPA's senior
    managers are also working with the States under the National
    Environmental Performance Partnership System (NEPPS) to negotiate
    performance partnership agreements necessary to meet clearly defined
    performance measures.
                      gpra: use of performance information
        Question. How is your agency using performance information to
    manage the agency?
        Answer. The Agency created a new Planning, Budgeting, Analysis and
    Accountability (PBAA) process that is intended to dramatically improve
    EPA's ability to achieve results.
        The new PBAA process has four specific purposes: (1) to develop
    goals and objectives for accomplishing the Agency's mission; (2) to
    improve the link between long-term planning and annual resource
    allocation; (3) to enhance our ability to use human health and
    environmental risk information in setting priorities; and (4) to better
    assess our accomplishments and provide feedback for making future
    decisions. While this effort will take several years to fully
    implement, the Agency is making real progress in the short term while
    we build for the future. The new PBAA process comprises several steps,
    including:
        A Strategic Plan, which describes EPA's strategic mission, long-
    term goals, and specific shorter-term (i.e., 5 years or more)
    objectives that the Agency will meet in achieving the goals.
        Annual Performance Plans and Budget Requests, which are derived
    from the Strategic Plan and ongoing strategic planning efforts, serves
    as the basis for budget decisions. They describe annual performance
    goals, measures of outputs and outcomes, and activities aimed at
    achieving the annual performance goals and making progress toward
    longer-term goals and objectives.
        Annual Performance Reports, required by GPRA six months after the
    end of each fiscal year, which will assess the progress EPA has made
    toward achieving its goals and report on the Agency's success in
    accomplishing its annual performance goals.
        EPA is now in its first cycle of evaluating performance information
    in the context of the GPRA structure. Though our processes may change
    as we gain experience this year, we have already made significant
    progress in incorporating performance information into the Agency's
    decision-making. For example, in May the Deputy Administrator met with
    the Agency's senior managers to discuss the performance data so far
    received and to evaluate how this might impact our priorities in fiscal
    year 2001. The Agency is committed to continuing this integration of
    performance evaluation and Agency priority-setting.
      gpra: use of performance information in developing fiscal year 2000
                                 budget request
        Question. How did program performance factor into your decisions
    about the funding you are requesting in fiscal year 2000. Please
    provide examples.
        Answer. As part of the Agency's overall planning, budgeting,
    analysis and accountability framework, the Agency conducts periodic
    reviews of changes needed to ensure that the Agency will achieve its
    long-term strategic goals and objectives. The results of these reviews
    are incorporated into the annual plan and budget request. The
    integration of our budget with performance planning has enabled the
    Agency to identify more than 70 specific performance goals associated
    with the funding requested in fiscal year 2000. Examples include:
      --5 percent reduction of air toxics emissions as part of the Agency's
            Air Toxics program;
      --an increase to 91 percent of the population served by community
            drinking water systems meeting all 194 health based standards
            as part of the Agency's Drinking Water program;
      --the implementation of environmental improvement projects in 350
            watersheds as part of the Agency's Clean Water Action Plan;
      --a 200 million pound reduction in the quantity of Toxic Release
            Inventory (TRI) pollutants released, treated, or combusted for
            energy recovery as part of the Agency's Pollution Prevention
            program; and
      --a reduction of more than 50 million metric tons carbon equivalent
            of greenhouse gas emissions as part of the Agency's Climate
            Change Technology Initiative.
                  gpra: program changes to improve performance
        Question. What specific program changes have you made to improve
    performance and achieve the goals established in your strategic and
    annual plans?
        Answer. The Agency has fully integrated its budget with strategic
    and annual planning, and has revised its budget structure to allocate
    100 percent of its resources within its goal--objective architecture.
    Accordingly, the priorities and initiatives contained in the
    President's Budget for fiscal year 2000, such as the Clean Water Action
    Plan, Climate Change Technology Initiative, Health Threats to Children,
    Clean Air Partnership Fund, and Chemical Right To Know program, reflect
    program changes proposed to achieve the goals in the Agency's strategic
    and annual plans. Since we are still in the first cycle of performance
    information in the GPRA context, it is premature to suggest
    programmatic changes that may be suggested by the first year's data.
               gpra: link between resources and performance goals
        Question. How does your budget structure link resource amounts to
    performance goals?
        Answer. The Agency has adopted a common framework for its planning,
    budgeting and financial management structures. This has enabled EPA to
    fully integrate its budget structure with its annual plan. EPA has
    based its strategic plan on ten long-term goals. Each goal consists of
    a number of strategic objectives which define the environmental
    outcomes we are attempting to achieve over several years. EPA's budget
    and annual plan use the same structure. The budget and annual plan
    identify resources and performance information associated with each
    strategic objective.
       gpra: changes to improve link between resources performance goals
        Question. What, if any, changes to the account and activity
    structure in your budget justification are needed to improve this
    linkage?
        Answer. The Agency realigned its activity structure in fiscal year
    1999 to match the structure of its strategic plan. There are no plans
    at present to request a change in our account structure, but we will
    continue to evaluate the need for changes, and will work with
    appropriate Congressional Committees if the evaluation reveals that
    changes to the account structure would enhance our ability to meet the
    Government Performance and Results Act, or the Federal Financial
    Management Improvement Act and associated Managerial Cost Accounting
    Standards.
                       gpra: data for performance report
        Question. Does your fiscal year 2000 Results Act performance plan
    include performance measures for which reliable data are not likely to
    be available in time for your first performance report in March 2000?
    If so, what steps are you planning to improve the reliability of these
    measures?
        Answer. The Agency has completed a preliminary review of our
    ability to provide valid and verified data in support of all the
    performance measures used in our fiscal year 1999 annual plan. The
    results of this review are included in the Agency's fiscal year 1999
    Annual Plan. This review revealed that there are areas where data are
    incomplete, of poor quality, or are inadequate in scope to fully
    capture the goals contained in the annual plan.
        The Agency's budget request for fiscal year 2000 contains resources
    to address the most critical problems. For example, the Agency is
    engaged in an extensive effort to improve our ability to evaluate the
    effectiveness and enhance accountability of our environmental
    enforcement efforts. Also, we have requested resources to modernize the
    information systems needed to efficiently collect and manage
    performance data. One of the Agency's key reinvention efforts is a
    five-year project to implement new data standards and electronic
    reporting in 13 major environmental information systems. We are also
    continuing to work with our State partners to identify the specific
    performance data improvements needed to measure the environmental
    results of our delegated environmental programs.
        To ensure that we proceed as effectively as possible, the Agency is
    establishing a new Office of Information. Among other things, this
    Office will be responsible for identifying a long-term strategic
    assessment of the Agency's data needs, coordinating investments, and
    ensuring a consistent application of data quality management practices
    across the Agency.
                    gpra: impact on future funding requests
        Question. How will your future funding requests take into
    consideration actual performance compared to expected or target
    performance?
        Answer. The Government Performance and Results Act requires that
    Agencies include in their Annual Performance Reports a ``summary of the
    findings of program evaluations completed during the fiscal year
    covered by the report.'' In general, these evaluations will provide a
    link between planning and actual performance by helping to measure
    progress against both our strategic and annual goals. In addition, EPA
    has formed multi-Office teams for each of its Strategic Goals. These
    ``Goal Teams'' are charged with assessing progress toward achieving
    long term strategic objectives and annual performance goals, and with
    identifying areas where changes in resources may be necessary to
    achieve those goals and objectives.
        EPA is now in its first cycle of evaluating performance information
    in the context of the GPRA structure. Though our processes may change
    as we gain experience this year, we have already made significant
    progress in incorporating performance information into the Agency's
    decision-making. For example, in May the Deputy Administrator met with
    the Agency's senior managers to discuss the performance data so far
    received and to evaluate how this might impact our priorities in fiscal
    year 2001. The Agency is committed to continuing this integration of
    performance evaluation and Agency priority-setting.
                             gpra: cost accounting
        Question. To what extent do the dollars associated with specific
    agency performance goals reflect the full costs of all associated
    activities performed in support of that goal? For example, are overhead
    costs fully allocated to goals?
        Answer. The Agency has fully integrated its budget and financial
    management processes with its strategic and annual plans. As a result,
    100 percent of our budgeted resources are associated with our strategic
    goals and objectives. However, it is true that the Agency's goals tend
    to be mutually supportive. Accordingly, the resources under each goal
    do not and cannot reflect all resources that could be reasonably
    associated with achieving the goal.
                                     ______

                      Questions Submitted by Senator Burns

                       fiscal year 2000 budget reduction
        Question. I was surprised to see that EPA is requesting a 5 percent
    (-$383 million) reduction for existing programs in its fiscal year 2000
    budget. I want to compliment EPA for requesting a smaller budget for
    fiscal year 2000. However, I do have some concerns with what your
    budget funds and how it is allocated. What are your priorities in
    fiscal year 2000 for funding in EPA?
        Answer. The Agency always strives to manage its resources
    prudently, while maintaining its focus on priorities to protect public
    health and the environment. While we recognize the constraints placed
    upon our budget annually by overall tight discretionary caps, we also
    are mindful of our environmental commitments. With a decreased budget
    this year, we must continue to shift resources to fund the Agency's
    highest priorities and to comply with new mandates established by
    Congress, including: the Safe Drinking Water Act Amendments of 1996
    (SDWA), and the Food Quality Protection Act of 1996 (FQPA).
        Question. Why is EPA moving into regulating health care, especially
    for children?
        Answer. EPA's mission includes protecting public health in the
    context of environmental protection. We do not, nor do we intend to,
    regulate health care, per se, which is the mission of other agencies.
        Question. Don't other federal departments and agencies such as HHS
    and BIA, adequately manage and regulate health care issues?
        Answer. EPA does not regulate health care management. EPA has
    always regulated and performed research on substances that affect the
    health of the public. Through the interagency Task Force on
    Environmental Health Risks & Safety Risks to Children, EPA is making
    sure that it does not duplicate the work of other Federal entities.
        Question. What are they doing in this area of children's health?
        Answer. Administrator Browner and Secretary Shalala co-chair the
    President's Task Force on Environmental Health Risks and Safety Risks
    to Children. This Task Force has developed a Federal strategy to
    address asthma in children and has other work groups examining issues
    related to childhood cancer, developmental disorders, and unintentional
    injuries. Each Federal entity brings to the Task Force its unique
    contribution derived from its mission and expertise in various
    children's health and safety areas. The Task Force exists both to take
    advantage of the synergistic effects of cooperation for a common goal
    and to avoid duplication of efforts across agencies and departments
    concerned with children's health. Individual departments and agencies
    can speak best to the specific activities that they are pursing in
    children's health.
        Question. Why does the Administration have to come up with a new
    environmental initiative every year such as the new Clean Air
    Partnership Fund for fiscal year 2000?
        Answer. EPA's mission is to protect human health and to safeguard
    the natural environment. New initiatives are created as environmental
    needs become more critical. One of the Administration's most important
    public health commitments is to improve the air that Americans breathe.
    Over one third of Americans still live in areas where the air does not
    meet the new air quality standards.
        The Clean Air Partnership Fund will provide new grant resources and
    opportunities for cities, states and tribes to partner with the private
    sector, the federal government and each other to provide healthy, clean
    air in the communities in which we live.
        The Clean Air Partnership Fund will demonstrate locally managed
    programs that achieve early integrated reductions in soot, smog, air
    toxics and greenhouse gases. The Fund will direct new resources to
    state and local governments to find the most innovative, cost-effective
    and protective ways to reduce soot, smog, air toxics and greenhouse
    gases that contribute to climate change.
                              better america bonds
        Question. Concerning the ``Better American Bonds'' initiative, I am
    confused on what and how these bonds will work. I understand it is part
    of the Administration's Livability Initiative to help states and local
    governments better protect their land and water. In Montana, we need
    some protection, especially from the federal government since many
    communities are surrounded by public lands. Plus we need economic
    development assistance in many small rural communities in Montana. Will
    these bonds allow local communities to buy conservation easements on
    agricultural lands to prevent them from being developed? Will these
    bonds allow local communities to purchase undeveloped lands for future
    economic development or are these bonds envisioned to lock up local
    lands from any economic development?
        Answer. Better America Bonds can be used for three purposes--to
    preserve open space, protect water quality, and clean up brownfields.
    Through a competitive process, state, local and tribal governments can
    apply to EPA (working in consultation with other federal agencies) for
    the authority to issue Better America Bonds for these purposes. To
    preserve open space, a community can either purchase the title to a
    land parcel or use conservation easements. A different community might
    decide that a city owned brownfield site should be cleaned up to help
    revitalize the economy and create jobs, or that a wetland should be
    restored. The choice is theirs. The program is entirely voluntary--if a
    community doesn't want to participate, it doesn't have to.
        EPA will design the Better America Bonds program to accommodate all
    types of communities--large, small, urban, suburban, and rural. As EPA
    works with other agencies to develop this initiative, we will include
    small communities in our outreach both to provide information about the
    program and to seek advice as to how to structure the program to meet
    their needs.
        To provide communities with the flexibility to respond to changing
    circumstances, this program allows communities to change the use of the
    land (sell a park financed with Better America Bonds to a developer who
    builds retail space on the land, for example) after the fifteen year
    term is up and the principal is repaid. We do not expect that many
    communities will change the use after fifteen years, but in certain
    cases it might make sense, either for environmental or economic
    reasons, for the community to do so. To provide a check and balance
    system, however, before a community can change the use it must allow
    any 501(c)(3) organizations that are tax exempt for environmental
    protection purposes the right of first refusal to purchase the land for
    the purpose of maintaining its qualifying use. The government would
    have to sell the land to a willing non-profit for the same price at
    which it was purchased originally. If no qualified buyer is found, the
    land could then be sold at its fair value for other uses.
        This is not a big government program. The federal government will
    not purchase one square inch of land. Nor will it micromanage local
    zoning and land use decisions. Our states and communities will build
    this legacy themselves. All decisions will be made at the state, tribal
    or local level. We're just providing them new tools they need to grow
    in ways that are best for them.
        Question. How will you implement these bonds, especially since EPA
    isn't in the business of issuing bonds?
        Answer. As the agency responsible for protecting public health by
    cleaning up our air, water and land, and ensuring that all Americans
    have access to a clean and healthy environment, EPA is best suited to
    help communities meet the stated goals of the program--protecting water
    quality, cleaning up brownfields for reuse, and preserving green space.
    The Better America Bonds program builds upon EPA's successful existing
    programs that work with communities to improve local water quality and
    to clean up brownfields sites so that they can be returned to
    productive community use.
        Furthermore, the Agency currently manages various bond-related
    programs such as the Clean Water State Revolving Fund and maintains an
    Environmental Finance office. The Agency would draw upon the
    significant expertise in these and other programs to run the Better
    America Bonds program. Finally, parts of this program will be managed
    by the Treasury Department (including enforcement by the Internal
    Revenue Service.)
        To ensure a broad range of expertise, EPA will chair a panel of
    departments and agencies including HUD, USDA, Interior, FEMA, and
    Treasury. EPA will work closely with them on the design of the program,
    the selection criteria, the application process, and the awarding of
    bonding authority.
        The Agency intends to administer this program in a cost effective
    manner and anticipates being able to absorb administrative expenses
    with existing agency resources. The Agency did not seek any new
    resources in EPA's fiscal year 2000 budget request to run this program.
        There are several factors supporting this approach. First, as
    stated by the Administrator, EPA does not intend to issue any
    regulations for this program. Instead, EPA will develop basic guidance
    documents to assist communities in applying for bonding authority.
    Second, the program will involve several current Agency programs such
    the Brownfields office, various water quality programs, and our
    Environmental Finance Office.
        Question. Finally, don't you need authority for this bonding
    authority and if so, when will we get a chance to see your requested
    authority?
        Answer. To create the tax credit mechanism for the Better America
    Bonds program, the tax code needs to be amended by Congress. A bill, HR
    2446, has been introduced in the House, and we anticipate a bill to
    create the program will be introduced in the U.S. Senate in the near
    future. They will be referred to the Finance and Ways and Means
    Committees, respectively. Assuming that those bills pass, President
    Clinton would then need to sign it into law.
                      clean air partnership fund programs
        Question. Concerning the ``Clean Air Partnership Fund,'' I am not
    sure how this compares with the state grants programs. It appears to be
    another $200 million on top of the $215 million provided to states and
    tribes for air quality programs. How are the programs under this new
    Partnership Fund different from what is done under state and tribal
    grants by the air program? What demonstrated need exists now for
    developing ``partnerships'' on air quality problems or programs? If so,
    give me some examples? What air problems to you expect will be
    addressed by these partnerships among local, state, tribal, and federal
    governments and the private sector?
        Answer. State and tribal grants are awarded under Section 105(a)(1)
    of the Clean Air Act which authorizes grants for the implementation of
    programs for the prevention and control of air pollution and the
    implementation of national air quality standards. In contrast, if funds
    are appropriated for the Clean Air Partnership Fund, those funds will
    be awarded under Section 103(b) of the Clean Air Act which authorizes
    grants for research, investigations, experiments, demonstrations,
    surveys and studies. Awards will be made to support individual
    innovative demonstration projects such as those that address reductions
    in air pollutants and greenhouse gases, not to implement ongoing State
    and tribal air pollution prevention and control programs.
    Traditionally, air programs (and grants to support them) have pursued
    solutions to one air pollution problem at a time. With the multiple air
    quality challenges facing states and private entities, this problem-by-
    problem approach is no longer optimal. The Clean Air Partnership Fund
    is designed to support demonstration projects and technologies that can
    simultaneously address multiple air pollution problems.
        EPA's believes that only through partnerships of government,
    private sector and non-governmental entities will sustained progress
    towards eliminating significant air pollution problems occur.
    Partnerships of all kinds are necessary and the Clean Air Partnership
    Fund will provide a catalyst for their formation. For example,
    addressing regional air quality problems such as ozone nonattainment
    requires states and municipalities to partner with each other to
    formulate regional air quality improvement strategies. In another
    example, transportation planners and air quality planners must work
    together to establish transportation management systems that further
    air quality improvement rather than exacerbate pollution. Similarly,
    there is a need to encourage state energy officials to form
    partnerships with local housing authorities to expand low income
    weatherization assistance in ways that improve energy conservation and
    reduce air pollution. In yet another example, to realize the potential
    benefits of reducing multiple pollutants through use of new
    technologies, private sector technology providers need to partner with
    municipal and state governments to demonstrate the capabilities of
    their clean air technologies and expand their market share.
        EPA anticipates that the Fund will address a spectrum of air
    quality problems including: criteria air pollution such as particulate
    matter and ozone nonattainment; air toxics; and climate change.
       fiscal year 2000 budget: support for states; justification for 5
                     percent increase in operating programs
        Question. I noticed that even though your total budget request for
    fiscal year 2000 is decreasing by 5 percent, your Operating Program is
    increasing by 5 percent (+$191 million). That part of your budget, as I
    recall supports more of the federal regulatory establishment instead of
    supporting the states and tribes who are managing environmental
    protection on the front lines. What percentage of your budget supports
    the states and what does this consist of?
        Answer. Over 40 percent of the Agency's budget is dedicated to
    support of the states and tribes. Included in this funding are
    resources from state grants, the Clean Water and Drinking Water SRFs,
    LUST cooperative agreements, and Superfund assistance to states.
        Within the Operating Programs, the President's Budget provides $885
    million for categorical program grants for state and tribal
    governments. This funding represents 24 percent of the Agency's total
    $3.682 billion for Operating Programs
        Question. Why do you need a 5 percent increase in your Operating
    Program, especially if the funding for the Superfund Program is not
    changing and funding for your Water Infrastructure Fund is decreasing
    30 percent
        Answer. The $3.7 billion request for Operating Programs includes:
    most of the Agency's research, regulatory and enforcement programs, and
    funds our partnership programs with states, tribes and local
    governments. Our Operating Programs represent the backbone of the
    nation's efforts to protect public health and the environment through
    sound science, standard setting and enforcement. Through these
    programs, the Agency works to ensure that our water is pure, our air is
    clean and our food is safe. This 5 percent increase is critical to help
    the Agency meet the expectations of the American public for a safe,
    healthy environment.
                      superfund: proposed cleanup actions
        Question. I have received quite a few complaints from people in
    Montana that the EPA does not seem to care about local citizen inputs
    or ideas--that the public meeting process is a joke and that anytime
    someone disagrees with the EPA it doesn't matter. As you know, there
    are many sensitive environmental issues in Montana. Most of the
    public's complaints seem to concentrate on EPA's review of proposed
    cleanup actions. However, I want to be assured that when the people of
    Montana provide comments to EPA, their input will be heard and used.
    What do you propose to do to counter this negative perception by my
    constituents?
        Answer. The Environmental Protection Agency (EPA) is committed to
    involving citizens in the site cleanup process. Our community relations
    effort is based on two-way communication designed not only to keep
    citizens informed about site progress, but also to give them
    opportunity to provide input into site decisions. Many opportunities
    are available to communities to provide input into the cleanup process
    through technical assistance. Technical assistance is available from a
    variety of sources depending on the community. For example, Technical
    Assistance grants are available to communities to hire technical
    advisors who can explain technical information and documents related to
    site cleanup and help articulate the community's concerns. We encourage
    communities to develop community advisory groups (CAGs) which provides
    an open dialogue between communities and EPA. Community members are
    encouraged to attend our availability sessions. These sessions allow
    community members access to the site cleanup team to ask questions and
    voice their concerns regarding cleanup issues prior to large public
    meetings.
               regional haze: implementation of final regulations
        Question. I am concerned with the release of the final regional
    haze regulations. From my initial review, they seem very complex and
    difficult to implement. However, the Western governors, through the
    Western Regional Air Partnership, appear somewhat satisfied. However, I
    need to understand how this rule will be implemented. It seems to set
    the stage for a long-term regional planning process which is heavily
    dependent on the cooperation of all parties. Also this process appears
    to impinge on state sovereignty. What are the time lines and major
    milestones of this rule? How will states who have the responsibility of
    setting and managing haze in the air over the Class I areas the
    authority to resolve issues of transboundary emissions from neighboring
    states and from public lands on which the states have no authority?
    Given this rule appears to establish a regional planning process, who
    is the ultimate party to make decisions on these regional plans?
        Answer. The regional haze program requires States to establish
    reasonable progress goals and long term strategies for improving
    visibility in Class I national parks and wilderness areas, and to adopt
    control measures to meet these goals. States are to consult with each
    other in setting Class I area goals and in developing appropriate
    strategies to meet these goals.
        The timelines and major milestones for this rule are as follows:
        Initial regional haze implementation plan due dates.--The
    implementation schedule for the regional haze program is consistent
    with the provisions in TEA-21 and its intent for integrating control
    strategies for PM2.5 and regional haze. For geographic areas designated
    as attainment or unclassifiable for PM2.5, the due date for regional
    haze SIPs is one year after EPA publishes the PM2.5 designation. For
    geographic areas designated as nonattainment for PM2.5, the due date is
    three years after the PM2.5 designation.
        Because of the regional nature of visibility problems, the rule
    also encourages regional planning involving multiple states.
    Accordingly, if a State participates in a regional planning effort and
    submits a SIP committing to continue its participation, the state may
    delay submittal of a regional haze SIP for its attainment areas and
    submit a regional haze SIP for the entire State on the date a SIP is
    due for nonattainment areas. This will allow States to develop
    coordinated regional strategies for both attainment and nonattainment
    areas and submit one SIP which incorporates those strategies.
        For the nine western States which participated in the Grand Canyon
    Visibility Transport Commission, the final rule provides for an
    implementation schedule for the 16 Class I areas addressed by the
    Commission's report consistent with TEA-21 and the recommendations of
    Western Governors Association. States choosing to follow this optional
    approach must submit initial regional haze implementation plans in
    2003.
        Initial Implementation Period.--The time period for the initial
    regional haze implementation plans will extend from the submittal date
    of the plan until 2018. Progress Reports and Comprehensive Updates. The
    rule requires progress reports every 5 years (beginning 5 years after
    the first SIP submission) and, beginning in the year 2018,
    comprehensive implementation plan updates every 10 years.
        EPA encourages regional planning efforts for States and other
    stakeholders, including federal land managers, to address the
    cumulative effect of emissions from multiple States on Class I areas.
    EPA plans to participate actively in these regional groups to assure
    its views are known by all participants as the process moves forward.
    We believe these regional planning efforts will enable participating
    States and other Stakeholders to reach consensus on coordinated
    strategies by highlighting the shared benefits of various emission
    reduction programs, and providing for cost-effective regional control
    strategies. At the same time, we recognize that under the Act, each
    State has the ultimate decision making authority regarding adoption of
    implementation plan provisions. State actions may not be dictated by
    regional planning organizations. Ultimately, EPA has the authority to
    approve or disapprove a State's implementation plan based on the
    State's assessment and selection of reasonable progress goals, the
    strategies it adopts to meet those goals and other factors.
        Question. I hope that the Agency has improved upon its original
    proposal by providing the states with the flexibility they need to
    fashion their own visibility programs that Congress intended when it
    enacted the visibility protection program in 1977 and revised in 1990.
    What flexibilities are provided to the states in the final rule to
    fashion local solutions for state visibility problems?
        Answer. The final rule provides the States with substantial
    flexibility in implementing the regional haze program to make
    ``reasonable progress'' toward the CAA's national goal of natural
    visibility conditions in Class I areas. First, States have the
    flexibility to take additional time to develop a single statewide SIP
    rather than multiple SIPs on different timelines for attainment and
    nonattainment areas, provided the State participates in regional
    planning effort(s). Second, the final rule does not include a
    presumptive rate of visibility improvement as was included in the
    proposed rule. States have the flexibility to set progress goals based
    upon a number of factors in the statute and regulation. Third, States
    have considerable flexibility in developing long-term strategies
    addressing an appropriate mix of stationary, mobile, and area sources
    of visibility-impairing emissions to achieve Class I area progress
    goals. Fourth, in lieu of requiring compliance on a source-specific
    basis with the requirement for application of best available retrofit
    technology (BART), States may develop a cost-effective emissions
    trading program or other alternative measure that achieves greater
    reasonable progress than BART, and involves participation by both BART-
    eligible and non-BART sources.
        regional haze: tea-21 legislation --integration with naaqs pm2.5
        Question. Last year, the necessary regulatory tools for the states
    to implement visibility rules were not provided. The TEA-21 legislation
    was amended to provide the states with the necessary time to implement
    these rules. What are EPA's plans to support the multi-year schedule
    and multi-million dollar price tag for the states to implement this
    final regional haze rule? How much funding was provided in fiscal year
    1999 and fiscal year 2000 for the states and regional organizations to
    comply with this new rule. Should additional funding be provided in
    fiscal year 2000 for implementation of the regional haze rule to ensure
    it does not develop into an unfunded mandate?
        Answer. In fiscal year 1999, the Agency provided approximately $1.9
    million in grant funds to support regional haze work. These funds
    supported the operation of the visibility monitoring network (IMPROVE)
    and provided support to states and multi-state organizations addressing
    regional haze issues associated with the Grand Canyon and the Southern
    Appalachian Mountains. Additionally and in response to Congress'
    recommendation, EPA provided approximately $4.0 million in Agency
    funding to support a new planning initiative for regional haze and
    visibility impairment. Recognizing that regional haze is a complex
    national problem, the Agency is working with all the States to identify
    the composition of potential regional planning groups. Once these
    regional planning groups are identified, the Agency will provide each
    planning organization with initial funding to develop their multi-year
    work plans and future funding needs. The Agency will incorporate the
    funding needs of these regional planning organizations in its fiscal
    year 2001 budget request.
        For fiscal year 2000, EPA is directing approximately $3.6 million
    in state grant funds for regional haze work. Funding is continued for
    the visibility monitoring network and support for the Grand Canyon
    visibility follow on work. Additionally funding is being provided to
    the States to initiate regional haze planning activities, assess
    visibility monitoring needs and identify emission inventory and source
    characterization efforts.
        Question. TEA-21 Act requires that the implementation of the
    regional haze rule and the NAAQS PM2.5 rule be integrated. Obviously,
    we do not want the implementation of the regional haze program to lead
    the health-based standards. How will EPA integrate these two regulatory
    programs to ensure that the implementation of the regional haze rule
    follows the implementation of the NAAQS PM2.5 rule and that these funds
    are being expended in the most cost effective manner?
        Answer. EPA has provided an implementation schedule for the
    regional haze program that is consistent with the provisions in TEA-21
    and integration of control strategies for PM2.5 and regional haze. For
    geographic areas designated as attainment or unclassifiable for PM2.5,
    the due date for regional haze SIPs is one year after EPA publishes the
    PM2.5 designation. For geographic areas designated as nonattainment for
    PM2.5, the due date is three years after the PM2.5 designation.
        Because of the regional nature of visibility problems, the rule
    also encourages regional planning involving multiple states.
    Accordingly, if a State participates in a regional planning effort and
    submits a SIP committing to continue its participation, the state may
    delay submittal of a regional haze SIP for its attainment areas and
    submit a regional haze SIP for the entire State on the date a SIP is
    due for nonattainment areas. This will allow States to develop
    coordinated regional strategies for both attainment and nonattainment
    areas and submit one SIP which incorporates those strategies.
        For the nine western States which participated in the Grand Canyon
    Visibility Transport Commission, the final rule provides for an
    implementation schedule for the 16 Class I areas addressed by the
    Commission's report consistent with TEA-21 and the recommendations of
    Western Governors Association. States choosing to follow this optional
    approach must submit initial regional haze implementation plans in
    2003.
        We believe that by providing opportunities for regional planning
    and for the integrated implementation of the PM2.5 and regional haze
    control strategies, the regional haze rule allows States to address
    both air quality programs in a cost-effective manner.
                      risk management plan rule on propane
        Question. I am very concerned with your Risk Management Plans rules
    issued under Section 112(r) of the Clean Air Act especially as they
    relate to non-toxic flammable fuels such as propane. Propane is a
    clean-burning alternative fuel which is adequately regulated under
    existing state and federal laws and independent safety codes and
    standards. As you probably know, I am a co-sponsor of S. 880 just
    introduced by Senator Inhofe to exempt non-toxic flammable fuels from
    Section 112(r). However, I understand that the U.S. Court of Appeals
    recently stayed the June 21, 1999 effective date of this rule for
    propane.
        What are the court's plans concerning this rule? What are EPA's
    plan to extend relief to propane marketers and large consumers now?
        Answer. The National Propane Gas Association (NPGA) has challenged
    the coverage of propane under the RMP rule and has requested a stay of
    the requirements. The United States Court of Appeals for the District
    of Columbia Circuit has granted a stay until further action by the
    court. This means that any (large or small) facilities handling propane
    subject to the RMP requirements do not need to comply with the
    requirements at this time. Further, EPA recently proposed an exemption
    for any listed flammable hydrocarbon substances (e.g. propane, methane,
    butane, acetylene) used or stored for use as a fuel in quantities up to
    67,000 pounds (18,000 gallons). In addition, EPA stayed the RMP
    requirements for facilities handling less than 67,000 pounds of a
    listed flammable hydrocarbon as a fuel until the proposal is finalized.
        At the House Appropriations Subcommittee on VA/HUD and Independent
    Agencies hearing in April 1999, you testified that EPA intends to
    increase the regulatory threshold for propane to 18,000 gallons. At the
    hearing, you also indicated that it didn't mater who held this amount
    in order to qualify. But in EPA's April 20 press release you announced
    that the threshold is only being increased to 16,750 gallons and that
    EPA's intent is not to provide any relief to marketers. I am confused
    by this inconsistency.
        Question. Please clarify what are EPA's plans on the regulatory
    threshold and the impact on propane marketers.
        Answer. The 18,000 gallon (67,000 pounds of propane) cut-off is
    derived by considering a number of factors. Large quantities of
    flammable hydrocarbon fuel are more likely to generate a vapor cloud
    explosion in a catastrophic accidental release. A large enough vapor
    cloud explosion is more likely to impact the public offsite; this is
    EPA's area of concern. EPA has considerable accident data on propane
    that shows that while accidental releases of small quantities can and
    sometimes do result in significant on-site property damage and/or
    deaths and injuries to workers or first responders on-site, they
    generally do not cause off-site impacts. EPA modeled typical fuel use
    conditions to calculate the outcome associated with a catastrophic
    accidental release. Using modeling assumptions such as fraction flashed
    after a release, mass of fuel in a vapor cloud, and the explosive yield
    factor associated with a fuel/air explosion, EPA calculated the fuel
    mass that could generate harm off-site. Since the vast majority of fuel
    processes covered under the RMP rule use propane, EPA then reviewed the
    sizes of widely-used propane tanks and set the cut-off to coincide with
    the tank size closest to the quantity derived from the blast modeling.
    EPA believes that 18,000 gallons (67,000 pounds of propane) represents
    a reasonable upper limit for the exemption. This limit is also
    consistent with accident history which generally indicates that
    flammable substance accidents with serious off-site consequences most
    often occur at sites handling large quantities.
        A user or dealer with a storage tank or multiple tanks holding more
    than 18,000 gallons subject to the RMP requirements needs to complete a
    hazard assessment (worst case and alternative scenarios and 5 year
    accident history), make sure an accident prevention program is in-
    place, make sure an up-to-date emergency response plan is in-place, and
    fill-out and submit an RMP form. As mentioned above, free software and
    guides are available for preparing the hazard assessment. A facility
    that has had no accidents in the past 5 years can complete this portion
    quickly. For the accident prevention program, a facility that is
    already in compliance with safety codes and standards (such as National
    Fire Protection Association [NFPA] standard 58 for liquefied petroleum
    gas) has nearly all the elements in place for safe operation. The user
    or dealer will need to make sure these elements are up-to-date and add
    accident prevention elements that are not addressed by industry codes
    and standards, such as written operating procedures. Finally, an
    emergency response plan should already be in place and coordinated with
    the local fire department; if not, it will need to be prepared. All
    that's left is to fill in the blank or check off the box RMP form and
    submit it to EPA. The form must be submitted once every 5 years, unless
    major modifications are made at the facility that affect the hazards or
    prevention program. EPA estimated that a facility would likely spend
    about $231 to $1,679 to prepare an RMP and supporting on-site
    documentation, assuming the facility was already in compliance with
    existing codes, standards and industry safety practices. Since the RMP
    need only be submitted once every 5 years, the annualized cost is about
    $46 to $336.
        Even though I support public access to information on the Internet,
    I also have concerns about the nature and quality of the information
    being provided on the Internet.
        Question. Given there is some potential for this type of
    information falling into the wrong hands, such as potential terrorists,
    what is EPA's position on releasing information from these Risk
    Management Plans on the Internet? How will EPA protect this information
    from Freedom of Information Requests?
        Answer. I agree current FOIA laws require EPA to provide the RMP
    Offsite Consequence Analysis (OCA) data in electronic format, if
    requested. To address this concern, an interagency workgroup drafted
    legislation to exempt OCA data from FOIA. The draft bill entitled
    ``Chemical Safety Information and Site Security Act of 1999'' was
    transmitted to Congress on May 7th. EPA staff continue to provide
    technical assistance to Congressional staff who are pursuing a
    legislative solution to your concerns. It is my hope that these ongoing
    discussions will lead to the passage of legislation in the immediate
    future.
                       low sulfur gasoline proposed rule
        Question. I am very interested about EPA's proposed regulation to
    require nation-wide production of low sulfur concentrations in
    gasoline. I do not understand why the people of Montana need to shift
    to low sulfur gasoline given we do not have a problem with sulfur
    emissions in our state. Why does EPA believe that a national standard
    for burning low sulfur in gasoline is warranted when sulfur non-
    attainment is inconsistent across the nation? What flexibilities do
    states with responsibility for managing their own air quality program,
    such as Montana, have to adjust sulfur concentrations in gasoline? Why
    not provide flexibility to the states to determine the regional level
    of sulfur needed in gasoline to meet local markets and local non-
    attainment problems as you are proposing under the regional haze rule?
        I am also interested about how sulfur concentrations in gasoline
    affect catalytic converters. If an automobile drives from a region
    burning low sulfur gasoline to another region burning high sulfur
    gasoline and returns to the low sulfur region, will the catalytic
    converter revert to its original performance in a reasonable period of
    time? Given that California, a low sulfur gasoline state, is surrounded
    by high sulfur gasoline states, what has been their experience with
    vehicles failing emissions tests due to burning high sulfur gasoline
    purchased while traveling in other states?
        Five small refineries in California either have closed or have
    stopped producing gasoline since California adopted its low sulfur
    gasoline standard. What information does EPA have regarding the effect
    of these refinery closures or market withdrawals on consumer gasoline
    prices in California? How can EPA be confident that closures will not
    affect consumer prices in areas where all refineries are small by
    industry standards?
        STAPPA/ALAPCO has stated that the combined Tier 2 and gasoline
    sulfur rule will be equivalent of taking 54 million automobiles off the
    road. Does EPA agree or disagree with this estimate? What is EPA's
    estimate and reasoning for the change in automobile use due to this
    proposed rule? Please provide your estimate and reasoning by state
    showing the number of equivalent cars taken off the road due to (a)
    improved automobile emissions technology; (b) reduced sulfur content of
    gasoline to 30 ppm; and (c) being Tier vehicles, Tier I vehicles, LEV/
    ULEV vehicles, and Tier 2 vehicles.
        Answer. EPA proposed Tier 2 and low sulfur gasoline standards on
    May 1, 1999. Without significant new controls on motor vehicle
    emissions, millions of Americans will continue to breath unhealthy air.
    The Tier 2 emission standards and lower-sulfur gasoline would help
    achieve this goal. Gasoline sulfur is a catalyst poison and high sulfur
    levels in commercial gasoline could affect the ability of future
    automobiles to meet more stringent standards. Sulfur in gasoline
    reduces the effectiveness of a vehicle's emission control system. Lower
    sulfur gasoline is also important in order to enable the introduction
    of advanced technologies that promise higher fuel economy but are very
    susceptible to sulfur poisoning (for example, gasoline direct injection
    engines). Therefore, low-sulfur gasoline is needed to effectively
    reduce pollution and to achieve the full performance of vehicle
    emission control technologies.
        The focus of the proposed controls on gasoline sulfur content is to
    reduce ambient levels of ozone and PM, not sulfur emissions, nor
    compliance with the NAAQS for sulfur dioxide directly. EPA proposed
    these gasoline sulfur controls nationwide in part because there are
    areas in both the East and West which have problems with attaining or
    maintaining the ozone and PM NAAQS and which experience restricted
    visibility as a result of haze. Also, nationwide standards were
    proposed because high levels of sulfur can have a permanent effect on
    the efficiency of vehicle emission control systems. Sulfur attaches to
    and penetrates the active materials of automotive catalysts, which
    provide most of the control of automotive emissions currently being
    achieved. The most efficient catalyst systems available currently and
    those being developed for the next generation of emission control, such
    as those capable of meeting the proposed Tier 2 emission standards, are
    more sensitive to sulfur than catalysts used in the 1980's and early
    1990's. In addition to losing much of their effectiveness when exposed
    to high sulfur levels, these catalysts do not always return to their
    original level of effectiveness after the use of high sulfur fuel
    ceases. Even one tankful of high sulfur gasoline can cause irreversible
    damage to these catalysts. EPA expects that vehicles designed to meet
    the proposed Tier 2 standards will show an even more irreversible
    sulfur effect than those designed to meet today's California and
    Federal low emission vehicle standards. Given the fact that vehicles
    are quite mobile and that popular vacation areas exist in the western
    U.S., nationwide sulfur control is necessary to ensure that vehicles
    operating in the worst ozone areas in the eastern U.S. emit at the
    emission levels for which they were designed. California has strongly
    encouraged EPA to implement nationwide sulfur controls precisely
    because their own vehicles are being permanently disabled by using high
    sulfur fuel in neighboring states and because out-of-state vehicles
    coming into California are emitting above their certified emission
    levels because of operation on high sulfur fuel.
        The proposed emission reductions from this rule would provide much-
    needed assistance to states facing ozone and PM air pollution problems.
    When fully effective in 2030, the proposed tailpipe standards would
    significantly reduce NOX emissions from vehicles by about 74
    percent and particulate matter emissions by about 84 percent compared
    to emission levels of current vehicles. The reductions in
    NOX and SOX emissions from the proposed program
    would also reduce secondary ambient sulfate and nitrate PM which are
    formed from these gaseous emission. The nation's refiners would meet an
    average sulfur level of 30 parts per million (ppm) by 2004, down from
    the current average of more than 300 ppm. The maximum amount of sulfur
    in gasoline, for purposes of averaging, would be capped at 80 ppm,
    after a three-year phase-in. EPA estimates the cost of reducing sulfur
    levels to 30 ppm nationwide would be about 1-2 cents per gallon. Under
    Section 211 of the Clean Air Act, a state could adopt the same standard
    as established by EPA, or it could, under certain conditions, establish
    a more stringent standard. However, once EPA regulates the sulfur
    content of gasoline, a state could not adopt a less stringent standard.
    A uniform nationwide standard is supported by the fact that motor
    vehicles can and do travel throughout the country and catalytic
    converters of current and future vehicles will be detrimentally
    impacted by high sulfur levels in gasoline.
        As part of these proposed new standards, EPA has included several
    measures to ensure maximum flexibility and cost-effectiveness. These
    flexibilities include: (1) allowing averaging to meet both the car
    emission and gasoline sulfur standards; (2) allowing extra time for
    larger vehicles between 6000 and 8500 pounds and smaller refiners to
    meet their respective standards; and (3) allowing for a market-based
    credit trading-and-banking system for both industries to reward those
    who lead the way in reducing pollution. The proposal includes special
    considerations for small refiners (defined in the proposal as those who
    employ no more than 1,500 employees), such as those in Montana, which
    would have an additional four years (until 2008) to comply with the
    proposed sulfur standards. If necessary, small refiners that
    demonstrate a severe economic hardship could apply for an additional
    extension of up to two years. In developing this proposal, EPA worked
    closely with small refiners located throughout the United States and
    convened a Small Business Advocacy Panel to collect information about
    companies which meet the Small Business Administration's definition of
    a small gasoline producer. Montana Refining was very active in the
    Advocacy Panel process and would likely benefit from the proposed small
    refiner provisions. The proposed sulfur averaging provisions should
    also provide significant flexibility to small refineries owned by large
    companies.
        California's reformulated gasoline program, put in place in 1996,
    controls many gasoline properties beyond sulfur levels. The sulfur
    requirements, while significant, were responsible for about one third
    of the total costs and even less of the capital investments needed to
    meet the California requirements. While there were refinery closures in
    California in the 90's, most of these refineries closed prior to 1996.
    There are many reasons for these closings, including lost access to a
    reliable source of cheap crude oil and overcapacity. The price
    differential between gasoline sold in California and elsewhere is due
    in part to the supply and demand of California gasoline and the
    difficulty of obtaining it from sources outside the state. A nationwide
    sulfur control program would help alleviate this concern in California
    and other markets across the country. We believe the sulfur control
    provisions, especially those applicable to small refiners, are
    reasonable and do not anticipate any refinery closures or disruption in
    fuel supply attributed to this proposal.
        Our estimate for comparing the Tier 2/gasoline sulfur proposal
    emission reductions to emissions from vehicles removed from operation
    differs from the estimate provided by STAPPA/ALAPCO. By 2020, we
    project that the NOX emission reductions due to the proposed
    Tier 2 and sulfur standards will be the equivalent of removing 166
    million baseline light-duty vehicles and trucks from the road. Of this
    total, we project the equivalent of 69 million cars and trucks would be
    removed due to sulfur control alone. We developed these figures by
    comparing the emission rates of vehicles estimated to be in the 2020
    fleet with and without the effects of the Tier 2/gasoline sulfur
    proposal. These reductions reflect only the 47-state region defined by
    the U.S. minus California, Alaska and Hawaii; since emission reductions
    are also projected in these states, the nationwide total will be
    higher. In 2020, we estimate that Tier 2 cars and trucks will account
    for approximately 95 percent of all miles traveled by cars and trucks.
    NLEV cars and trucks will account for 2.8 percent, and Tier 1 cars and
    trucks will account for 2.2 percent.
    clean water action plan: usda and epa draft strategy on animal feeding
                                   operations
        Question. Recently USDA in conjunction with EPA unveiled their
    draft strategy for the Clean Water Action Plan. This Plan seeks to
    address the ``problem'' of animal waste management in animal feeding
    operations and essentially develop an approach to reduce phosphorous
    levels in livestock waste. This proposed plan potentially has major
    impacts on Montana producers because it will affect not only feedlot
    operators but any producer who houses an animal in a corral for an
    extended period of time. This includes producers who work with beef
    cattle, dairy cattle, swine, poultry, and even horses. In this time of
    depressed market prices and poor cash reserves by livestock producers,
    they do not need more regulatory burdens.
        Answer. The USDA-EPA Unified National Strategy for Animal Feeding
    Operations (AFOs) was issued in final form by the Vice President on
    March 9, 1999. The Strategy is one of over 100 action items included in
    the President's Clean Water Action Plan, issued in February 1998. The
    Strategy reflects a balanced and appropriate use of programs and
    authorities to address water quality and public health problems caused
    by AFOs.
        The Strategy does not change EPA's existing regulations for AFOs.
    Rather, the Strategy sets forth a range of flexible, common-sense steps
    that USDA and EPA plan to take, under existing legal and most under
    existing regulatory authority, to minimize the water quality and public
    health impacts of improperly managed animal wastes while complementing
    the long-term sustainability of livestock production. As indicated in
    the Strategy, EPA plans to review and revise its regulations related to
    CAFOs. This regulatory review and revision will be conducted in
    accordance with applicable legal and regulatory requirements.
        The Strategy relies heavily on the stewardship ethic of producers
    and is based on a national performance expectation that all AFO owners
    and operators should develop and implement technically sound,
    economically feasible, and site-specific ``comprehensive nutrient
    management plans'' (CNMPs) for managing the animal wastes produced at
    their facilities. These CNMPs will include actions to prevent or reduce
    runoff and result in better management of the estimated 1.37 billion
    tons of manure produced each year. We expect that the large majority of
    AFOs, particularly the small AFOs, will not be subject to federal
    regulatory requirements, but rather will be encouraged to voluntarily
    adopt CNMPs to ensure proper manure management.
        EPA's regulatory definitions of AFOs and concentrated animal
    feeding operations (CAFOs) were established in 1976 and are given at 40
    CFR 122.23 and Part 122, Appendix B. These regulations define an AFO as
    a facility that meets the following criteria:
      --Animals have been, are, or will be stabled or confined and fed or
            maintained for a total of 45 days or more in any 12-month
            period, and
      --Crops, vegetation, forage growth, or post-harvest residues are not
            sustained in the normal growing season over any portion of the
            lot or facility.
        The Federal regulations further define a CAFO generally as an AFO
    that:
      --Confines more than 1,000 animal units (AUs); or
      --Confines 301 to 1,000 AU and discharges pollutants:
          --Into waters of the United States through a man-made ditch,
            flushing system, or similar man-made device; or
          --Directly into waters of the United States that originate
            outside of and pass over, across, or through the facility or
            otherwise come into direct contact with the animals confined in
            the operation.
        In addition, the permitting authority (i.e., EPA or an NPDES
    authorized State) can designate an AFO as a CAFO upon determining that
    the operation is a significant contributor of pollution to waters of
    the United States. This determination, which takes a number of factors
    into account (e.g., slope, vegetation, and the proximity of the
    operation to the waters), is based on an on-site inspection by the
    agency that issues NPDES permits.
        An area where a producer ``houses an animal in a corral for an
    extended period of time'' would qualify as an AFO or CAFO only if it
    meets these regulatory definitions.
        Question. What is the scientific basis of this ``problem'' in
    managing animal wastes?
        Answer. As a result of domestic and export market forces,
    technological changes, and industry adaptations, the past several
    decades have seen substantial changes in America's animal production
    industries. These factors have promoted expansion of confined
    production units, with growth in both existing areas and new areas;
    integration and concentration of some of the industries; geographic
    separation of animal production and feed production operations; and the
    concentration of large quantities of manure and wastewater on farms and
    in some watersheds.
        In terms of production, the total number of animal units (AUs) in
    the U.S. increased by about 4.5 million (approximately three percent)
    between 1987 and 1992. During this same period, however, the number of
    AFOs decreased, indicating a consolidation within the industry overall
    and greater production from fewer, larger AFOs.
        AFOs can pose a number of risks to water quality and public health,
    mainly because of the amount of animal manure and wastewater they
    generate. Manure and wastewater from AFOs have the potential to
    contribute pollutants such as nutrients (e.g., nitrogen, phosphorus),
    sediment, pathogens, heavy metals, hormones, antibiotics, and ammonia
    to the environment. Excess nutrients in water can result in or
    contribute to eutrophication, anoxia (i.e., low levels of dissolved
    oxygen), and, in combination with other circumstances, have been
    associated with outbreaks of microbes such as Pfiesteria piscicida.
        Pathogens, such as Cryptosporidium, have been linked to impairments
    in drinking water supplies and threats to human health. Pathogens in
    manure can create a food safety concern if manure is applied directly
    to crops at inappropriate times. In addition, pathogens are responsible
    for some shellfish bed closures. Nitrogen, in the form of nitrate, can
    contaminate drinking water supplies drawn from ground water. Nutrients
    can also cause toxic algal blooms which may be harmful to human health.
        EPA is working to develop better scientific data and to better
    assess the scope of the problem of improperly managed animal waste both
    nationally and regionally. There are, however, a number of reports and
    studies and other compelling evidence to indicate that water pollution
    from AFOs is a significant water quality problem. This information
    falls generally into four broad categories:
        (1) The States continue to report that on a national level,
    polluted runoff from agriculture is a leading source of impairment in
    both rivers and lakes. Although sub-categories for agriculture are not
    broken out for all States, 22 States did voluntarily report that
    feedlots and animal holding areas impair about 35,000 river miles, or
    20 percent of impaired river miles nationwide.
        (2) Numerous peer-reviewed papers and case studies demonstrate the
    impact animal feeding operations can have on water quality. These
    studies indicate that at the farm and watershed level, animal feeding
    operations can impact water quality. These impacts usually result from
    the cumulative over-application of manure from numerous farms in a
    watershed and can result in increases of nutrients and pathogens in
    waterways.
        (3) While cumulative small additions of nutrients and pathogens can
    impair water quality, it is the large catastrophic events which attract
    the most attention. The well-publicized North Carolina lagoon spills in
    1995 are unfortunate examples of how large amounts of animal waste, if
    not properly managed, can severely impact a waterbody.
        (4) There are also other areas where animal feeding operations have
    been identified as a potential source of the problem. AFOs have been
    identified as a possible contributing factor in the outbreaks of
    Pfiesteria in both North Carolina and Maryland during the summer of
    1997 and Cryptosporidium in Milwaukee's drinking water system in 1993.
        Question. How will EPA take into consideration the economic impacts
    of this proposed plan on agricultural producers to avoid putting
    farmers and ranchers out of business. Finally, what financial relief
    can EPA provide Montana's farmers and ranchers to meet the Clean Water
    Action Plan? How can they apply for this relief?
        Answer. The Unified AFO Strategy is not a new regulation and does
    not in itself impose any binding requirements or economic burden on
    producers. Instead, the Strategy describes a range of actions that USDA
    and EPA plan to take to address the water quality and public health
    impacts from AFOs. These actions will have to meet applicable legal and
    regulatory requirements. For example, EPA is currently in the process
    of reviewing and revising the existing regulations and expects to
    propose changes in the near future. Consistent with small business
    analysis requirements, EPA will evaluate the impacts of projected costs
    on facilities that are small businesses. EPA will also evaluate the
    economic impacts of any new regulations on larger operations. Both of
    these analyses will address the major species of livestock.
        Currently, EPA's policy is to treat only AFOs that meet regulatory
    definition of a CAFO or have been designated CAFOs as point sources
    subject to the NPDES program. Other AFOs may be eligible to receive
    financial assistance through EPA grant and loan programs such as the
    CWA Section 319 nonpoint source program and the Clean Water State
    Revolving Loan program. AFOs may also be eligible for assistance from
    several USDA programs including the Environmental Quality Incentives
    Program. Facilities, including CAFOs, that are subject to permitting
    under EPA's existing regulations are generally not able to receive
    financial assistance from EPA to comply with their permit requirements.
    The Unified AFO Strategy does, however, describe two types of
    incentives which can allow certain CAFOs to exit the regulatory program
    and work to stay out of the regulatory program.
        First, the Strategy states our view that smaller CAFOs (those with
    fewer than 1,000 AUs) should be allowed to exit the permit program
    after the end of their permit term (which is a period of five years
    from the date the permit is issued) if they meet certain conditions. To
    exit the program, a facility would be expected to demonstrate that it
    has successfully addressed the conditions that caused it to be defined
    or designated as a CAFO and that it is fully implementing its
    Comprehensive Nutrient Management Plan (CNMP) and would be expected to
    offer evidence that it is in full compliance with its permit at the end
    of the permit term.
        Second, AFOs with less than 1,000 AUs may in many cases be taking
    early voluntary actions in good faith to manage animal wastes in
    accordance with a CNMP. Specifically, some AFOs that are voluntarily
    implementing a CNMP may have a discharge that makes them subject to
    being designated as CAFOs under the NPDES permitting program, but does
    not cause them to be included in the permitting priorities described in
    the Strategy. The Strategy states that NPDES permitting authorities
    should consider providing an opportunity for these AFOs to address the
    cause of the discharge before designating them as CAFOs.
                                  food safety
        Question. As you know, we are facing extreme problems in the
    agricultural industry, especially in Montana. During the 1990's,
    farmers have made only a 4 percent return while retail food chains have
    made 18 percent, food processors made 17 percent, and even agricultural
    banks are receiving a 11 percent return. Since 1984, consumer prices
    for food has risen 3 percent while the price paid to farmers has fallen
    by 36 percent. Now we are facing a potential drought in eastern
    Montana. All of these factors are compounded when agricultural chemical
    products are changing with reregistrations. Even though I agree safer,
    less toxic pesticides should be used, how do you consider the economic
    impacts of this struggling agricultural industry in making your
    decision on pesticide reregistration?
        Answer. Last year Vice President Gore responded to growers'
    concerns about the effects of the Food Quality Protection Act (FQPA) by
    asking the Environmental Protection Agency (EPA) and the U.S.
    Department of Agriculture (USDA) to convene a committee of stakeholders
    to assist the government in developing a process for conducting
    tolerance reassessment that is required by the new law. The process
    must incorporate four principles: sound science, transparency,
    consultation with stakeholders, and reasonable transition for
    agriculture. In consultation with the Tolerance Reassessment Advisory
    Committee (TRAC), EPA and USDA identified nine science policy areas
    where EPA needed to explain how it will make risk assessments, began to
    explore risk management issues, and initiated a pilot process for
    conducting the tolerance reassessments of the organophosphate
    pesticides.
    EPA's Commitment to an Open Process for Developing FQPA Policies
        Taking the TRAC's advice, the Agency has made its pesticide risk
    assessment and risk management processes and science policy development
    far more accessible to the public through notice and comment
    procedures. The Agency has created an Internet site providing access to
    the same information made available at the TRAC meetings, including the
    science policy papers on tolerance reassessment and risk management.
    EPA also created an Internet site with up-to-date information on the
    organophosphate pesticides, including the schedule for tolerance
    reassessment and individual preliminary risk assessments. These
    webpages enable the Agency to keep the public informed of each step in
    the tolerance reassessment process and entry-points for participation.
    These websites can be accessed at http://www.epa.gov/pesticides.
    EPA's Commitment to an Open Process for Making Tolerance Reassessment
            Decisions
        With the help of the TRAC members, EPA and USDA have laid out this
    pilot process for the organophosphate pesticides, complete with self-
    imposed deadlines for releasing the preliminary risk assessments,
    further refining the risk assessments, and providing for public
    participation on risk mitigation measures and practical transition
    strategies. In making decisions on tolerances, EPA relies on actual
    data generated by the registrant, other agencies such as USDA, from
    peer reviewed scientific literature, and from growers and other
    pesticide users--not on default values based on worst-case assumptions.
        In many cases, the comment process is providing additional health
    and environmental effects data, use data, or other relevant information
    which EPA is using to refine the risk assessments. EPA has compiled
    organophosphate use and usage information for some crops and posted it
    on the Agency's website. We expect to begin a public comment period on
    risk management for the first of the organophosphate pesticides later
    this spring or in early summer. The comment period will allow for
    discussion and examination of both risk mitigation measures and
    possible transition processes to alternative pest control approaches
    where needed. EPA and USDA are working on the best ways to start this
    phase of organophosphate tolerance reassessment and will be consulting
    with the TRAC.
        At the same time that we are issuing the preliminary risk
    assessments and developing the risk management process for individual
    organophosphate pesticides, we are also developing a method for
    calculating cumulative risk for the organophosphate pesticides as a
    group. We expect to issue this draft methodology for rigorous external
    scientific peer review and full public comment later in the year. In
    the meantime, the Agency will continue to make registration and
    tolerance reassessment decisions on individual active ingredients based
    on sound science.
    EPA's Commitment to a Reasonable Transition for Agriculture
        One of Vice President Gore's four principles is to provide for a
    reasonable transition for agriculture. FQPA imposes more stringent
    standards for pesticide use in food and feed crop production, and the
    Agency recognizes that how it implements the law may have important and
    far reaching consequences. This statute, while helping to ensure a high
    level of food safety, has the potential to create uncertainty for
    agricultural producers, both in the short and long term.
        Expedited Review for Safer Pesticides.--FQPA reinforced EPA's
    commitment to bringing new and safer technologies to the marketplace to
    reduce the potential risks from pesticide exposures while helping to
    maintain an abundant and safe food supply. To be sure that pesticide
    users have access to a range of safer pest control tools, the Agency is
    expediting review of pesticides which might be used as alternatives to
    riskier pesticides. As you may know, the Agency had created a new
    reduced-risk pesticide registration program to facilitate this effort
    before FQPA was enacted. This expedited review includes new active
    ingredients and new uses of currently registered pesticides that reduce
    risks to human health or the environment. In a notice sent to all
    registrants in August 1998, EPA explained its policy for the
    prioritization and expedited review of applications for new active
    ingredients which can be used as alternatives to organophosphate
    pesticides, and new use registration applications for alternative,
    conventional pesticides. Of 27 new pesticide active ingredients
    registered in fiscal year 1998, 14 were done as a result of expedited
    review.
        Minor Uses and Other Special Situations.--EPA is focusing on
    reducing the risks of existing pesticides in a manner that is least
    disruptive to growers. Many existing pesticides will almost certainly
    be found to meet the new standard. However, when the risk of a
    pesticide is above the safety standard set by law, EPA must take
    regulatory action to manage the risk. The Agency has identified a range
    of regulatory approaches for achieving risk management; the most
    appropriate approach is dependent upon the level of risk. Working with
    USDA, it is our goal to ensure a smooth transition process that is the
    least disruptive to growers. The Agency is particularly conscious of
    the potential impacts on minor crop growers and integrated pest
    management programs and will continue to work with growers and
    registrants to focus attention on those situations where limited crop
    protection alternatives exist. The final TRAC meetings will focus on
    formulating ways to gain grower input on practical, feasible, and
    affordable mitigation measures. The Agency will also be seeking input
    from grower groups to identify potential organophosphate pesticide
    alternatives for their crops. EPA's risk assessments will attempt to
    identify those crops/uses that contribute most to the risk, so that the
    Agency, USDA, and growers can work together to devise real and sensible
    solutions.
    USDA's Role in Transition to Safer Pest Management
        Because of its contacts and ability to interact more readily with
    the agricultural community, USDA has taken a large role in developing
    transition strategies. USDA is devoting significant effort and is
    requesting additional funding in its fiscal year 2000 budget to help
    grower groups develop strategies that will result in reduced risk but
    still ensure adequate pest control. One possible strategy for enhancing
    public participation is the idea of holding informational or technical
    briefings for interested parties, including commodity groups that may
    be directly affected by the findings for a selected pesticide or group
    of pesticides.
        Regional Centers for Education and Outreach.--To promote the
    advance of pest management to ensure a safe, nutritious, and economical
    food supply for the American public, USDA is establishing Regional Pest
    Management Centers. Since crops, pests, and weather patterns differ
    from region to region within the United States, no single, national
    approach to pest management is appropriate across all the agricultural
    regions. Also, it is economically inefficient and not appropriate for
    every state within similar production regions to organize and support
    repetitive, and often competing, pest management program efforts. A
    viable solution to this dilemma is the development of regional pest
    management centers based on similarity of cropping patterns, pest
    problems and environmental conditions.
        Pest Management Centers would be organized in eight different
    agricultural regions of the country. These centers would be located at
    existing land-grant universities or other appropriate facilities such
    that no new infrastructure would be required. Among the activities
    carried out by such centers would be to: (1) develop and evaluate new
    agricultural pest management technologies; (2) identify and organize
    pest management expertise within the regions to ensure rapid response
    capability for pest problems or public information needs; (3) organize
    and deliver pest management educational programs for agricultural
    producers as well as consumers; (4) provide science-based, regionally-
    specific input for public policy and regulatory issues; and (5) manage
    and report on pest management research projects within the region.
        Three Research and Education Programs.--One of the first activities
    of the Centers would be to carry out, on a regional basis, the USDA
    research and education plan for helping growers overcome changes from
    the implementation of FQPA. The USDA research and education plan has
    three components: (1) The Pest Management Alternatives Program (PMAP),
    a program to develop replacement tactics and technologies for
    pesticides under consideration for cancellation or use restrictions by
    EPA. The focus of this program, which was established in 1996, is
    primarily towards replacement of individual chemicals in a pest
    management program on a crop by crop basis. PMAP is structured to fund
    short term (1-2 years) projects aimed at adaptive research and
    implementation of tactics that have shown promise in previous testing;
    (2) New Pest Management Strategies Contributing to Crop Productivity, a
    research and implementation program, proposed to begin in 2000, for
    several crops which face potentially severe economic constraints
    resulting from loss of certain pesticides through implementation of
    FQPA. Development of new multiple-tactic pest management strategies to
    help ensure economic viability and productivity of food crops will be
    the goal of the program; and (3) Reducing Risk in Major Food Crop
    Production Systems, a new approach to risk reduction with a food and
    grain production system focus, integrating food safety and water
    quality considerations a impacted by FQPA. The program is also proposed
    to begin in 2000 and will involve the major acreage crops including
    corn, soybean, wheat, cotton and rice as well as the fruits and
    vegetables most important in the diets of infants and children. The
    program goal is to eliminate pesticide residues in food crops and
    drinking water.
        Question. How does EPA coordinate economic impact assessments on
    the agricultural industry due to pesticide reregistrations with USDA
    and FDA?
        Answer. EPA establishes tolerances under the Federal Food Drug and
    Cosmetic Act (FFDCA). Cost/benefit analysis is not required for
    regulations made under FFDCA authority. Although the Federal
    Insecticide, Fungicide and Rodenticide Act (FIFRA) is a risk/benefit
    statute, the Agency does not explicitly analyze costs and benefits
    except in formal cancellation proceedings. Should the Agency propose to
    take formal action (under Section 6 of FIFRA) it is required to consult
    with USDA regarding actions against agricultural pesticides and with
    the Secretary of Health and Human Services (HHS) regarding public
    health pesticides.
        EPA has a number of formal and informal links with USDA to
    coordinate our fact-finding and regulatory efforts. During development
    of significant reregistration and tolerance reassessment actions, such
    as those affecting organophosphate pesticides, EPA works closely with
    USDA to obtain information on ``real-life'' exposure, potential impacts
    of regulatory options, and the availability of alternative methods of
    pest control. EPA also strongly encourages pesticide and agricultural
    producers to provide similar information to USDA and EPA. Efforts with
    HHS are well underway to develop a Memorandum of Understanding which
    will outline how EPA and HHS will consult on actions that may impact
    public health pesticides. As with agricultural pesticides, EPA has
    worked with industry and State offices, such as mosquito control
    boards, to help assess the potential impact of any actions on this
    important class of pesticides.
        Question. Finally, how are you ensuring that the quality of
    imported agricultural products are safe for consumption, especially
    imported beef from Canada?
        Answer. Authority for the safety of imported meat is spread among
    three Federal agencies. EPA establishes tolerances for pesticide
    residues under the FFDCA while FDA monitors imports for compliance with
    FFDCA requirements. USDA sets and monitors quality standards for meat,
    including hygienic standards.
        Differences in the regulation of pesticide residues in food can be
    a trade issue. These concerns are being addressed with our North
    American Free Trade Act (NAFTA) partners. Cooperative U.S./Canada
    bilateral efforts on pesticides regulatory harmonization were expanded
    in 1996 to include Mexico through the NAFTA Technical Working Group
    (TWG) on Pesticides. The goal of the TWG is to develop a coordinated
    pesticides regulatory framework among NAFTA partners to address trade
    irritants, build national regulatory scientific capacity, share the
    review burden, and coordinate scientific and regulatory decisions on
    pesticides. This work has already begun to pay dividends by addressing
    specific trade irritants, such as national differences in Maximum
    Residue Limits (MRLs, or tolerances), developing a better understanding
    of each regulatory agency's assessment practices, working to harmonize
    each country's procedures and requirements, and encouraging pesticide
    registrants (product owners) to make coordinated data submissions to
    the three NAFTA countries to facilitate joint reviews.
                                 tribal support
        Question. I understand that you are requesting a total of $166
    million for support to Tribal governments. Also I understand that you
    are working to improve the capacity of tribes to manage their own
    environmental programs. Since Montana has eight Federally-recognized
    tribes which I strongly support. What is your assessment of the
    environmental conditions of their tribal lands?
        Answer. EPA is assisting Montana's federally-recognized tribes to
    build the capacity to manage their own programs for environmental
    protection of their lands, similar to our efforts to help states build
    the capacity in the early years of the Agency. In addition, EPA has the
    statutory responsibility to protect public health and the environment
    on Indian reservations. Environmental conditions vary from reservation
    to reservation, but overall the condition of the Montana tribes'
    environment range from poor to good, with impacts from improper
    disposal of solid wastes, drinking water and wastewater impacts due to
    a lack of infrastructure and a lack of operations & maintenance, mining
    impacts, oilfield contamination, and non-point source pollution the
    most prevalent.
        Question. What environmental problems are they having to manage on
    their lands?
        Answer. Environmental problems vary from reservation to
    reservation, but some of the problems Montana tribes are experiencing
    include disposal of solid wastes, pollution and other impacts from
    mining, surface water pollution, and infrastructure needs for drinking
    water and wastewater treatment systems. There is also the problem of
    air pollution from off-reservation sources.
        Question. What type of financial and technical assistance can you
    provide to them to help address their environmental problems?
        Answer. Though a variety of mechanisms in addition to broad based
    multi-media funding under the General Assistance Program (GAP), Tribes
    are eligible for assistance under the Drinking Water and State
    Revolving Fund Programs, as well as other standing Grant Programs (Sect
    319, PWSS, WQCA, Wetlands, UIC, 106).
        Question. I understand that EPA is proposing a 20 percent set-aside
    in the Clean Water State Revolving Fund for Indian tribes to use for
    nonpoint source problems and other water quality problems. Does this
    require statutory changes and, if so, when will we get to review your
    proposed legislation? Why have the tribes not availed themselves of
    State Revolving Fund loans that the states can provide?
        Answer. The President's proposal would allow states to use up to 20
    percent of their fiscal year 2000 Clean Water State Revolving Fund
    (CWSRF) capitalization grants for grants for nonpoint source pollution
    control projects. Indian tribes do not receive capitalization grants
    because the Clean Water Act does not authorize CWSRFs for tribes. The
    tribes do, however, receive 0.5 percent of the CWSRF appropriation for
    use as wastewater grants. Tribes can also apply to states for CWSRF
    loans, as can any municipality, as long as they meet fiscal management
    and regulatory requirements. To date no tribe has received a CWSRF
    loan. One reason is that all loan recipients are required to have
    dedicated sources of revenue for loan repayments. Many tribes do not
    have revenue sources with which to repay the loan. Tribes prefer
    instead to receive grants, which require no repayment, to address their
    water quality problems Another reason is that many tribes view
    themselves as sovereign nations, with authority equal to that of
    states. Their preference is to work with the U.S. government on a
    government-to-government basis, as opposed to working through the
    states. Tribes would face state oversight requirements when applying to
    states for nonpoint source pollution control grants from the optional
    CWSRF 20 percent set-aside.
        If Congress adopts the President's proposal, implementing language
    would be required in the fiscal year 2000 Appropriation Act. Such
    language is proposed in the Appendix of the fiscal year 2000
    President's Budget, pages 930--931, as follows:

                `` * * * for fiscal year 2000, each State may reserve from
            funds in its Clean Water State Revolving Fund, an amount equal
            to no more than 20 percent of the sums allotted to such State
            under section 604 of the Federal Water Pollution Control Act to
            provide grants of no more than 60 percent of the costs of
            projects eligible under section 603 (2) or (3) of such Act.
            Such grants may not be made for publicly-owned treatment works
            as defined in section 212 of that Act. Projects receiving grant
            assistance must, to the maximum extent practicable, rank
            highest on the State's priority list that is used to prioritize
            projects eligible for assistance under section 603 of that
            Act.''
                                     ______

                     Questions Submitted by Senator Shelby

           grandfather regulation: environmental defense fund vs. epa
        Question. Administrator Browner, it is my understanding that a few
    years ago you approved the specific ``grandfather'' regulation that was
    challenged and struck down in Environmental Defense Fund v. EPA. Why
    did you choose not to appeal the recent conformity grandfathering
    decision? Did your viewpoint regarding this regulation change? If it
    did, why? Administrator Browner, did someone else, either within the
    Justice Department or at the White House, make the decision not to
    appeal?
        Answer. After extensive review of the decision and discussions
    within the Administration, including EPA and the Departments of
    Transportation and Justice (DOT and DOJ), we have decided not to seek
    rehearing of the decision. The Administration has developed a workable
    approach for implementing conformity under the court's decision. We
    believe that a combination of guidance to states, quick action by EPA
    to find submitted State Implementation Plans (SIPs) adequate, and
    regulatory changes to our conformity rules in response to the court's
    remand make appeal of the court's decision or changes to the Clean Air
    Act unnecessary. This approach properly balances economic development
    with environmental protection, and minimizes any immediate disruption
    to transportation activities resulting from the decision.
        We are committed to an approach that recognizes the importance of
    continued highway construction--providing local areas with as much
    predictability and flexibility as possible--consistent with meeting our
    Nation's air quality needs. EPA intends to amend the transportation
    conformity rules to clarify that grandfathering of previously approved
    projects can proceed during a conformity lapse, but only where DOT has
    made a full funding commitment to the project prior to the lapse. EPA
    believes that this is both an appropriate interpretation of the
    conformity requirements of the Act, and consistent with the recent
    court decision.
        As a result of recent problems associated with implementation of
    the prior grandfathering regulation, especially in Atlanta, Georgia,
    EPA believes that grandfathering at the stage of full funding
    commitment is more appropriate than at the stage of NEPA review, and
    that grandfathering at this stage properly coordinates the twin desires
    of advancing transportation planning and protecting clean air.
                   transportation construction projects list
        Question. This case could have a great impact on numerous
    transportation construction projects. However, I am not aware of any
    definitive information regarding projects that are within the reach of
    the Court's decision. Could you provide me with the list of projects
    that the EPA believes that this decision affects. Could you also
    provide cost estimates regarding the losses that will result from the
    delays caused by this decision?
        Can you consult with the Department of Transportation and provide
    the list of the immediately affected projects? And the associated
    project costs?
        Answer. Attached please find DOT's list (as of June 15, 1999) of
    projects that are immediately affected by the court decision, and the
    associated project costs. We understand that the table entitled
    ``Status of Grandfathered Projects in Lapsed Areas'' describes in
    columns 1 and 2 the total universe of projects that could be affected
    by the court decision. The projects in columns 3 and 4 are the subset
    that definitely can proceed even under the terms of the court decision.
        It is worth noting that among the areas where conformity has lapsed
    (i.e., there are conformity problems independent of the court
    decision), most of these areas will have ended their lapse by September
    1999 at the latest (Ashland, KY; Monterey, CA; Raleigh, NC; Santa
    Barbara, CA; Winston-Salem, NC).
        Of the areas where conformity was suspended following the court
    decision, most are expected to re-establish conformity within weeks
    (Longmont, CO; Stanislaus County, CA; Tucson, AZ). In fact, Yuma, AZ
    has already re-established conformity. This reduces the total project
    costs on DOT's table by $53.3 million.
                  transportation construction projects impact
        Question. Administrator Browner, while we may not yet know the
    exact number of projects that will be affected, we do know there will
    be a substantial number. Most of these projects were intended to
    improve transportation efficiency. The delays caused by this ruling
    will keep thousands, if not millions, stuck in inefficient
    transportation systems. Won't this have a detrimental impact on the
    environment?
        Answer. The number of projects affected by the March 2, 1999, court
    decision is limited. These projects are located in areas where analysis
    shows that transportation plans will cause vehicle emissions to be
    higher than what is allowed for in the State implementation plans
    (SIPs) for air quality. These areas may proceed with transportation
    projects once they have developed transportation plans that do not
    cause the vehicle emissions limits of their SIPs to be exceeded. We
    expect most of these areas to fix their conformity problems by August
    1999 which will restore nearly half of the project funding impacted.
    Until they do so, it is more environmentally protectiveand a more
    efficient use of resourcesto avoid investments that may worsen air
    quality over the long term. We believe that short-term delays in
    transportation efficiency improvements are preferable to irreversible
    investments in a transportation system that is incompatible with long-
    term attainment and maintenance of the air quality standards.
                        transportation partners program
        Question. Administrator Browner, it is my understanding that the
    EPA conducts the ``Transportation Partner's Program.'' Could you please
    tell me about this program?
        Answer. Transportation Partners is a U.S. EPA program that promotes
    and supports innovative, local, voluntary efforts to reduce vehicle
    miles traveled (VMT). Transportation Partners is one of the actions in
    President Clinton's Climate Change Action Plan and is responsible for
    reducing miles traveled by single occupancy vehicles in order to reduce
    greenhouse gas emissions.
        The Transportation Partners program is comprised of a team of
    national, non-governmental organizations, called Principal Partners,
    who receive EPA funding to foster innovative transportation solutions
    nationwide. Principal Partners share EPA's commitment to decreasing
    greenhouse gas emissions and to mitigating environmental impacts from
    the transportation sector. Funds received by these organizations are
    used to provide technical assistance to businesses, communities, and
    organizations engaging in VMT reduction strategies. Transportation
    Partners has funded nine non-profit organizations since its founding.
        In cooperation with its Principal Partners, the Transportation
    Partners program provides technical and networking assistance to over
    300 nationwide Project Partners. Project Partners consist of national,
    non-governmental organizations, community-level associations, state and
    local governments, and businesses. Business partners include WalMart,
    Kaiser Permanente, Bank of America, and many others. Transportation
    Partner examples are provided on the attachment.
        Question. Are you aware of whether the EDF, the party that brought
    the suit in the [conformity] case, has ever received funding under this
    program? Could funding from this program have been used by EDF to bring
    the lawsuit against the EPA?
        Answer. EPA has entered into cooperative agreements with EDF and
    other groups that have expertise in various aspects of the
    transportation and environmental issues. In some cases, groups which
    have received Federal funds are also engaged in litigation with the
    Federal government. EPA has strict guidelines that prevent EDF and
    other groups from using EPA funds to pay for these legal actions. Every
    EPA grant agreement is conditioned on compliance with OMB Circulars
    that prohibit the use of grant funds for suits against the Government.
    Specifically, they prohibit ``costs of legal, accounting, and
    consultant services, and related costs, incurred in connection with * *
    * the prosecution of claims or appeals against the Federal Government''
    (OMB Circular No. A-122, Attachment B, Section 10.g, which applies to
    nonprofit organizations; same provision in Circular No. A-21, Section
    J.11.g, which applies to educational institutions) and ``legal expenses
    for prosecution of claims against the Federal Government'' (Circular
    No. A-87, Attachment B, Section 14.b, which applies to State, local,
    and tribal governments). In addition, EPA's appropriation acts provide
    that grant funds may not be used to pay the expenses of, or otherwise
    compensate, non-Federal parties intervening in regulatory or
    adjudicatory proceedings.
    Examples of Transportation Partners Projects
        Cornell University's comprehensive Transportation Demand Management
    Program enhanced transportation choices, reduced VMT, and saved money
    by eliminating the need for new parking spaces. The program combines a
    three-tiered rate structure for parking, transit subsidies, and
    coordination with local communities and transit operators to reduce
    approximately 10 million VMT per year and an estimated 1,450 MMTCE. The
    program worked with surrounding municipalities to encourage the
    creation of park-and-ride lots, improved and distributed transit maps,
    and created a ``Commuter Connection'' column in the local newspaper.
    The increased demand created by the program lead to new routes and
    improved service in previously underserved areas.
        A Howard County, Maryland School Walkway Program has resulted in
    hundreds of students now walking to school. A partnership between
    Howard County's Department of Public Works and Department of Education
    has resulted in the installation of miles of new sidewalks. Before
    these sidewalks or missing sidewalk links were installed, students who
    lived within walking distance of school were forced to ride a bus for
    safety reasons. One 900 foot walkway enabled 141 students to walk to
    school, and eliminated three buses and 2,000 bus trips per year.
        The City of Xenia and Green County, Ohio have teamed up with the
    Ohio Department of Transportation, the Ohio Department of Natural
    Resources, and the private sector to convert 60 miles of former railway
    corridors and a seven acre railroad depot into an alternative
    transportation center. The transportation center includes bike and
    pedestrian trails, parking facilities, and a community building. The
    trails are located within a short walk of every Xenia resident and
    within ten minutes of most residents in the county. It was estimated
    that over 300,000 people used the trails to get to work, home, school,
    and other activities by the end of 1997.
        Kaiser Permanente of California is taking demonstrable steps to
    reduce pollution and traffic congestion through the KAISERider program.
    Throughout California, 10,500 employees at sites with the KAISERider
    program use alternative means of transportation, such as carpooling, on
    a regular basis. Four KAISERRider services alone eliminate approximate
    37,000 passenger trips a month or nearly 4 million VMT per year (571
    MMTCE).
        The City of Oakland, California Oakland Broadway electric shuttle
    has revitalized a key shopping and business district. Signage and
    discounted merchant coupons were created to encourage the use of the
    shuttle, which provides workers and shoppers in the area with a quick,
    easy, and free way to move throughout the downtown area during lunch
    time hours. The total estimated annual VMT reduction for the shuttle is
    237,600 which would result in an annual reduction of 34 MMTCE.
                                     ______

                      Questions Submitted by Senator Craig

                 climate change: kyoto protocol implementation
        Question. Has EPA taken any action or programs that seek to
    implement the Kyoto Protocol.
        Answer. No. The Administration has committed not to implement the
    Kyoto Protocol before the Senate has considered the Protocol and
    provided advice and consent to its ratification.
        Question. Has EPA staff provided any formal communications to the
    Administration related to the Kyoto Protocol or data used to try to
    justify the Protocol? If so, please provide copies of these
    communications for the record including any EPA press releases,
    statements by EPA staff and documentation detailing the peer review
    process used prior to release of any of this data.
        Answer. We understand your question as asking whether EPA has
    formally transmitted any scientific or economic data related to or in
    justification of the Kyoto Protocol to the White House or another
    federal Agency, through a press release or other form of public
    announcement. We further understand your question as asking for
    information on the peer review process for any such data transmitted in
    this way. EPA has not made any such transmittal of data to the White
    House or other agencies.
        Question. In October 1997, the President announced a three-stage,
    multi-year plan to reduce greenhouse gas emissions. One element was a
    proposal to provide credits to companies that take voluntary action to
    reduce their greenhouse gas emissions. Legislation to authorize such
    program was introduced by Senator Chafee and others in both the 105th
    and 106th Congresses, but the Administration has not endorsed the
    Chafee legislation nor submitted its own legislation.
        As part of its Green Lights and other voluntary programs, EPA
    requires that participating companies submit detailed information
    (project-by-project) on reductions. EPA spends considerable amounts of
    money to compile this detailed information. If a program to provide
    early credits were enacted, companies seeking such credits would
    presumably need to keep track of their reductions in order to justify
    their credits. If these companies were also participants in EPA's Green
    Lights or other voluntary programs, it is not clear that EPA would
    still need such detailed data. Thus, EPA might be able to reduce its
    funding level for Green Lights and other voluntary programs without
    reducing the effectiveness of these programs.
        Did the President's announcement increase company willingness to
    invest in energy-saving equipment? Please explain by providing the
    necessary supporting documentation. Did it increase willingness in the
    business community to sign up for Green Lights and other voluntary
    programs?
        Answer. Since the President's announcement, the rate of private
    sector companies and other entities (e.g., schools, state or local
    governments, or other non-profits) newly joining partnership programs
    like ENERGY STAR Buildings and Green Lights has remained about the
    same. EPA's voluntary climate partnerships are continuing to grow at a
    steady pace and the number of partnerships now exceeds 7,000.
        It does appear that there may have been an increase in overall
    private sector investment in energy efficiency over this period,
    paralleling the strong general investment trend in the U.S. economy
    over this time.
        The President's announcement did spur increased participation on
    the part of companies and industries who came forward to participate in
    consultations between industry and government about voluntary industry-
    by-industry commitments to reduce greenhouse gases through the industry
    consultation process. A significant number of new, meaningful voluntary
    industry commitments have been announced in this period.
        For example:
      --United Technologies has committed to a sales weighted reduction of
            greenhouse gas emissions of 25 percent below 1997 emissions
            levels by 2007.
      --British Petroleum has agreed to reduce their greenhouse gas
            emissions by 10 percent below 1990 levels by 2010.
      --Shell has agreed to reduce their greenhouse gas emissions 10
            percent below 1990 levels by 2002.
      --Dow will reduce their energy use per unit of production by 20
            percent by 2005.
      --Dupont will reduce their greenhouse gas emissions 40 percent below
            1990 levels by 2000.
      --Through their global energy conservation, product design, and
            perfluorocompound emission reduction goals, IBM has committed
            to reduce 40 percent of their PFC emissions by 2002 per unit
            output using a 1995 baseline in semiconductor manufacturing.
            They have also committed to achieve energy conservation savings
            each year equivalent to 4 percent of annual electric and fuel
            use.
      --Finally, the most recent announcement came from Motorola which will
            reduce emissions of PFCs by 50 percent from 1995 levels by the
            year 2010.
        Question. Can you explain why, in nearly 18 months since the
    President first announced the ``early credits'' idea, the
    Administration has not submitted legislation on this issue? When do
    [you] expect the Administration to submit such legislation?
        Answer. In his State of the Union message this year, the President
    pledged to work with members of Congress in both parties to reward
    companies that take early, voluntary action to reduce greenhouse gases.
    Rather than submit its own bill, the Administration believes it would
    be most efficient and productive to work with Congress on the basis of
    early credit proposals that have already been introduced, such as S.547
    in the Senate, and similar legislation expected to be introduced in the
    House.
        Question. If a program to provide ``early credits'' were to be
    enacted, what changes in EPA's voluntary programs would be appropriate?
    For example, would it still make sense for EPA to keep detailed
    company-by company, project-by-project records for EPA's partners?
        Answer. While there are many uncertainties as to how a program to
    provide early credits would work, it is unlikely that EPA's voluntary
    programs would need significant changes. Partners in voluntary programs
    such as ENERGY STAR Buildings and Green Lights would need to continue
    to report to EPA on a company-by-company basis in order to track the
    company's progress in each particular voluntary program, as well as the
    aggregate achievements of that program. EPA uses this company-submitted
    information to publicly recognize the accomplishments of companies and
    other organizations that make commitments under the program.
        Question. How much of the $41.3 million requested for Buildings
    Initiatives will be spent to compile company data?
        Answer. The $41.3 million requested to expand EPA's Buildings
    Programs will not to be used to compile company data for EPA's
    Buildings programs. The requested funding is intended to expand
    partnerships and provide essential information to organizations and
    consumers so that they can choose equipment and products that will not
    only save them money but reduce pollution. Current funding levels of
    these programs have been and will continue to be sufficient to collect
    and compile data on participant activities through the program. EPA has
    already established an efficient system for updating an existing
    database with new information from program partner reports. The program
    partners compile and report their own data in an agreed-upon format, so
    a relatively small proportion of EPA's expenditures for the voluntary
    programs is used for data compilation activities.
        Question. Please explain why a company would need credits for
    greenhouse gas reductions. Does the Administration plan to put in place
    mandatory limits on companies combustion of fossil fuels and other
    activities that produce greenhouse gases? When would those limits take
    effect? How would company limits be determined?
        Answer. As domestic and international policy developments on
    climate change unfold, a significant number of companies are
    considering whether to take actions now to reduce their greenhouse gas
    emissions in anticipation of a possible future market-based system to
    limit emissions. Many of those firms support having credits for early
    greenhouse gas reductions because they want to be assured that they
    will not be inadvertently penalized in a possible future market-based
    system, and that reductions they make before such a system takes effect
    will be appropriately recognized and rewarded. The Administration
    shares this view and thus supports the creation of a program for
    appropriately rewarding early action.
        The President has put forth a plan, articulated most fully in a
    speech in October 1997, to responsibly and effectively address the very
    real and serious problem of global warming in both the domestic and
    international arenas. The President has proposed to proceed
    pragmatically in three stages. In the first stage, he has directed EPA,
    the Department of Energy, and other agencies to take actions that help
    reduce greenhouse gas emissions while providing direct and immediate
    benefits to the economy, primarily through encouraging voluntary
    emissions reductions. These actions include the Climate Change
    Technology Initiative (CCTI), the restructuring of the electric utility
    industry, and a program to give businesses appropriate credit for early
    reductions in greenhouse gas emissions. In the second stage of the
    President's proposal, programs implemented during stage one would be
    reviewed, evaluated, and--depending on their success--extended. A pilot
    emissions trading program would be put in place and tested. The third
    stage of the President's plan envisions implementation of an emissions
    cap and trading system--based on the successful experience with the
    acid rain program--to harness the power of the marketplace to limit
    greenhouse gas emissions as flexibly and efficiently as possible, and
    at the lowest possible cost. The Administration has not made any
    further decisions as to when such a market-based system would come into
    effect, or how emission limits at the company level would be
    determined. The Administration has pledged to work with Congress on any
    necessary legislation.
        Question. Has EPA developed any analysis regarding the ``credit for
    early action'' legislation introduced in the Senate in the 105th
    Congress and the 106th Congress? If so, please provide this
    documentation, including a list of any recipients of this
    documentation.
        Answer. Regarding the credit for early action legislation
    introduced in the Senate in the 105th and/or 106th Congress, EPA has
    developed two internal analyses which have been distributed to EPA
    staff only. In January 1999, an analysis entitled ``Early Reduction
    Credit Proposals'' was completed for Todd Stern, Special Assistant to
    the President for Special Projects.
        Question. In EPA's fiscal year 2000 Annual Performance Plan it
    stated: ``EPA will * * * build a program that provides appropriate
    credit for early action. (Page VI-30 of EPA fiscal year 2000
    submission) What is EPA's statutory authority for developing a ``credit
    for early action'' program?
        Answer. EPA stated in its fiscal year 2000 Annual Performance Plan:
    ``[i]n 2000, EPA will expand its work with these industries to build a
    program that provides appropriate credit for early action.'' In its
    recent Climate Change Report to Congress, prepared in response to
    Senate Appropriations Report 105-216, p. 74-75, EPA described this
    concept more fully, stating that ``EPA will expand its work with [key
    energy intensive] industries and work across the Administration to help
    develop the basis for a program that could provide appropriate credit
    for early action.'' This work furthers the Administration's goals. In
    his January 1999, State of the Union Address, President Clinton
    expressed his support for the concept of providing credit for early
    reductions of greenhouse gases.
        EPA's statement in the fiscal year 2000 Annual Performance Plan was
    not intended to indicate that EPA will implement an early action credit
    program in fiscal year 2000, but rather that EPA will work to develop a
    conceptual framework for such a possible program. EPA will work with
    key industries to identify areas where and the means by which
    environmental and economic benefits could be obtained from early action
    to reduce greenhouse gases. EPA believes these are important first
    steps in considering how such a program might be structured.
    Information provided by energy intensive industries also provides a
    basis for evaluating the scope of the benefits that might be achieved
    through providing credits for early action.
        EPA's primary source of statutory authority for these activities is
    section 103(a) and (b) of the Clean Air Act. Section 103 of the Clean
    Air Act requires the Administrator to establish a ``national research
    and development program for the prevention and control of air
    pollution.'' As part of this program, section 103(a)(1) requires the
    Administrator to, ``conduct, and promote the coordination and
    acceleration of, research, investigations, experiments, demonstrations,
    surveys, and studies relating to the causes, effects (including health
    and welfare effects), extent, prevention and control of air
    pollution.'' Section 103(b) provides that in carrying out subsection
    (a), the Administrator is authorized to ``collect and make available,
    through publications and other appropriate means, the results of and
    other information, including appropriate recommendations by him in
    connection therewith, pertaining to such research and other
    activities.'' Section 103(g) of the CAA provides additional authority
    for some of the Agency's activities in this area. Section 103(g)
    provides that in carrying out subsection (a), ``the Administrator shall
    conduct a basic engineering research and technology program to develop,
    evaluate, and demonstrate nonregulatory strategies and technologies for
    air pollution prevention.'' The program is to include among its
    elements, ``[i]mprovements in nonregulatory strategies and technologies
    for preventing or reducing multiple air pollutants, including sulfur
    oxides, nitrogen oxides, heavy metals, PM-10 (particulate matter),
    carbon monoxide, and carbon dioxide, from stationary sources, including
    fossil fuel power plants. Such strategies and technologies shall
    include improvements in the relative cost effectiveness and long-range
    implications of various air pollutant reduction and nonregulatory
    control strategies such as energy conservation, including end-use
    efficiency, and fuel-switching to cleaner fuels.'' These Clean Air Act
    provisions authorize EPA to explore and develop innovative,
    experimental approaches for prevention and control of air pollution,
    and an early action credit program would be one such approach.
        Other statutes provide additional general authority for and/or
    authority for specific aspects of EPA's activities in this area. Such
    statutes include: Pollution Prevention Act of 1990, 42 U.S.C. 13101 et
    seq.; National Environmental Policy Act of 1969, 42 U.S.C. 4321 et
    seq.; Global Climate Protection Act of 1987, 15 U.S.C. 2901; and
    Federal Technology Transfer Act, 15 U.S.C. 3710a.
       climate change: greenhouse gas emissions--credit for early action
        Question. In October 1997, the President announced a three-stage,
    multi-year plan to reduce greenhouse gas emissions. One element was a
    proposal to provide credits to companies that take voluntary action to
    reduce their greenhouse gas emissions. Legislation to authorize such
    program was introduced by Senator Chafee and others in both the 105th
    and 106th Congresses, but the Administration has not endorsed the
    Chafee legislation nor submitted its own legislation.
        Answer. As part of its Green Lights and other voluntary programs,
    EPA requires that participating companies submit detailed information
    (project-by-project) on reductions. EPA spends considerable amounts of
    money to compile this detailed information. If a program to provide
    early credits were enacted, companies seeking such credits would
    presumably need to keep track of their reductions in order to justify
    their credits. If these companies were also participants in EPA's Green
    Lights or other voluntary programs, it is not clear that EPA would
    still need such detailed data. Thus, EPA might be able to reduce its
    funding level for Green Lights and other voluntary programs without
    reducing the effectiveness of these programs.
        Question. Did the President's announcement increase company
    willingness to invest in energy-saving equipment? Please explain by
    providing the necessary supporting documentation. Did it increase
    willingness in the business community to sign up for Green Lights and
    other voluntary programs?
        Answer. Since the President's announcement, the rate of private
    sector companies and other entities (e.g., schools, state or local
    governments, or other non-profits) newly joining partnership programs
    like ENERGY STAR Buildings and Green Lights has remained about the
    same. EPA's voluntary climate partnerships are continuing to grow at a
    steady pace and the number of partnerships now exceeds 7,000.
        It does appear that there may have been an increase in overall
    private sector investment in energy efficiency over this period,
    paralleling the strong general investment trend in the U.S. economy
    over this time.
        The President's announcement did spur increased participation on
    the part of companies and industries who came forward to participate in
    consultations between industry and government about voluntary industry-
    by-industry commitments to reduce greenhouse gases through the industry
    consultation process. A significant number of new, meaningful voluntary
    industry commitments have been announced in this period.
        For example:
      --United Technologies has committed to a sales weighted reduction of
            greenhouse gas emissions of 25 percent below 1997 emissions
            levels by 2007.
      --British Petroleum has agreed to reduce their greenhouse gas
            emissions by 10 percent below 1990 levels by 2010.
      --Shell has agreed to reduce their greenhouse gas emissions 10
            percent below 1990 levels by 2002.
      --Dow will reduce their energy use per unit of production by 20
            percent by 2005.
      --Dupont will reduce their greenhouse gas emissions 40 percent below
            1990 levels by 2000.
      --Through their global energy conservation, product design, and
            perfluorocompound emission reduction goals, IBM has committed
            to reduce 40 percent of their PFC emissions by 2002 per unit
            output using a 1995 baseline in semiconductor manufacturing.
            They have also committed to achieve energy conservation savings
            each year equivalent to 4 percent of annual electric and fuel
            use.
      --Finally, the most recent announcement came from Motorola which will
            reduce emissions of PFCs by 50 percent from 1995 levels by the
            year 2010.
        Question. Can you explain why, in nearly 18 months since the
    President first announced the ``early credits'' idea, the
    Administration has not submitted legislation on this issue? When do
    [you] expect the Administration to submit such legislation?
        Answer. In his State of the Union message this year, the President
    pledged to work with members of Congress in both parties to reward
    companies that take early, voluntary action to reduce greenhouse gases.
    Rather than submit its own bill, the Administration believes it would
    be most efficient and productive to work with Congress on the basis of
    early credit proposals that have already been introduced, such as S.547
    in the Senate, and similar legislation expected to be introduced in the
    House.
        Question. If a program to provide ``early credits'' were to be
    enacted, what changes in EPA's voluntary programs would be appropriate?
    For example, would it still make sense for EPA to keep detailed
    company-by company, project-by-project records for EPA's partners?
        Answer. While there are many uncertainties as to how a program to
    provide early credits would work, it is unlikely that EPA's voluntary
    programs would need significant changes. Partners in voluntary programs
    such as ENERGY STAR Buildings and Green Lights would need to continue
    to report to EPA on a company-by-company basis in order to track the
    company's progress in each particular voluntary program, as well as the
    aggregate achievements of that program. EPA uses this company-submitted
    information to publicly recognize the accomplishments of companies and
    other organizations that make commitments under the program.
        Question. How much of the $41.3 million requested for Buildings
    Initiatives will be spent to compile company data?
        Answer. The $41.3 million requested to expand EPA's Buildings
    Programs will not to be used to compile company data for EPA's
    Buildings programs. The requested funding is intended to expand
    partnerships and provide essential information to organizations and
    consumers so that they can choose equipment and products that will not
    only save them money but reduce pollution. Current funding levels of
    these programs have been and will continue to be sufficient to collect
    and compile data on participant activities through the program. EPA has
    already established an efficient system for updating an existing
    database with new information from program partner reports. The program
    partners compile and report their own data in an agreed-upon format, so
    a relatively small proportion of EPA's expenditures for the voluntary
    programs is used for data compilation activities.
        Question. Please explain why a company would need credits for
    greenhouse gas reductions. Does the Administration plan to put in place
    mandatory limits on companies combustion of fossil fuels and other
    activities that produce greenhouse gases? When would those limits take
    effect? How would company limits be determined?
        Answer. As domestic and international policy developments on
    climate change unfold, a significant number of companies are
    considering whether to take actions now to reduce their greenhouse gas
    emissions in anticipation of a possible future market-based system to
    limit emissions. Many of those firms support having credits for early
    greenhouse gas reductions because they want to be assured that they
    will not be inadvertently penalized in a possible future market-based
    system, and that reductions they make before such a system takes effect
    will be appropriately recognized and rewarded. The Administration
    shares this view and thus supports the creation of a program for
    appropriately rewarding early action.
        The President has put forth a plan, articulated most fully in a
    speech in October 1997, to responsibly and effectively address the very
    real and serious problem of global warming in both the domestic and
    international arenas. The President has proposed to proceed
    pragmatically in three stages. In the first stage, he has directed EPA,
    the Department of Energy, and other agencies to take actions that help
    reduce greenhouse gas emissions while providing direct and immediate
    benefits to the economy, primarily through encouraging voluntary
    emissions reductions. These actions include the Climate Change
    Technology Initiative (CCTI), the restructuring of the electric utility
    industry, and a program to give businesses appropriate credit for early
    reductions in greenhouse gas emissions. In the second stage of the
    President's proposal, programs implemented during stage one would be
    reviewed, evaluated, and--depending on their success--extended. A pilot
    emissions trading program would be put in place and tested. The third
    stage of the President's plan envisions implementation of an emissions
    cap and trading system--based on the successful experience with the
    acid rain program--to harness the power of the marketplace to limit
    greenhouse gas emissions as flexibly and efficiently as possible, and
    at the lowest possible cost. The Administration has not made any
    further decisions as to when such a market-based system would come into
    effect, or how emission limits at the company level would be
    determined. The Administration has pledged to work with Congress on any
    necessary legislation.
        Question. Has EPA developed any analysis regarding the ``credit for
    early action'' legislation introduced in the Senate in the 105th
    Congress and the 106th Congress? If so, please provide this
    documentation, including a list of any recipients of this
    documentation.
        Answer. Regarding the credit for early action legislation
    introduced in the Senate in the 105th and/or 106th Congress, EPA has
    developed two internal analyses which have been distributed to EPA
    staff only. In January 1999, an analysis entitled ``Early Reduction
    Credit Proposals'' was completed for Todd Stern, Special Assistant to
    the President for Special Projects.
        Question. In EPA's fiscal year 2000 Annual Performance Plan it
    stated: ``EPA will * * * build a program that provides appropriate
    credit for early action. (Page VI-30 of EPA fiscal year 2000
    submission) What is EPA's statutory authority for developing a ``credit
    for early action'' program?
        Answer. EPA stated in its fiscal year 2000 Annual Performance Plan:
    ``[i]n 2000, EPA will expand its work with these industries to build a
    program that provides appropriate credit for early action.'' In its
    recent Climate Change Report to Congress, prepared in response to
    Senate Appropriations Report 105-216, p. 74-75, EPA described this
    concept more fully, stating that ``EPA will expand its work with [key
    energy intensive] industries and work across the Administration to help
    develop the basis for a program that could provide appropriate credit
    for early action.'' This work furthers the Administration's goals. In
    his January 1999, State of the Union Address, President Clinton
    expressed his support for the concept of providing credit for early
    reductions of greenhouse gases.
        EPA's statement in the fiscal year 2000 Annual Performance Plan was
    not intended to indicate that EPA will implement an early action credit
    program in fiscal year 2000, but rather that EPA will work to develop a
    conceptual framework for such a possible program. EPA will work with
    key industries to identify areas where and the means by which
    environmental and economic benefits could be obtained from early action
    to reduce greenhouse gases. EPA believes these are important first
    steps in considering how such a program might be structured.
    Information provided by energy intensive industries also provides a
    basis for evaluating the scope of the benefits that might be achieved
    through providing credits for early action.
        EPA's primary source of statutory authority for these activities is
    section 103(a) and (b) of the Clean Air Act. Section 103 of the Clean
    Air Act requires the Administrator to establish a ``national research
    and development program for the prevention and control of air
    pollution.'' As part of this program, section 103(a)(1) requires the
    Administrator to, ``conduct, and promote the coordination and
    acceleration of, research, investigations, experiments, demonstrations,
    surveys, and studies relating to the causes, effects (including health
    and welfare effects), extent, prevention and control of air
    pollution.'' Section 103(b) provides that in carrying out subsection
    (a), the Administrator is authorized to ``collect and make available,
    through publications and other appropriate means, the results of and
    other information, including appropriate recommendations by him in
    connection therewith, pertaining to such research and other
    activities.'' Section 103(g) of the CAA provides additional authority
    for some of the Agency's activities in this area. Section 103(g)
    provides that in carrying out subsection (a), ``the Administrator shall
    conduct a basic engineering research and technology program to develop,
    evaluate, and demonstrate nonregulatory strategies and technologies for
    air pollution prevention.'' The program is to include among its
    elements, ``[i]mprovements in nonregulatory strategies and technologies
    for preventing or reducing multiple air pollutants, including sulfur
    oxides, nitrogen oxides, heavy metals, PM-10 (particulate matter),
    carbon monoxide, and carbon dioxide, from stationary sources, including
    fossil fuel power plants. Such strategies and technologies shall
    include improvements in the relative cost effectiveness and long-range
    implications of various air pollutant reduction and nonregulatory
    control strategies such as energy conservation, including end-use
    efficiency, and fuel-switching to cleaner fuels.'' These Clean Air Act
    provisions authorize EPA to explore and develop innovative,
    experimental approaches for prevention and control of air pollution,
    and an early action credit program would be one such approach.
        Other statutes provide additional general authority for and/or
    authority for specific aspects of EPA's activities in this area. Such
    statutes include: Pollution Prevention Act of 1990, 42 U.S.C. 13101 et
    seq.; National Environmental Policy Act of 1969, 42 U.S.C. 4321 et
    seq.; Global Climate Protection Act of 1987, 15 U.S.C. 2901; and
    Federal Technology Transfer Act, 15 U.S.C. 3710a.
               climate change: global climate issue--epa outreach
        Question. Has EPA sponsored, co-sponsored, or participated in any
    public meetings related to the global climate issue? If so, please
    provide the dates of the meetings, a list of participants, copies of as
    delivered presentations, and any presentation material used by EPA
    staff or produced as a result of a grant from EPA.
        Answer. Please see Attachment 1. Attachment 1 includes two lists
    which summarize: (1) public meetings related to the global climate
    issue that have been sponsored or co-sponsored by EPA; and (2) other
    public meetings related to the global climate issue at which EPA staff
    have participated as presenters and/or exhibitors. These lists include
    public meetings that occurred in fiscal year 1999 (10/1/98 through 3/
    18/99, the date of your request) and at which climate change issues
    were specifically on the agenda. These lists cover EPA headquarters
    offices (EPA Regional office information will follow shortly). We have
    also attached copies of participant lists for the listed EPA sponsored
    or co-sponsored meetings, lists of participants for the listed meetings
    at which EPA participated (where available), and presentation materials
    (hand outs and/or overheads) where available.
        Question. For any program sponsored or co-sponsored by EPA, how
    were/are decisions made about the participants in the program? Who is
    responsible for making these decisions? How does EPA assure that the
    views reflected are balanced?
        Answer. It is EPA's policy to be as inclusive as possible in
    determining who should participate (speak/present/exhibit) in EPA-
    sponsored public events, in order to ensure that all constituencies and
    all sides of the issue are represented. For the public meetings listed
    in our response to question #16, the EPA staff responsible for each
    meeting worked with other co-sponsors and stakeholders to identify
    qualified representatives from all appropriate sectors, including:
    industry; environmental groups; federal, state, and local government;
    and academia. Attendance at EPA-sponsored public meetings is open to
    all that are interested and the events are advertised through EPA
    mailings and in such media as the trade press, public press, and the
    Internet.
        Question. Does EPA have plans for any more of these meetings? If
    so, please provide a current list of these as well as any updates?
        Answer. Please see Attachment 2, which is a list of EPA-sponsored
    public meetings related to the global climate issue that are planned
    for the remainder of fiscal year 1999.
        Question. Has EPA been involved in any activities involving
    consulting with countries implementing the Kyoto Protocol since the
    fiscal year 1999 VA HUD Appropriations was signed by the President on
    October 21, 1998? Have you been involved with Argentina? If so, what
    was the scope of the activity and who was involved? Please provide any
    documents related to this activity including trips taken and the names
    of participants?
        Answer. EPA has supported climate change activities in developing
    countries since the negotiations leading up to the signing of the UN
    Framework Convention for Climate Change in 1992. As one of the key
    agencies supporting the U.S. Country Studies Program, an interagency
    program, EPA has supported cooperative work with numerous developing
    countries in the areas of inventories, mitigation, vulnerability and
    adaptation, and capacity building. EPA is now focusing its efforts on
    supporting capacity in inventories, economic analysis and modeling,
    technology cooperation, and linkages between climate mitigation and
    local pollution This work is being concentrated in a few key developing
    countries including Argentina, Brazil, Chile, China, Korea and Mexico.
    In Argentina EPA participated in several interagency trips (with
    Departments of State, Agriculture, Energy and Transportation) to
    discuss technical support concerning climate change to the Argentine
    Department of Natural Resources and Sustainable Development. This
    support focuses on the following technical areas: determine the
    baseline for GHG emissions; perform GHG inventory for 1997; revise the
    1990 and 1994 GHG emission inventories; determine future emission
    projections; establish different mitigation scenarios and analyze their
    impacts, and costs/benefits; elaborate alternative proposals for GHG
    emission goals under the FCCC; and prepare a Second National
    Communication or a Revision of the Initial National Communication. EPA
    participants in these technical trips were Maurice N. LeFranc, Jr.,
    Clare Breidenich, Leianne Clements and Peter Nagelhout.
        Question. Has EPA provided any funds to state or local entities to
    begin the process of implementing the Administration's proposed climate
    policy, including the Kyoto Protocol? Provide the details of all grants
    to state and local organizations including the date of the grant, the
    funding level, agreed scope, principal contact and Requests for
    Proposals for the following periods:
        (a) July 25, 1997 through July 23, 1998
        (b) July 24, 1998 through October 21, 1998
        (c) October 21, 1998 through April 28, 1999
        Answer. EPA has supported climate change activities in developing
    countries since the negotiations leading up to the signing of the UN
    Framework Convention for Climate Change in 1992. As one of the key
    agencies supporting the U.S. Country Studies Program, an interagency
    program, EPA has supported cooperative work with numerous developing
    countries in the areas of inventories, mitigation, vulnerability and
    adaptation, and capacity building. EPA is now focusing its efforts on
    supporting capacity in inventories, economic analysis and modeling,
    technology cooperation, and linkages between climate mitigation and
    local pollution. This work is being concentrated in a few key
    developing countries including Argentina, Brazil, Chile, China, Korea,
    and Mexico. In Argentina, EPA participated in several interagency trips
    (with the Departments of State, Agriculture, Energy, and
    Transportation) to discuss technical support concerning climate change
    to the Argentine Department of Natural Resources and Sustainable
    Development. This support focuses on the following technical areas:
    determine the baseline for GHG emissions: perform GHG inventory for
    1997; revise the 1990 and 1994 GHG emission inventories; determine
    future emission projections; establish different mitigation scenarios
    and analyze their impacts and costs/benefits; elaborate alternative
    proposals for GHG emission goals under the FCCC; and prepare a Second
    National Communication or a Revision of the Initial National
    Communication. EPA participants in these technical trips were Maurice
    N. LeFranc, Jr., Clare Breidenich, Leinne Clements and Peter Nagelhout.
        Question. Has EPA provided any funding for studies of either
    domestic or international carbon emissions trading?
        If so, please provide by May 15, 1999:
      --(a) the names of the organizations or individuals receiving the
            grant;
      --(b) the amount of the grant;
      --(c) the documents describing the initial scope of the project;
      --(d) the dates of initial contact and project initiation; and
      --(e) copies of these reports or preliminary drafts
        Also, please provide the Agency's statutory basis for pursuing
    these studies.
        Answer. EPA provided funding for the following studies that deal
    with domestic and/or international carbon emissions trading:
        (a) grant recipients:
        (21) H. John Heinz III Center for Science, Economics and the
    Environment, Washington DC.
        (22) Center for Clean Air Policy, Washington DC.
        III. Resources for the Future, Washington DC.
        (b) funding level and (d) project period
        I. John H. Heinz III Center for Science, Economics and the
    Environment.
        Fiscal year 1999/2000--Not funded.
        Fiscal year 1998/1999--Funding Level: $100,000; Project Period:
    September 23, 1996-September 23, 1998.
        Fiscal year 1997/1998--Funding Level: $100,000; Project Period:
    September 23, 1996-September 23, 1998.
        II. Center for Clean Air Policy.
        Fiscal year 1999/2000--Funding Level: $160,000; Project Period:
    August 1, 1999-July 31, 2000.
        Fiscal year 1998/1999--Funding Level: $196,000; Project Period:
    August 1, 1998-July 31, 1999.
        Fiscal year 1997/1998--Funding Level: $50,000; Project Period: July
    1997-December 1997.
        III. Resources for the Future
        Fiscal year 1999/2000--N/A.
        Fiscal year 1998/1999--Funding Level: $220,000; Project Period:
    July 1, 1997-June 30, 2000.
        Fiscal year 1997/1998--Funding Level: $75,000; Project Period: July
    1, 1997-June 30, 2000.
        (c) and (e) Please see attached.

                                  Attachment 1

        The following two lists summarize: 1) public meetings related to
    the global climate issue that have been sponsored or co-sponsored by
    EPA; and 2) public meetings related to the global climate issue at
    which EPA staff have participated as presenters and/or exhibitors.
    These lists include public meetings that occurred in fiscal year 1999
    (10/1/98 until 3/18/99, the date of your request).
                 epa sponsored and co-sponsored public meetings
        Meeting: Is Climate Changing Where the Wild Things Are?
        Date/location: October 7-8, 1998, Washington, D.C.
        Participant: David Gardiner, Assistant Administrator, Office of
    Policy

        Meeting: Third Annual State and Local Climate Change Partners'
    Conference
        Date/location: October 13-15, 1998, Albuquerque, NM
        Participant:
        Katherine Sibold, staff
        Jane Leggett Emil, Director, Climate Policy and Programs Division
        Steve Thompson, staff, EPA Region 6
        Ronn Dexter, Director, Climate Outreach and Innovations Division
        Jerry Clifford, Deputy Regional Administrator, Region 6
        Jack Colbourn, staff, Region 9
        Clay Ogg, staff
        Shari Friedman, staff

        Meeting: Air & Waste Management
        Association: Second International Specialty Conference on Global
    Climate Change
        Date/location: 10/14/98, Crystal City, VA
        Participant: David Doniger, Counsel to the Assistant Administrator,
    Office of Air and Radiation

        Meeting: Earth Technologies Forum
        Date/location: 10/26-28/98, Washington, D.C.
        Participant:
        Peter Robertson, Deputy Administrator
        Bob Perciasepe, Assistant Administrator, Office of Air and
    Radiation
        David Doniger, Counsel to the Assistant Administrator, Office of
    Air and Radiation
        Skip Laitner, staff

        Meeting: The Importance of Air Traffic Management Modernization
    Action Plan to Climate Protection
        Date/location: 10/7-10/98, Brussels, Belgium.
        Participant:Stephen O. Andersen, Ph.D., staff

        Meeting: Semiconductor Manufacturing Energy Efficiency Workshop
        Date/location: 10/22/98, Austin, TX.
        Participant: Jeanne Briskin, staff

        Meeting: Global Climate Change: Science, Policy, and Mitigation/
    Adaptation Strategies
        Date/location: 10/13-15/98, Washington, D.C.
        Participant: Reid Harvey, Jennifer Macedonia, staff

        Meeting: Electric Utilities Environment Conference on Science,
    Regulations & Impacts of SO2, CO2, O3,
    NOX & Mercury/EEI
        Date/location: 1/11/99, Tucson, AZ.
        Participant:
        Skip Laitner, Jennifer Macedonia, staff
        Brian McLean, Director, Acid Rain Division
      conferences at which epa staff have participated as speakers and/or
                                   exhibitors
        Meeting: The Nature Conservancy Seminar
        Date/location: October 1, 1998, Edgartown, MA
        Participant: Jim Titus, staff

        Meeting: Rutgers University Seminar
        Date/location: October 2, 1998, New Brunswick, NJ
        Participant: Jim Titus, staff

        Meeting: CoastFest 1998
        Date/location: October 3, 1998, Brunswick, GA
        Participant: Exhibit only

        Meeting: Delaware Coast Day
        Date/location: October 4, 1998 (Lewes, DE)
        Participant:Jim Titus, staff

        Meeting: Ocean Community Conference
        Date/location: November 16-19, 1998, Baltimore, MD
        Participant: Jim Titus, staff

        Meeting: The Changing Face of Public Health
        Date/location: January 21-22, 1999, Raleigh, NC
        Participant:Exhibit only

        Meeting: BioEnergy Meeting
        Date/location: October 1998, Madison, WI
        Participant:Exhibit only

        Meeting: Town Hall Meeting
        Date/location: Overland Park, Kansas, October 1998
        Participant: Katherine Sibold, staff

        Meeting: Fish Expo
        Date/location: November 15-17, 1998, Seattle, WA
        Participant: Exhibit Only

        Meeting: RCRA National Meeting
        Date/location: January 1999, Washington, D.C.
        Participant: Henry Ferland, Ethan McMahon, staff

        Meeting: R 99 Recovery, Recycling, Re-integration Congress
        Date/location: February, 1999, Geneva, Switzerland
        Participant:Eugene Lee, staff

        Meeting: New Jersey Dept. of Env. Protection GHG Workgroup Meeting
        Date/location: April 1999, Trenton, NJ
        Participant:Eugene Lee, staff

        Meeting: Resources for the Future Workshop on Emissions Trading
    Systems for Greenhouse Gas Emissions
        Date/location: January 15, 1999, Washington, D.C.
        Participant:
        Robert Shackleton, Martin Ross, staff
        Michael Shelby, Director, Energy & Transportation Sectors Division

        Meeting: CCAP's ``Greenhouse Gas Emissions Trading Dialogue Group''
        Date/location: Quarterly meetings, Washington, D.C.
        Participants:
        Stuart Schare, Tracy Terry, John Thomas
        Michael Shelby, Director, Energy & Transportation Sectors Division

        Meeting: Clean Energy Working Group
        Date/location: 12/10/98, Washington, D.C.
        Participant: Robert Perciasepe, Assistant Administrator, Office of
    Air & Radiation

        Meeting: Edison Electric Institute Air Quality Integration Dialogue
        Date/location: 12/18/98, Washington, D.C.
        Participant: Robert Perciasepe, Assistant Administrator, Office of
    Air & Radiation

        Meeting: Federal Bar Association
        Date/location: 1/27/99, Washington, D.C.
        Participant:David Doniger, Counsel to the Assistant Administrator,
    Office of Air & Radiation

        Meeting: National Association of State Energy Officials
        Date/location: 2/19/99, Washington, D.C.
        Participant: Robert Perciasepe, Assistant Administrator, Office of
    Air & Radiation

        Meeting: Alliance to Save Energy: Talking Points to Save Energy
        Date/location: 3/8/99, Washington, D.C
        Participant: Robert Perciasepe, Assistant Administrator, Office of
    Air & Radiation

        Meeting: Ohio Farm Bureau
        Date/location: 3/10/99, Washington, D.C
        Participant: Robert Perciasepe, Assistant Administrator, Office of
    Air & Radiation

        Meeting: Global Climate Forum
        Date/location: 1/28/99, Cambridge, MA
        Participant: Reid Harvey, staff

        Meeting:Energy Conservation Subcommittee of the National
    Association of Regulatory Utility Commissioners (NARUC)
        Date/location: 11/8/98, Washington, D.C.
        Participant: Skip Laitner, staff

        Meeting: Energy/Environment Seminar, Johns Hopkins Paul H. Nitze
    School of Advanced International Studies (SAIS)
        Date/location: 12/7/98, Washington, D.C.
        Participant: Skip Laitner, staff

        Meeting: Edison Electric Institute.
        Date/location: 1/20/99, Washington, D.C.
        Participant: Skip Laitner, Sam Napolitano, staff

        Meeting: U.S. Advanced Ceramics Association Meeting
        Date/location: 3/9/99, Washington, D.C.
        Participant: Skip Laitner, staff

        Meeting: Eastern Economics Association
        Date/location: 3/12/99, Washington, D.C.
        Participant: Skip Laitner, staff

        Meeting: Emissions Trading: Extracting Revenue Opportunities for
    Your Company in an Emerging Commodity Market
        Date/location: 12/7-8/98, Washington, D.C.
        Participant:
        Brian McLean, Director, Acid Rain Division
        Jennifer Macedonia, staff

        Meeting: Emissions Trading and Permit Allocation Conference
        Date/location: 10/14-15/98, London, England
        Participant: Brian McLean, Director, Acid Rain Division

        Meeting: Briefing for Congressional staff with a focus on Acid
    Rain's experience with early action incentives
        Date/location: 2/5/99, Washington, D.C.
        Participant: Brian McLean, Director, Acid Rain Division

                                  Attachment 2

        The following two lists summarize: (1) public meetings related to
    the global climate issue that will be sponsored or co-sponsored by EPA;
    and (2) public meetings related to the global climate issue at which
    EPA staff will participate as presenters and/or exhibitors. These lists
    include public meetings that will occur for the remainder fiscal year
    1999 (3/18/99, the date of your request, until 9/30/99).
            upcoming epa sponsored and co-sponsored public meetings
        Meeting: Climate Change: What Does It Mean for the Midwest?
        Date/location: April 28, 1999, Kansas City, MO
        Participant:
        Dennis Grams, Regional Administrator, Region 7
        David Gardiner, Assistant Administrator, Office of Policy

        Meeting: Regional Conference on Potential Climate Change Issues in
    Florida's Coastal Communities
        Date/location: May 26, 1999, Miami, Florida
        Participant:
        Jim Titus, staff (tentative)
        David Gardiner, Assistant Administrator, Office of Policy
    (tentative)

        Meeting: Technical Workshop on Sea Level Rise, Coral Bleaching, and
    other Potential Global Warming Impacts in Florida Keys
        Date/location: May 27, 1999, Marathon, Florida
        Participant: Jim Titus, staff (tentative)

        Meeting: The Second International Symposium on Greenhouse Gases
        Date/location: 9/8/99, Netherlands
        Participant: Reid Harvey, staff
      conferences at which epa staff will participate as speakers and/or
                                   exhibitors
        Meeting: Risk and Insurance Management Society Annual Conference
        Date/location: April 11-16, 1999, Dallas, Texas
        Participant: Exhibit only

        Meeting: Electric Power 1999
        Date/location: April 20-22, Baltimore, Maryland
        Participant: Exhibit only

        Meeting: National Town Meeting
        Date/location: May 2-5, 1999, Detroit, Michigan
        Participant: David Gardiner, Assistant Administrator, Office of
    Policy

        Meeting: Public Risk Management Association Convention and Expo
        Date/location: June 6-9, 1999, San Diego, California
        Participant: Exhibit only

        Meeting: Edison Electric Institute Annual Convention and Exposition
        Date/location: June 13-15, Long Beach, California
        Participant: Exhibit only

        Meeting: National Association of Mutual Insurance Companies
        Date/location: September 19-22, San Antonio, Texas
        Participant: Exhibit only

        Meeting: Coastal Issues Conference
        Date/location: April 19-20, 1999, South Padre Island, Texas
        Participant: Jim Titus, staff (tentative) and Exhibit

        Meeting: Coastal Zone 1999 Conference
        Date/location: July 27-29, 1999, San Diego, California
        Participant: Jim Titus, staff (tentative) and Exhibit

        Meeting: Maryland Coast Day
        Date/location: September 18, 1999, Assateague Island, MD
        Participant: Jim Titus, staff (tentative) and Exhibit

        Meeting: CoastFest 1999
        Date/location: September 25, 1999, Brunswick, GA
        Participant: Jim Titus, staff (tentative) and Exhibit

        Meeting: National Environmental Health Association Annual
    Educational Conference and Exhibition
        Date/location: July 1, 1999, Nashville, TN
        Participant: Exhibit only

        Meeting: National Association of County & City Health Officials
    Annual Conference
        Date/location: July 14-17, 1999, Dearborn, Michigan
        Participant: Exhibit only

        Meeting: American Meteorological Society Broadcasters Meeting
        Date/location: June 18-25, 1999, Orlando, FL
        Participant: John Foster, Karen Gibbons, staff, and Exhibit

        Meeting: Radio and Television News Directors Association 1999
        Date/location: September 29-October 2, 1999, Charlotte, North
    Carolina
        Participant: Exhibit only

        Meeting: U.S. Conference of Mayors Annual Conference
        Date/location: June 11-15, 1999, New Orleans, LA
        Participant: Exhibit only

        Meeting: National Conference State Legislatures Annual Meeting
        Date/location: June 24-28, 1999, Indianapolis, IN
        Participant: Exhibit only

        Meeting: National Association of Counties Annual Conference
        Date/location: July 16-20, 1999, St. Louis, MO
        Participant: Exhibit only

        Meeting: National Association of State Energy Officials Annual
    Meetings
        Date/location: September 19-20, 1999, Indianapolis, IN
        Participant: Exhibit only

        Meeting:International City/County Management Association Annual
    Conference
        Date/location: September 26-29, Portland, Oregon
        Participant: Exhibit only

        Meeting: Izaak Walton League Annual Conference
        Date/location: July 1, 1999, Williamsburg, VA
        Participant: Karen Gibbons, staff, and Exhibit

        Meeting: Federation of Fly Fishers Annual Conference
        Date/location: August 1, 1999, Gatlinburg, TN
        Participant: Karen Gibbons, staff, and Exhibit

        Meeting: California Resource Recovery Conference
        Date/location: June, 1999, Monterrey, CA
        Participant: Exhibit only

        Meeting: OECD Workshop on Extended Producer Responsibility and
    Waste Minimization Policy
        Date/location: May 1999, Paris, France
        Participant: EPA speaker to be determined

        Meeting: National Recycling Coalition Annual Congress
        Date/location: September 1999, Cincinnati, OH
        Participant: EPA speaker to be determined

        Meeting:Recycling Council of Alberta, ``Frontiers in Waste
    Reduction''
        Date/location: September 1999
        Participant: EPA speaker to be determined

        EPA's primary source of statutory authority for funding studies
    that deal with domestic and/or international carbon emissions trading
    is section 103(a) and (b) of the Clean Air Act. Section 103 of the
    Clean Air Act requires the Administrator to establish a ``national
    research and development program for the prevention and control of air
    pollution.'' As part of this program, section 103(a)(1) requires the
    Administrator to, ``conduct, and promote the coordination and
    acceleration of, research, investigations, experiments, demonstrations,
    surveys, and studies relating to the causes, effects (including health
    and welfare effects), extent, prevention and control of air
    pollution.'' Section 103(b) provides that in carrying out subsection
    (a), the Administrator is authorized to ``collect and make available,
    through publications and other appropriate means, the results of and
    other information, including appropriate recommendations by him in
    connection therewith, pertaining to such research and other
    activities.'' Section 103(g) of the CAA provides additional authority
    for some of the Agency's funding of studies that deal with domestic
    and/or international carbon emissions trading. Section 103(g) provides
    that in carrying out subsection (a), ``the Administrator shall conduct
    a basic engineering research and technology program to develop,
    evaluate, and demonstrate nonregulatory strategies and technologies for
    air pollution prevention.'' The program is to include among its
    elements, ``[i]mprovements in nonregulatory strategies and technologies
    for preventing or reducing multiple air pollutants, including sulfur
    oxides, nitrogen oxides, heavy metals, PM-10 (particulate matter),
    carbon monoxide, and carbon dioxide, from stationary sources, including
    fossil fuel power plants. Such strategies and technologies shall
    include improvements in the relative cost effectiveness and long-range
    implications of various air pollutant reduction and nonregulatory
    control strategies such as energy conservation, including end-use
    efficiency, and fuel-switching to cleaner fuels.''
        Other statutes provide additional authority for EPA's activities in
    this area. Such statutes include: National Environmental Policy Act of
    1969, 42 U.S.C. 4321 et seq. and the Global Climate Protection Act of
    1987, 15 U.S.C. 2901.
                   climate change: meeting in kansas city, mo
        Question. April 28, 1999 Meeting in Kansas City, Missouri. Who
    selected the speakers for the Kansas City event? Who defined the
    ``balance'' in terms of participants. Please provide a description of
    the credentials of the speakers, whether they receive government
    funding, and, if funding has been received, which agency has provided
    the funding and for what.
        Answer. EPA sought advice and input from a variety of sources
    outside the Agency at every stage of the planning and production of the
    event in order to strive for balance. In the very beginning stages of
    planning, we asked 40 organizations and governmental bodies to
    cosponsor the conference. At various times, we asked for their help in
    identifying, contacting, and arranging for speakers and other
    cosponsors. We later asked all of our initial contacts to help with
    suggested lists of participant invitees and publicity, whether or not
    they had chosen to cosponsor the event. For example, a Missouri-based
    non-profit organization, Bridging the Gap, cosponsored the Kansas City
    conference and provided us with a mailing list of approximately 900
    business and governmental addresses to which we sent invitations. The
    Missouri Chamber of Commerce asked for and received flyers to do a
    special mailing. The Missouri Farm Bureau did their own mailing on the
    meeting as well.
        The biographies of the speakers for the conference are attached.
    Six of the speakers are employed by the federal government: Dennis
    Grams, Regional Administrator of USEPA, Region 7; David Gardiner,
    Assistant Administrator, Office of Policy, USEPA; Glen Overton,
    Regional Administrator for the General Service's Administration's
    Heartland Region; Dr. David Easterling, Principal Scientist at the
    National Climatic Data Center; Joseph Aldy, Senior Adviser at the
    President's Council of Economic Advisers; and Val Jensen, Director of
    the Chicago Regional Office of the Department of Energy. As far as we
    know, the only ones who work for non-federal organizations that have
    received government funding are the ones to whom the Office of Economy
    and Environment (OEE) in EPA have provided money. They are the
    following:
        Anita Randolph and Steve Mahfood both work for the Missouri
    Department of Natural Resources (DNR). The Missouri DNR received money
    from EPA/OEE in 1991 to conduct a statewide energy survey, in 1994 to
    do an inventory of greenhouse gases, and in 1995 to produce a state
    action plan to evaluate mitigation options.
        George Moody works for the City of Overland Park, Kansas. From 1993
    to present, the International Council for Local Environmental Issues
    (ICLEI)has received funding from EPA/OEE to support the ``Cities for
    Climate Protection Program''. Overland Park has been a participant in
    the program and receives technical support from ICLEI, but no direct
    funds from OEE.
        Question. Which speaker will document the uncertainty in the
    science?
        Answer. The April 28 conference in Kansas City addressed
    uncertainties in the science of climate change in a number of ways.
    Eugene S. Takle, Ph.D., professor of atmospheric science at Iowa State
    University, gave a talk entitled, ``What is Global Warming and How Do
    We Know It's Happening?'' In his speech he repeatedly referenced the
    uncertainties involved in long-range projections of any scientific
    phenomenon, including the statistical ranges of validity in the
    scientific data he presented regarding observed and projected trends in
    climate change. David R. Easterling, Ph.D., principal scientist at the
    National Climatic Data Center (NCDC), spoke on ``Droughts, Floods, and
    Other Weather-related Impacts on the Midwest.'' He reported data that
    had been documented by scientists at NCDC as well as projections that
    the center's scientists are making about possible future events that
    may occur in the Midwest, should climate trends continue. He, too,
    acknowledged some of the uncertainties inherent in such projections and
    some of the controversy surrounding the scientific debate. Participants
    in the audience were given the opportunity to ask both Dr. Takle and
    Dr. Easterling questions about their research; many opinions varying
    from those of the two scientists were presented by audience members.
        Question. Which participant will discuss the inadequacy of the
    models to predict local effects?
        Answer. Eugene Takle noted that global climate models have poor
    resolution at the regional and local level, although he demonstrated
    that the models do a good job at replicating observed trends in climate
    on a global scale.
        Question. Which speaker will give the non-governmental assessment
    of the international negotiations?
        Answer. The Missouri Coalition on Global Climate Change provided a
    speaker, Christopher C. Horner, Esq., member and liaison of the Cooler
    Heads Coalition, to give a non-governmental assessment of the
    international negotiations regarding climate change.
        Question. Which participant will give the economic assessment in
    contrast to the Administration's discredited analysis?
        Answer. Christopher Horner included remarks in his speech about
    economic assessments that had been performed outside the government
    that differed from assessments produced by economists within the
    federal government. David Martin, director of governmental affairs at
    Kansas City Power and Light, made mention of the differing economic
    reports during his speech. In addition, several participants from the
    audience questioned the government economist, Joseph Aldy from the
    Council of Economic Advisers, about differing analyses and assessments
    after his speech. Many question/answer periods were provided throughout
    the day in order to assure a forum for open, balanced discussion of the
    issues.
        Question. Which participant will discuss the impacts on small
    business from the viewpoint of economic harm?
        Answer. Several of the speakers talked about the potential economic
    harm to small businesses from the impacts of climate change. In
    particular, James W. Russell, Ed.D., vice president for outreach at the
    Institute for Business and Home Safety, talked about the money lost by
    businesses because of recent severe weather events. Several climate
    models indicate an increase in precipitation intensity, suggesting a
    possibility for more extreme rainfall events due to climate change.
        In addition, David Martin of Kansas City Power and Light discussed
    the potential economic impact of the Kyoto Protocol on electric
    utilities and ratepayers, noting that climate change is one of the
    leading issues facing utilities today. Christopher Horner discussed the
    potential negative economic impacts of the Kyoto Protocol on jobs,
    Gross Domestic Product, and international competitiveness.
        Question. How and when was notice of this event provided to
    interested parties? If a distribution (mail, electronic mail, or
    facsimile) was made of any notice, please provide this list.
        Answer. In total, more than 5,000 invitations were sent to diverse
    lists of potential participants. We placed announcements on at least
    two Internet mailing lists and the U.S. EPA Kansas City-based Region 7
    web page. We put a notice on the Region 7 ``Headliners'' page, which
    provides regulatory announcements to the public. Notices were placed in
    bulletins of various public and private organizations in Iowa and
    Missouri. We issued press releases and a press advisory from Region 7.
    We did a mailing to press contacts of the 100 largest newspapers and
    electronic media organizations in Region 7. We provided press packets
    in advance to those who requested them (Kansas City Star, Wichita Eagle
    Beacon, etc.) We worked with each state Energy Office in the Region
    (Kansas, Missouri, Iowa and Nebraska) to get them to alert their
    clients about the meeting. And in planning of the meeting we talked
    with the state Energy Offices, business organizations, energy
    organizations, a number of university personnel, and others. All of
    this was done in an effort to assure that the cosponsors, speakers, and
    participants represented a balance of backgrounds and viewpoints on the
    issue of climate change.
        Though many of our co-sponsors and other interested parties asked
    for information about the conference throughout the months of January
    and February 1999, and received phone calls, emails and faxes in reply,
    all formal notices were sent during the months of March and April,
    1999, including postal and electronic mailings using ``distribution
    lists''. The lists we used are attached.
        In addition to the mailings we did, were mailings sent out by
    various groups who preferred sending their own notices along with or
    instead of the flyers we produced. Those provided flyers by us were:
    Heartland Solar Energy Industries Association, 100; Bridging the Gap,
    500; Metropolitan Energy Center, 100; Missouri Department of Natural
    Resources, 50; Mid America Regional Council, 50; Department of Energy,
    Denver Regional Support Office, 50; Department of Energy, Kansas City
    Plant, 100; Competitive Resources Incorporated, 50; General Services
    Administration, 50; and Missouri Coalition for Global Climate Change,
    200.
        Question. When was this event initially planned? Who were the
    participants in the planning?
        Answer. Planning for this conference began in March 1998. As stated
    above, a committee of EPA staff at Washington Headquarters and at EPA's
    Region 7 Office in Kansas City approached approximately 40
    organizations to help in cosponsoring the event, identifying speakers,
    and inviting participants. One of these organizations, Bridging the
    Gap, participated in several conference calls in the later stages of
    planning (January through March 1999) to set up some of the logistics.
        Question. What other events are planned for the balance of this
    fiscal year? Please provide the dates, preliminary agendas, and planned
    speakers.
        Answer. There is just one other such climate change event planned
    for the rest of this fiscal year. The title of that conference will be
    ``Climate Change: What Does It Mean for South Florida?'' It will be
    held May 26 and 27, 1999, in Miami and in the Keys. Each venue will
    host a half-day event to provide information about the potential
    impacts of climate change on South Florida's economy, infrastructure,
    and natural resources. Strategies and sustainable solutions for
    reducing the potential risks associated with global warming and sea
    level rise will also be addressed. Confirmed speakers include: Dr.
    Stephen P. Leatherman, director of the International Hurricane Center
    at Florida International University; L. Benjamin Starrett, a fellow at
    the Growth Partnership, Collins Center for Public Policy; Dr. Pamela
    Hallock, professor of marine science, University of South Florida; and
    Dr. Harold C. Wanless of the Department of Geological Sciences at
    University of Miami.
        Question. What Members of Congress have been invited to this
    program? What Congressional staff have been invited to this program?
    When were they invited?
        Answer. Congresswoman Jo Ann Emerson and Congressman McCarthy
    Benson were both invited to the climate change conference in Kansas
    City held April 28. The invitations that were sent to Representatives
    Emerson and Benson were intended to include the entire staff of their
    offices, as were all the conference invitations we sent to government,
    nonprofit and private business offices. Both Members of Congress were
    sent invitations in our initial mailing to invitees about March 20,
    1999, and in a subsequent ``reminder'' mailing about April 10, 1999.
        climate change: greenhouse gas emissions credit for early action
        Question. On April 15, 1998, EPA entered into a proposed consent
    decree with the Natural Resources Defense Council (NRDC) that included
    an agreement to study how CO2 emissions would be controlled.
    This step appears to be an effort towards implementation of the Kyoto
    Protocol. Why did EPA entertain the possibility of regulating
    CO2 when the original October 1994 consent agreement with
    NRDC made no mention of CO2? Did EPA decide to take this
    step after it realized that it had no authority to proceed to regulate
    CO2 based on an April 10, 1998 General Counsel memo on this
    subject to the Administrator?
        Answer. The settlement agreement that you refer to calls for a
    multiple pollutant analysis that looks at the relationship among the
    four most significant air pollutants from electric power generation:
    NOX, SO2, CO2, and mercury. In
    agreeing to undertake that analysis, EPA proposed simply to update a
    series of multi-pollutant analyses of utility emissions that were first
    undertaken more than two years ago. The updated analysis called for in
    the proposed agreement was specifically intended to inform a decision
    that EPA must make under the Clean Air Act on whether to regulate
    mercury emissions from electric power plants.
        Multiple pollutant analysis of utility emissions makes sense
    because pollution control strategies to reduce emissions of these
    pollutants are highly inter-related. Strategies to reduce emissions of
    any one pollutant from power generation can have effects of differing
    magnitude on emissions of the other pollutants. The cost and other
    impacts of control strategies for these pollutants are also highly
    interdependent. Multiple pollutant analyses examine these inter-
    relationships and can provide valuable information to the electric
    power industry, the public, Federal agencies, and Congress about the
    relationships among policy choices to address the major pollutants from
    this industry.
        The options that were examined in the study are hypothetical
    approaches to emission controls on the electric power industry for each
    pollutant and do not represent the EPA or Administration position on
    how any of these pollutants should be reduced in the future.
    Specifically with regard to carbon dioxide, the Administration has
    committed not to implement the Kyoto Protocol without the advice and
    consent of the Senate.
        Although the Agency has legal authority to regulate CO2
    as an air pollutant under provisions of the Clean Air Act if the
    Administrator makes certain determinations (see Memorandum of Jonathan
    Cannon, General Counsel, April 10, 1998), the Administrator has not
    made any such determinations.
                        climate change: climate science
        Question. Has EPA factored into its budget and programs the 1998
    recommendations of the National Research Council regarding science
    priorities? If so, please provide the document that describes the
    issues raised by the National Research Council and the detailed plan to
    respond to these issues. If not, please provide this analysis by March
    15, including the funding requirements.
        Answer. Yes. EPA, along with the entire US Global Change Research
    Program (USGCRP) incorporated the recommendations of the National
    Research Council (NRC) into the development of its programs. This
    consideration is reflected in the fiscal year 2000 USGCRP Our Changing
    Planet annual report to Congress and the USGCRP's fiscal year 2000
    Implementation Plan. (A draft of this report has already been delivered
    to Congress by the USGCRP.) It is also reflected in EPA's new Research
    Strategy for the Global Change Research Program, which is still being
    drafted and will soon go through a rigorous, external peer review.
        One example of how EPA responded to the recommendations of the NRC
    is its new support for Human Dimensions research as part of its
    assessment program. The NRC identified a wide range of Human Dimensions
    research questions that should be considered by the USGCRP. EPA is
    coordinating with other federal agencies to address many of these
    questions. EPA is working with other federal agencies to ensure that
    efforts are not duplicated and that each agency focuses on specific
    human dimensions questions related to its own program and niche within
    the USGCRP.
        Humans have many different impacts on natural systems, including
    changes in land use, industrial processes, agricultural and forest
    management practices, and emissions of air and water pollutants. Humans
    also respond to the effects of global change. Human dimensions research
    entails understanding how humans, who are an integral component of the
    Earth system, contribute and respond to global change. Research on the
    environmental effects of human activities is critical for understanding
    long-term global change. The NRC's report reaffirmed the need to
    articulate how the science of global change is important to people and
    society. The new assessment-oriented EPA Global Change Research Program
    incorporates considerations of ``human dimensions'' into both its
    assessment activities and its foundation research program. In the
    assessment program, this will occur in two ways: (1) through ongoing
    engagement of stakeholders to define the specific measures of change
    that are of interest; and (2) through coordination of findings from the
    social sciences with those from the physical and biological sciences to
    attain a policy-relevant perspective. In the foundation research
    program, the near-term priorities for human dimensions research that
    are relevant to EPA's Global Program include understanding how humans,
    who are an integral component of the Earth system, contribute and
    respond to global change.
        Question. The October 16, 1998 issue of Science carried the story
    about the possibility that North America appears to be a massive sink
    for carbon. The article `` A Large Terrestrial Carbon Sink in North
    America implied by Atmospheric and Oceanic Carbon Dioxide Data and
    Models'' presents evidence that North America (US+Canada) sops up
    enough carbon each year ``to cover every ton of carbon discharged
    annually by fossil fuel burning in the United States and Canada. `` The
    recommendations for further study included:
      --Intensive atmospheric sampling and ecological field studies to
            identify the location and cause of North American terrestrial
            CO2 uptake,
      --New atmospheric measurements to include Eurasia, South America,
            Africa, and Australia,
      --Studies to better characterize oceanic CO2 uptake,
            particularly in the Southern Hemisphere, and
      --Reduced uncertainty in atmospheric transport modeling.
        Has EPA developed a program to address these issues? If so, what
    funds are budgeted?
        Has EPA had any discussions with Canadian authorities to address
    CO2 monitoring as a joint scientific effort? If so, what are
    the plans?
        Answer. EPA is no longer conducting any research related to the
    carbon cycle (which includes analysis of carbon sinks). This is an area
    of disinvestment for EPA's Global Program, given its redirection
    towards a more assessment-oriented program with primary emphasis on
    understanding the potential consequences of global change for human
    health, ecosystems, and socioeconomic systems in the United States. EPA
    is no longer doing carbon cycle work. Within the context of the entire
    USGCRP, other federal agencies now have responsibility for the carbon
    cycle work.
     issues in the 1998 nas/national research council analysis of science
              uncertainties and the october 1998 hansen nas paper
        Question. In October 1998 Jim Hansen published a paper in the
    Proceedings of the National Academy of Sciences entitled ``Climate
    Forcings in the Industrial Era''. Key conclusions included:
      --The forcings that drive long-term climate change are not known with
            an accuracy sufficient to define future climate change.
      --Quantitative knowledge of all significant climate forcings is
            needed to establish the contribution of deterministic factors
            in observed climate change and to predict future climate.
        The paper identified a number of important areas for further
    research that should be addressed in the fiscal year 2000 budget:
        Aerosols.--advanced capability for global satellite measurement of
    aerosol scattering and absorption properties.
        Aerosols-clouds.--coordinated research program including accurate
    global measurement of aerosol and cloud changes, as well as in situ
    field studies and aerosol modeling.
        Land-use.--comprehensive historical data on land-use change and
    increased realism of land processes in climate models.
        Solar variability.--need to monitor and understand.
        Has EPA reviewed this paper as input to its research funding
    request? If so, please provide the detailed analysis of the issues and
    the original EPA budget request (not the President's budget request)?
    If not, please provide this analysis by April 30, 1999.
        Answer. EPA has not reviewed this paper as input to its research
    funding request because all of the uncertainties identified by Hansen
    in his paper relate to the development of global circulation models
    that predict future climatic conditions. EPA no longer is involved in
    the development of climate models. This is an area of disinvestment for
    EPA's Global Program, given its redirection towards a more assessment-
    oriented program with primary emphasis on understanding the potential
    consequences of global change for human health, ecosystems, and
    socioeconomic systems in the United States. EPA is no longer doing
    climate modeling (in the same way that it is no longer doing carbon
    cycle work). Within the context of the entire USGCRP, other federal
    agencies now have responsibility for the carbon cycle work.
        It is important to note that EPA coordinates closely with all other
    federal agencies in the U.S. Global Change Research Program (USGCRP)
    and benefits from the work being done by the agencies developing
    climate models. EPA is part of the larger USGCRP and is involved in the
    development of the USGCRP's fiscal year 2000 implementation plan and
    the USGCRP's Our Changing Planet annual report to Congress. Through
    this process, EPA coordinates its activities with those of other
    federal activities. Opportunities to cooperate with other federal
    agencies are also identified.
        Question. In 1999, Tim Barnett, Scripps Institution of
    Oceanography, ran 11 models and concluded: ``There is no model that
    consistently agrees well with the observations.'' Is EPA using any
    models to predict the effects of global climate change on a regional or
    local level? If so, what models are being used?
        Answer. EPA's assessments do not make predictions of the effects of
    future climate change on a regional or local level. EPA uses input from
    climate models to define scenarios of potential climate futures. That
    is, the scenarios are used to understand the sensitivity and
    vulnerability of human and ecological systems to potential future
    climate change, but not to make actual predictions of future
    conditions. All of the regional assessments being sponsored by the EPA
    as part of the National Assessment effort use state-of-the-art climate
    scenarios generated by the Canadian and British climate modelers. In
    some cases, these model outputs are used as input to Regional Climate
    Models in order to develop scenarios for future climatic conditions are
    a regional level. Also, EPA--and the regional coordinators it is
    sponsoring in the research community--are using the VEMAP model output
    to understand the potential changes in vegetation that may occur as the
    climate changes.
        EPA has conducted one study that assigns probabilities to
    particular future effects of climate change: The Probability of Sea
    Level Rise, which was published in October 1995. This study, conducted
    by the Office of Policy, Planning, and Evaluation, developed
    probability-based projections that can be added to local tide-gauge
    trends to estimate future sea level rise at particular locations around
    the coast of the United States.
        Question. Since, according to the Hansen paper, as well as others,
    models are not capable of predicting natural variability and global
    effects, how can EPA justify using these models to predict effects on a
    smaller, ``microscopic scale'' as planned for the 3 regional
    assessments (Mid-Atlantic, Great Lakes, & Gulf Coast)?
        Answer. EPA's assessments of the potential consequences of climate
    change and variability on the United States rely on a diversity of
    information. Some of the EPA assessment work uses input from climate
    models to define scenarios of potential climate futures. For example,
    all of the regional assessments being sponsored by the EPA as part of
    the National Assessment effort use state-of-the-art climate scenarios
    (specifically ones that are generated by the Canadian and British
    climate modelers). It must be emphasized that the climate model output
    is viewed as scenarios, not predictions of future climate. They are
    being used to understand the sensitivity and vulnerability of human and
    ecological systems to potential future climate change, but not to make
    actual predictions of future conditions.
        It is also important to understand that the regional assessments
    are not limited to scenarios generated by climate models. The
    assessments also use other information to illustrate the potential
    consequences of climate variability and change for human health and
    ecological systems. In addition to climate model output, EPA's
    assessment work also relies on historic data to understand the
    sensitivity of human and ecological systems to change (e.g., changes in
    the profile of the Blackwater National Wildlife Refuge as sea level has
    risen during the past 50 years). Also, plausible ``what if'' scenarios
    are used to illuminate the sensitivity of various systems. These
    sensitivity analyses help to define the potential risks and
    opportunities posed by climate change and variability to human health,
    the ecosystems, and social well-being.
        Question. Because of these substantial modeling problems, what is
    the basis for EPA conducting a ``Health Sector Assessment'' in fiscal
    year 2000?
        Answer. An important goal of the Health Sector Assessment is to
    understand the various pathways through which weather and climate may
    affect human health (i.e., to understand the sensitivity of human
    health to weather and climate). That is, the Health Sector Assessment
    is attempting to understand how important changes in weather and
    weather extremes (e.g., heat waves; storms) are for human health even
    under current climatic conditions. A better understanding of the
    sensitivity of human health to weather and weather extremes under
    current climatic conditions is essential before one can assess the
    potential effects of climate change and variability on human health.
    Also, this research into current sensitivities yields immediate
    benefits to society by enabling the public health community to develop
    better systems for responding to the risks posed by weather and climate
    (e.g., extreme heat and extreme cold).
        These research and assessment activities do not rely upon climate
    change models.
        It is also important to understand that analyses being done in the
    Health Sector Assessment of potential consequences of future climate
    change are not limited to scenarios generated by climate models. The
    assessments also use other information to illustrate the potential
    consequences of climate variability and change for human health. In
    addition to climate model output, the assessment work also relies on
    historic data to understand the sensitivity of human to change. Also,
    plausible ``what if'' scenarios are used to illuminate the sensitivity
    of various systems. These sensitivity analyses help to define the
    potential risks and opportunities posed by climate change and
    variability to human health and social well-being.
        The human health sector is looking at how climate affects human
    health in the United States and at how climate change and variability
    might affect our health. For example, heat waves can cause death and
    illness, especially among the elderly poor. Air pollution, which is
    worse in hot weather, can make people with respiratory disease sicker
    and can make breathing harder for everyone. People can be hurt or even
    killed in severe storms and floods, or can be made sick by unclean
    storm water. A change in climate might increase the risk of exposure to
    disease-carrying rodents and insects.
        The health sector team will analyze scientific research and
    government data on our country's health and how climate change might
    affect our health. In addition, the team may develop a limited number
    of quantitative models of projected or possible future health impacts,
    where reliable data is available.
        The eleven members of the health sector team come from a range of
    government, academic, and private institutions, including the U.S.
    Centers for Disease Control, the Environmental Protection Agency, the
    Johns Hopkins University School of Public Health, Harvard Medical
    School, the University of South Florida, the National Oceanic and
    Atmospheric Administration, and the Electric Power Research Institute.
                            coeur d'alene superfund
        Question. Since the federal government has continued to spend huge
    sums of taxpayer money on studies and additional research outside the
    21 square mile Bunker Hill Superfund site, does the Agency have an end
    plan or remedy in mind? What is that plan?
        Answer. The purposes of the Superfund process are: (1) to determine
    the nature and extent of contamination; (2) to identify existing and
    potential risks to human health or the environment; (3) to evaluate
    cleanup options; and (4) to identify a cleanup plan. EPA is in the
    investigation and evaluation phase of the process at this time and does
    not have a specific remedy identified. The remedy proposed will be a
    result of the RI/FS process and input from affected stakeholders and
    communities.
        Question. How much money has been spent on the RI/FS (remedial
    investigation and feasibility study) outside the existing 21 square
    mile Superfund site?
        Answer. EPA estimates that as of 5/2/99, approximately $10,200,000
    in cost associated with work in the Basin, including the RI/FS and the
    costs associated with litigation. In addition, EPA has incurred
    $750,000 conducting residential and school soil removals outside of the
    existing 21 square mile Superfund site.
        These costs are estimates and have not been reconciled by EPA
    finance personnel. All site costs are reconciled as part of the cost
    recovery process which occurs when the sites reach completion.
        Question. How much more do you anticipate spending on the RI/FS?
        Answer. EPA estimates spending an additional $6.1 million in fiscal
    year 1999 and approximately $8.8 million in fiscal year 2000 to
    complete the RI/FS for the Basin. These costs are estimates; actual
    cost will be dependent upon factors that are unknown at this time, such
    as the nature and extent of contamination found, the need for
    treatability studies, and input from a large number of stakeholders
    involved in the Basin.
        Question. How long do you think the RI/FS will take?
        Answer. EPA hopes to have the RI/FS completed in fiscal year 2000.
    However, schedule modifications may be necessary depending on timely
    receipt of funding, the findings of the study, and additional
    requirements resulting from stakeholder input.
        Question. When do you anticipate EPA will be involved in more
    cleanup efforts in the Coeur d'Alene Basin rather than simply to
    continue studies?
        Answer. EPA has been involved in numerous cleanup actions in the
    basin since 1993. Examples include early removal actions at the Success
    and Douglas tailings piles. In addition, since 1997, EPA has been
    conducting early actions at residential and school properties and in
    common use areas such as parks and beaches. EPA has also used its
    removal authority in the basin to support actions by other parties such
    as the State trustees and the mining companies. These removal actions
    do not address the overall contamination that is present in the basin.
    The RI/FS will provide the information needed to determine what
    appropriate actions must be implemented for a comprehensive remedy to
    protect human health and the environment.
        Question. Can EPA pursue any cleanup activities in the Basin
    without completing the RI/FS?
        Answer. Even before completing the RI/FS, EPA is presently
    conducting cleanup activities in the Coeur d'Alene basin. However,
    these actions in themselves may not permanently protect human health
    and the environment. Permanent protection may only be achieved by
    addressing the various sources of contaminants in the basin, which may
    include individual outfalls and waste piles, or segments of river banks
    or stream beds. In order to determine what comprehensive long-term
    actions need to be taken in the basin, EPA needs to conduct the RI/FS.
        Question. How could damages have been assessed (under the NRD
    lawsuit) when an RI/FS had not been conducted? Isn't this backward?
        Answer. The damages associated with injuries to natural resources
    may be calculated whether or not an RI/FS has been completed. However,
    in the present litigation, the United States has argued to the district
    court that it would be most logical to determine the amount of natural
    resource damages after determining the appropriate cleanup actions
    through the RI/FS and Record of Decision. Accordingly, the district
    court has decided that the actual dollar amount of natural resource
    damages would be determined in a second trial following a first trial
    on liability and production of the Record of Decision (ROD) for the
    Coeur d'Alene Basin.
        Question. Is the RI/FS being used to support the NRD lawsuit? If
    not what is the purpose of the RI/FS?
        Answer. EPA is conducting the RI/FS in the basin because we believe
    that there are significant human health and ecological risks associated
    with releases of mining wastes. These risks must be accurately
    identified so that appropriate cleanup actions may be selected to
    protect human health and the environment. In addition, data and
    analyses from the RI/FS process will be made publicly available and can
    be used by various parties. For example, data developed by the RI/FS
    may be used to develop Total Maximum Daily Loads for rivers and other
    waterbodies under the Clean Water Act and may be relevant to the NRD
    litigation.
        Question. Is the EPA still considering the expansion of the 21
    square mile Superfund site?
        Answer. The United States' position remains that the Bunker Hill
    NPL facility extends to all areas with mining contamination in the
    Coeur d'Alene Basin. While the district court's contrary determination
    is being appealed, EPA may proceed with formal NPL listing action to
    ensure that all affected areas of the basin are included in an NPL
    facility. At this time, however, no preliminary determinations have
    been made and no decisions will be made prior to further coordination
    with state, local, and tribal governments and a period for formal
    public comment.
        Question. Is EPA willing to consider a legislative remedy to the
    Basin's problems?
        Answer. At the present time, it is too early to make any
    determinations as to the type(s) of remedy(ies) that may be necessary
    to address the contamination in the basin; therefore, it is premature
    for EPA to consider a legislative remedy. The RI/FS process was
    designed to determine the extent of contamination and to develop
    cleanup alternatives. Once the RI/FS is complete, a remedy is selected
    with stakeholder and community input. EPA believes that this public
    process is the appropriate method for selecting a remedy in the basin.
        Question. What is the TMDL standard that's been set for the
    Superfund site in Kellogg?
        Answer. A final TMDL standard has not yet been established for the
    Bunker Hill Superfund site in Kellogg. In April, 1999 the United States
    Environmental Protection Agency (EPA) and the State of Idaho Division
    of Environmental Quality issued a draft TMDL for public comment for
    dissolved cadmium, lead and zinc in surface waters of the Coeur d'Alene
    River Basin in Idaho. Waste load allocations are based on river flow.
    The draft TMDL document is currently out for public comment. In that
    draft document, the most stringent wasteload allocations for the Bunker
    Hill Central Treatment Plant (CTP), at the lowest 7-day average daily
    river flow that occurs with a 10-year return period, are: 4.23E-03
    pounds/day for cadmium; 1.30E-02 pounds/day for lead; and 3.09E-01
    pounds/day for zinc.
        Questions. Can this standard be met by the EPA in their management
    of effluent at the site?
        Answer. The EPA is currently developing a work plan to carry out a
    treatability study to determine the extent to which the wasteload
    allocations noted above can be achieved at the CTP. EPA will be able to
    make that determination once the treatability study has been conducted
    and the results are available for review.
                         carney site, st. maries, idaho
        Question. What is EPA's intention for the Carney site in St. Maries
    where there is creosote leakage from underground storage tanks?
        Answer. EPA intends to complete characterization of creosote
    contamination at the site and determine what additional actions, if
    any, need to be taken to prevent or mitigate the further release of
    creosote to the St. Joe River.
        Question. What types of cleanup activity is occurring?
        Answer. To date, the City of St. Maries and Carney Products Company
    have performed a Superfund removal action under a Unilateral
    Administrative Order (UAO) with the EPA, to remove exposed creosote and
    creosote-contaminated soil from the bank of the St. Joe River. They
    have also completed a removal site evaluation under the UAO to
    characterize the extent of contamination in soils and groundwater.
        Question. Do you anticipate clean up in conjunction with the city/
    county?
        Answer. It is likely that additional cleanup action will be
    required to mitigate extensive creosote contamination present in bottom
    sediments of the St. Joe River and to prevent further release of
    creosote from the site. The City of St. Maries has been identified as a
    potentially responsible party (PRP) and may be responsible, along with
    other PRPs, for this work.
        Question. Is the EPA recommending this site for the NPL?
        Answer. EPA has just recently received the data from the site
    investigation, that will be used to calculate a preliminary Hazard
    Ranking System Score. This evaluation will determine whether the site
    is eligible for the NPL.
                              regional haze rules
        Question. Last year, in the EPA Appropriation Conference Report,
    Congress encouraged EPA to re-propose the Regional Haze Rule. How do
    you feel you responded to this report language?
        Answer. The EPA gave serious consideration to the congressional and
    other recommendations to re-propose the regional haze rule. However, we
    decided that re-proposal would not be necessary for a number of
    reasons. First, the EPA provided an extensive opportunity for comment
    on the proposal, including an extension of the original comment period
    by six weeks. More than 1200 comments were received on the proposal,
    many of which requested EPA to move forward with the rule.
        Second, EPA provided a second comment period in September 1998 on a
    notice of availability of additional information that became available
    after the close of the initial comment period. This information
    included the regional haze SIP timing requirements included in the TEA-
    21 legislation, adopted in June 1998, and a June 1998 letter including
    significant comments from the Western Governors' Association, developed
    with input from a broad range of stakeholders.
        Third, over the course of the proposal period, EPA engaged in many
    meetings and discussions with interested stakeholders on various
    aspects of the rule. EPA was very aware of stakeholder views on the
    range of issues in the proposed rule. The issues raised by those
    requesting re-proposal generally were issues already under
    consideration by EPA due to comments received on the proposed rule or
    the notice of availability.
        Fourth, EPA believed that a re-proposal would only serve to further
    delay the finalization of the regional haze program when its statutory
    deadline had already been exceeded. In fact, several environmental
    groups later issued a notice of intent to sue the Agency for failure to
    issue the rule in accordance with the statutory schedule for action.
        As we anticipated at the time we decided not to repropose the rule,
    the final rule reflects many changes that are significant issues
    identified in public comments.
        Question. Approximately 15 Governors from throughout the country
    requested EPA to re-propose the Regional Haze Rule, even after last
    fall's comment period. Why did you ignore these requests? What specific
    contact concerning this rule did you have with Governors on this rule
    prior to its issuance.
        Answer. EPA considered these requests for re-proposal, and we also
    considered requests from the Governors of Utah, California, Maine,
    Vermont and New Hampshire who urged that we proceed with the regional
    haze rule. For the reasons noted above in the response to the previous
    question, EPA decided not to re-propose the final rule.
        Since the close of last fall's comment period, we have had the
    following specific contacts with Governors related to the Regional Haze
    Rule:
        (1) November 13, 1998 letter from Robert Perciasepe, EPA, in
    response to October 5, 1998 letter from Florida Governor Lawton Chiles.
        (2) December 1, 1998, Meeting with Governor Leavitt of Utah.
        (3) December 9, 1998 letter from Midwest Governors' Conference
    signed by Governors of Indiana, Kansas, Wisconsin, Michigan, Ohio,
    Illinois, Minnesota, Iowa, Missouri, Nebraska, South Dakota, and North
    Dakota.
        (4) January 4, 1999 letter from Southern Governors Association to
    the President signed by Governors of Virginia, North Carolina,
    Tennessee, Kentucky, Mississippi, Missouri, Arkansas, West Virginia,
    Alabama, Oklahoma, and Louisiana.
        (5) January 27, 1999. Meeting with Midwest Governor's conference.
        (6) February 8, 1999 meeting with EPA and Southern Governors'
    Association to discuss Regional Haze Rule and Regional Planning. March
    24, 1999 meeting with the Southern Governors' Association.
        (7) March 30, 1999 letter from Southern Governors' Association to
    Lydia Wegman, EPA.
        (8) March 5, 1999 letter to Vice President Gore from Governor
    Shaheen of New Hampshire and Governor Dean of Vermont.
        (9) April 6, 1999 letter to Vice President Gore from Governor King
    of Maine.
        (10) March 24, 1999 letter from Governor Davis of California.
        (11) April 15, 1999 letter from Governor Leavitt of Utah on behalf
    of the Western Governors' Association. April 15, 1999 meeting with
    Western Governors' Association.
        (12) April 21, 1999 letter from Robert Perciasepe, EPA in response
    to March 20, 1999 letter from Colorado Governor Owens.
        Question. If all power plants in the West were subjected to Best
    Available Retrofit Technology (BART), what degree of visibility
    improvement would you expect in the West?
        Answer. Power plant sulfur dioxide emissions are a significant
    contributor to sulfate concentrations in the West, and sulfate
    particles are a significant contributor to visibility impairment in the
    West. We have estimated that sulfates contribute about 30 to 60 percent
    of the aerosol light extinction on the worst visibility days in most
    western Class I areas. We do not, however, have a precise estimate of
    the fraction of that sulfate contribution that is due to power plants,
    nor do we have an available estimate of the degree of visibility
    improvement that would be achieved from BART-level controls in the
    West. It should be noted that the BART provision does not affect all
    power plants in the West, but rather potentially affects any power
    plant with the potential to emit more than 250 tons of any visibility
    impairing pollutant that was placed in operation between August 1962
    and August 1977. However, to the extent that sulfate is a significant
    contributor to class I area visibility impairment, BART level emission
    controls on power plants would be expected to achieve a significant
    improvement in visibility.
        Question. What is the statutory authority for a ``regional BART''
    in view of the specific source requirement?
        Answer. In establishing appropriate BART emission limits section
    169A(a)(2) of the Clean Air Act requires States to take into account
    the following factors:
      --The costs of compliance;
      --The energy and nonair quality environmental impacts of compliance;
      --Any existing pollution control technology in use at the source;
      --The remaining useful life of the source; and
      --The degree of improvement in visibility which may reasonably be
            anticipated to result from the use of such technology.
        The statutory language is clear that the State should consider
    ``the existing pollution control technology at the source'' and ``the
    remaining useful life of the source.'' The statute also requires the
    States to consider ``the degree of improvement in visibility which may
    reasonably be anticipated to result from the use of such technology.''
    EPA interprets the language ``from the use of such technology'' to
    refer to the general application of BART to sources subject to BART. As
    a result, EPA believes that it reasonable to interpret this provision
    as requiring the State to consider, as part of its source-specific
    analysis, the cumulative impact of applying retrofit controls to all
    sources subject to BART to estimate the degree of visibility
    improvement which may reasonably be anticipated to result from the use
    of BART.
        Question. What will be the cost of imposing the Regional Haze Rule
    on power plants? On stationary sources generally?
        Answer. The Regional Haze rule provides States with the opportunity
    to make decisions on reasonable progress goals, emissions management
    strategies, and best available retrofit technology. Until those
    decisions are made by the States, the cost of the regional haze rule
    for power plants and other stationary sources is unknown.
        However, in order to comply with the requirements of Executive
    Order 12866 and the Congressional Review Provisions of the Small
    Business Regulatory Enforcement Fairness Act, the U.S. Environmental
    Protection Agency completed an illustrative assessment of the potential
    annualized cost of the rule in 2015, a year near the end of the first
    long term progress period. The scope of the illustrative cost analysis
    included 4 hypothetical reasonable progress goals and two sets of
    control strategies. For the example strategies analyzed, the estimated
    range of power plant costs is $248 million (for a control strategy
    which provides for the use of fugitive dust controls and is aimed at a
    1.0 deciview improvement in 15 years) to $595 million (for a control
    strategy which precludes the use of certain fugitive dust controls and
    is aimed at a 10 percent deciview improvement in 10 years). These cost
    estimates are in 1990 dollars and represent 23 and 16 percent of the
    corresponding total cost estimates. For the same scenarios, the range
    of estimated cost for non-utility sources with industrial
    classification codes is $787 million to $2858 million in 1990 dollars.
        We stress that the above estimates are illustrative, and that
    States have considerable discretion to establish their own reasonable
    progress goals so long as they consider the statutory factors and take
    into account the results of the analyses required by the rule. In
    addition, States are responsible for selecting and adopting control
    strategies, and have flexibility to select cost-efficient programs,
    including those which provide for emissions trading across emission
    source categories.
                                     ______

                    Questions Submitted by Senator Mikulski

                   orimulsion: conclusive report on research
        Question. From correspondence I have seen that has been sent to
    colleagues of mine who have inquired about the research on the use of
    Orimulsion as a fuel, I understand that research will be conducted this
    calendar year. I agree that this is an appropriate time frame.
    Therefore, am I correct in expecting that a conclusive report on
    Orimulsion will be issued from the EPA by the end of the year?
        Answer. A report on Phase 1 research activities is planned to be
    submitted for OMB review by the end of the fiscal year and should be
    available to Congress by the end of the calendar year. Phase 1 research
    activities are pilot-scale testing of air emissions from Orimulsion,
    toxicology testing of particulate matter captured during the pilot-
    scale tests, a review of existing scientific results, and a preliminary
    environmental assessment of using Orimulsion as a fuel for power
    generation.
        The Orimulsion Technology Assessment Plan (OTAP) states that the
    research program will be completed in three phases, if necessary. The
    OTAP calls for an evaluation of the Phase 1 results before making a
    decision as to whether further work will be necessary to address
    questions found during Phase 1. If further study is required to
    adequately address remaining questions, the report of Phase 1 results
    will be issued and will include a discussion of the remaining questions
    and additional research requirements. If scientific results indicate no
    further work is necessary, the Phase 1 report will be conclusive, and
    it is unlikely the Agency will proceed with Phase 2 and 3.
                          orimulsion: research funding
        Question. Is there adequate funding that is currently dedicated to
    the research activity that will allow EPA to complete its conclusive
    report by year's end? If not, how do you plan to obtain such funding
    from existing sources to permit the completion of the report by the end
    of 1999?
        Answer. There is adequate funding to complete the planned Phase 1
    activities, which are scheduled to be submitted for OMB review by the
    end of the fiscal year. Phase 1 activities include: pilot-scale testing
    of air emissions from Orimulsion, toxicology testing of particulate
    matter captured during the pilot-scale tests, a review of existing
    scientific results, and a preliminary environmental assessment of using
    Orimulsion as a fuel for power generation.
                                     ______

                      Questions Submitted by Senator Leahy

                           dioxin reassessment study
        Question. It is my understanding that EPA has been drafting a
    dioxin reassessment study and plans to release it by the end of this
    year. As we found with the Mercury Report to Congress, a factual basis
    detailing emission volumes, sources, and health considerations is
    needed for developing legislative proposals and to shape the public
    policy debate. Please provide to the Subcommittee your timetable for
    completing the study, interim milestones and deliverables leading up to
    release of the final reassessment.
        Answer. EPA's Dioxin Reassessment effort is producing three
    documents:
        Estimating Exposure to Dioxin-like Compounds.--This document,
    discusses chemical/physical properties, sources, environmental levels
    and background exposures and site-specific assessment procedures.
        Health Assessment Document for 2,3,7,8-TCDD and Related
    Compounds.--This document discusses pharmacokinetics, epidemiology,
    cancer, various noncancer health effects and dose-response.
        Integrated Summary and Risk Characterization for Assessment of
    2,3,7,8-TCDD and Related Compounds.--This document summarizes the
    findings of the health and exposure documents and integrates the
    information to reach general conclusions about the impacts of dioxin
    like compounds on human health and specifically identifies the risks
    that may be occurring in the general population at background exposure
    levels. The risk characterization articulates the strengths and
    weaknesses of the available evidence and presents assumptions made and
    inferences used. It is meant to provide a balanced picture of dioxin
    science for use by risk managers inside and outside of EPA.
        The process for developing these documents has been open and
    participatory. They have all been developed in collaboration with
    scientists from inside and outside the Federal Government. Each
    document has undergone extensive internal and external review,
    including review by EPA's Science Advisory Board (SAB). In their 1994
    review, the SAB recommended substantive revisions to both the Dose-
    Response Chapter of the Health Effects Document and the Risk
    Characterization. These two sections were to be revised with the
    participation of and input from a broad cross-section of outside
    interests from both the public and private sectors, then submitted for
    external peer review, and subsequently brought back to the SAB for re-
    review. In addition, the SAB suggested adding a de novo chapter on the
    Toxic Equivalency Factors (TEF) to gather in one place the discussion
    and scientific information on the complex issue and use of TEFs for
    dioxin and dioxin-like compounds.
        Another major part of the dioxin reassessment activity is the
    exposure assessment. During the SAB's review of the draft assessment,
    the Board recommended some revisions to the dioxin emissions inventory
    that were included in the draft exposure assessment document. In
    response to both SAB comments and public comments on this section, EPA
    has substantially revised the source inventory and held a two-day
    external peer review meeting for expert scientific review of the draft
    document in June 1998. Currently, the exposure assessment is undergoing
    revision and incorporation of the peer reviewed inventory. As
    recommended by the SAB, this section will not undergo any further
    review by the Board. Information from the exposure assessment has been
    feeding into the revision of the Integrated Summary and Risk
    Characterization.
    Status and Schedule
        Integrated Summary and Risk Characterization:
      --Internal EPA review--June 1999
      --External review--July 1999
      --External Peer Review--September 1999
      --SAB review--November 1999
        TEF Chapter:
      --Internal EPA review--June 1999
      --External review--July 1999
      --External Peer Review--September 1999
      --SAB review--November 1999
        Dose-Response Modeling Chapter:
      --Internal review--December 1996/January 1997
      --External Peer Review--March 1997
      --Writing Team Meeting--July 1999
      --SAB review--November 1999
        Completed reassessment: Publically available--Expected Early 2000
        It is important to note that EPA remains committed to a fully open
    and participatory process as it finalizes the dioxin reassessment.
        Note: All dates are contingent on the extent and nature of the peer
    review comments.
                         known or suspected carcinogens
        Question. The Occupational Health and Safety Administration (OSHA)
    under the Department of Labor maintains a list of ``known or suspected
    carcinogens.'' Many, if not all, of these have been reported on several
    years in the Toxics Release Inventory reports. I would appreciate
    receiving an analysis that looks at emissions of ``known or suspected
    carcinogens'' for each of the past five years. Please provide the
    following three reports for 1993--1997 with the total change since
    1993: (1) the top 20 3-digit SIC codes for on-site releases and total
    releases, (2) releases of OSHA carcinogens by state, and (3) on-site
    releases and total releases by chemical and media. For each ``known or
    suspected carcinogen'' and associated industry, I would like to know
    whether a regulatory emissions control strategy is in place (e.g., a
    final MACT standard has been promulgated) or, where a strategy is not
    yet in place, EPA's current schedule for developing and implementing a
    strategy.
        Answer. In addition to providing an analysis of air, water and land
    releases from the TRI data (see attached charts), EPA can provide an
    analysis of air releases (emissions) from the National Toxics Inventory
    (NTI). The NTI contains much of the air release information from TRI,
    which is self-reported by industry, but also includes additional data.
    For example, while the 1996 TRI contains estimates of air toxics
    emitted from about 13,000 facilities, the 1996 National Toxics
    Inventory (NTI) contains emissions estimates of air toxics emitted from
    more than 38,000 facilities.
        The TRI requires manufacturing facilities and facilities in seven
    new sectors to report annual chemical releases and other chemical waste
    management. Although the NTI includes various other sources of
    emissions (i.e., mobile and area, in addition to point sources), the
    NTI relies on emission estimates, and, as such, the NTI emission data
    varies in quality and completeness among source categories, geographic
    location, and estimation method.
        EPA has a baseline NTI which represents data for the period 1990-
    1993, and a draft NTI for 1996. The NTI contains estimates of 188
    hazardous air pollutants from point, area, and mobile sources. Of these
    188 hazardous air pollutants, 134 have been classified by either EPA or
    the International Agency for Research on Cancer as carcinogens (list is
    attached).
        The emissions data in the NTI could be presented by Source
    Classification Code (SCC) and/or MACT code, which is more closely
    aligned with the source of emissions than would be the SIC code, which
    is related to the economic sector. An analysis that could be done to
    summarize carcinogen emissions and identify regulatory strategies which
    are targeting these emissions is:
        Use baseline NTI data (1990-1993) and 1996 draft NTI data to
    compare carcinogenic hazardous air pollutant emissions by source
    category nationally and for each state. Identify source categories with
    existing and planned MACT standards, and industries for which the
    Agency has other types of regulatory activities planned or in place
    (for example, control technology guidelines to reduce volatile organic
    compounds, which are a precursor to ozone formation).
        Question. Lastly, I would like to know whether EPA currently
    coordinates with OSHA or has plans to begin working with OSHA, to
    ensure that workers and people living in the proximity of significant
    sources of ``known or suspected carcinogens'' are being adequately
    protected from these emissions.
        Answer. EPA began discussions with OSHA this Spring on the
    potential to coordinate a number of air toxics regulations with OSHA
    regulations. On June 17-18, 1999, EPA, OSHA and NIOSH jointly sponsored
    a workshop on ``Common Sense Approaches to Protecting Workers and the
    Environment.'' At this workshop, EPA and OSHA acknowledged that they
    would work cooperatively on a number of toxics issues.
        To the extent possible, the Agency plans to include OSHA review
    prior to proposal of future air toxics regulations. In addition, EPA
    and OSHA are in the process of coordinating on worker exposure issues.
    Specifically, EPA has committed to help address any major issues that
    may exist where reductions in environmental emissions inadvertently
    have an adverse effect on worker exposures. Also, OSHA plans to provide
    EPA with quantitative risk assessments to help with EPA's priority-
    setting and efforts to address emissions impacting people living in the
    proximity of significant sources of air toxics. Staff from both
    Agencies plan to meet later this year to further coordinate these
    efforts.
        Below is a list of 134 HAPs that either EPA or IARC have classified
    as carcinogens. Most of these are listed singly under section 112(b) of
    the Clean Air Act Amendments, but some (particularly PAHs) fit within
    HAP categories.

    ------------------------------------------------------------------------
                                                         Ratings
    ------------------------------------------------------------------------
    EPA:
        A..................................  Known.
        B..................................  Probable.
        C..................................  Possible.
        D..................................  No evidence.
    IARC:
        1..................................  Known.
        2A.................................  Probable.
        2B.................................  Possible.
        3..................................  No evidence.
    ------------------------------------------------------------------------

        Compounds classified by EPA and/or IARC as known, probable, or
    possible human carcinogens.

    ------------------------------------------------------------------------
               Chemical name                   CAS No.          EPA    IARC
    ------------------------------------------------------------------------
    4-Aminobiphenyl...................  92671...............  ......       1
    Radon.............................  14859677............  ......       1
    N,N-dimethylaniline...............  121697..............  ......       3
    Diethyl sulfate...................  64675...............  ......      2A
    Styrene oxide.....................  96093...............  ......      2A
    2,4/2,6-Toluene diisocyanate        26471625............  ......      2B
     mixture (TDI).
    2,4-Toluene diisocyanate..........  584849..............  ......      2B
    4,4'-Methylenedianiline...........  101779..............  ......      2B
    Acetamide.........................  60355...............  ......      2B
    Anisidine.........................  90040...............  ......      2B
    Dibenzo(j)fluoranthene............  205823..............  ......      2B
    Dimethyl..........................  68122...............  ......      2B
    Ethyl carbamate...................  51796...............  ......      2B
    N-Nitrosomorpholine...............  59892...............  ......      2B
    Styrene...........................  100425..............  ......      2B
    Vinyl acetate.....................  108054..............  ......      2B
    Arsenic and Compounds.............  7440382.............       A       1
    Asbestos..........................  1332214.............       A       1
    Benzene...........................  71432...............       A       1
    Bis(chloromethyl)ether............  542881..............       A       1
    Chloromethyl methyl ether.........  107302..............       A       1
    Chromium (VI) Compounds...........  18540299............       A       1
    Vinyl chloride....................  75014...............       A       1
    Benzidine.........................  92875...............       A  ......
    Coke Oven Emissions...............  8007452.............       A  ......
    Nickel refinery dust..............  NI-DUST.............       A  ......
    Nickel subsulfide.................  12035722............       A  ......
    Radionuclides.....................  Radio...............       A  ......
    Nickel and Compounds..............  7440020.............       A      2B
    Beryllium and Compounds...........  7440417.............      B1       1
    Cadmium and Compounds.............  7440439.............      B1       1
    Ethylene oxide....................  75218...............      B1       1
    Acrylonitrile.....................  107131..............      B1      2A
    Formaldehyde......................  5000................      B1      2A
    Aniline...........................  62533...............      B2       3
    Bromoform.........................  75252...............      B2       3
    Captan............................  133062..............      B2       3
    Chlorinated dibenzofurans (as       furans..............      B2       3
     2,3,7,8-equivalents).
    1,2-Dibromo-3-chloropropane.......  96128...............      B2  ......
    1,2-Diphenylhydrazine.............  122667..............      B2  ......
    1,2-Tropyleneimine................  75558...............      B2  ......
    2,3,7,8-Tetrachlorodibenzo-p-       1746016.............      B2  ......
     dioxin.
    2,4,6-Trichlorophenol.............  88062...............      B2  ......
    2,4-Toluene diamine...............  95807...............      B2  ......
    3,3'-Dimethylbenzidine............  119937..............      B2  ......
    7,12-Dimethylbenz(a)anthracene....  57976...............      B2  ......
    alpha-Hexachlorocyclohexane (a-     319846..............      B2  ......
     HCH).
    beta-Hexachlorocyclohexane (b-HCH)  319857..............      B2  ......
    Carbazole.........................  86748...............      B2  ......
    Chlorinated dibenzo-p-dioxins (as   dioxins.............      B2  ......
     2,3,7,8-equivale).
    Chrysene..........................  218019..............      B2  ......
    DDE...............................  72559...............      B2  ......
    Dichloroethyl ether...............  111444..............      B2  ......
    Hexachlorodibenzo-p-dioxin,         19408743............      B2  ......
     mixture.
    Methyl hydrazine..................  60344...............      B2  ......
    Nickel carbonyl...................  13463393............      B2  ......
    Propoxur..........................  114261..............      B2  ......
    Propylene dichloride..............  78875...............      B2  ......
    Selenium sulfide..................  7446346.............      B2  ......
    technical Hexachlorocyclohexane     608731..............      B2  ......
     (HCH).
    1,3-Butadiene.....................  106990..............      B2      2A
    4,4'-Methylene bis(2-               101144..............      B2      2A
     chloroaniline).
    Acrylamide........................  79061...............      B2      2A
    Benzo(a)anthracene................  56553...............      B2      2A
    Benzo(a)pyrene....................  50328...............      B2      2A
    Dibenz(a,h)anthracene.............  53703...............      B2      2A
    Dimethyl sulfate..................  77781...............      B2      2A
    Epichlorohydrin...................  106898..............      B2      2A
    Ethylene dibromide................  106934..............      B2      2A
    Nitrosodimethyla..................  62759...............      B2      2A
    Polychlorinated biphenyls.........  1336363.............      B2      2A
    Vinyl bromide.....................  593602..............      B2      2A
    1,1-Dimethylhydrazine.............  57147...............      B2      2B
    1,3-dichloropropene...............  542756..............      B2      2B
    1,4-Dioxane.......................  123911..............      B2      2B
    2,4/2,6-Dinitrotoluene (mixture)..  25321146............      B2      2B
    2,4-Dinitrotoluene................  121142..............      B2      2B
    2-Nitropropane....................  79469...............      B2      2B
    3,3'-Dichlorobenzidine............  91941...............      B2      2B
    3,3'-Dimethoxybenzidine...........  119904..............      B2      2B
    Acetaldehyde......................  75070...............      B2      2B
    Antimony trioxide.................  1309644.............      B2      2B
    Benzo(b)fluoranthene..............  205992..............      B2      2B
    Benzo(k)fluoranthene..............  207089..............      B2      2B
    Benzotrichloride..................  98077...............      B2      2B
    Benzyl chloride...................  100447..............      B2      2B
    Bis(2-ethylhexyl)phthalate........  117817..............      B2      2B
    Carbon tetrachloride..............  56235...............      B2      2B
    Chlordane.........................  57749...............      B2      2B
    Chloroform........................  67663...............      B2      2B
    DDT...............................  50293...............      B2      2B
    Dichlorvos........................  62737...............      B2      2B
    Ethyl acrylate....................  140885..............      B2      2B
    Ethylene dichloride...............  107062..............      B2      2B
    Ethylene thiourea.................  96457...............      B2      2B
    Heptachlor........................  76448...............      B2      2B
    Hexachlorobenzene.................  118741..............      B2      2B
    Hydrazine.........................  302012..............      B2      2B
    Indeno(1,2,3-cd)pyrene............  193395..............      B2      2B
    Lead and Compounds................  7439921.............      B2      2B
    Methylene chloride................  75092...............      B2      2B
    o-Toluidine.......................  95534...............      B2      2B
    Pentachlorophen...................  87865...............      B2      2B
    Propylene oxide...................  75569...............      B2      2B
    Toxaphene.........................  8001352.............      B2      2B
    Lindane...........................  58899...............    B2-C  ......
    Tetrachloroethene.................  127184..............    B2-C      2A
    Trichloroethylene.................  79016...............    B2-C      2A
    1,1,2,2-Tetrachloroethane.........  79345...............       C       3
    1,1,2-Trichloroethane.............  79005...............       C       3
    Acrolein..........................  107028..............       C       3
    Allyl chloride....................  107051..............       C       3
    Dibromochloromethane..............  124481..............       C       3
    Hexachlorobutadiene...............  87683...............       C       3
    Hexachloroethane..................  67721...............       C       3
    Parathion.........................  56382...............       C       3
    Pentachloronitrobenzene...........  82688...............       C       3
    Trifluralin.......................  1582098.............       C       3
    Cresols (mixed)...................  1319773.............       C  ......
    Cyanazine.........................  21725462............       C  ......
    Ethylidene dichloride.............  75343...............       C  ......
    Isophorone........................  78591...............       C  ......
    m-Cresol..........................  108394..............       C  ......
    Mercuric chloride.................  7487947.............       C  ......
    Methyl chloride...................  74873...............       C  ......
    Methyl iodide.....................  74884...............       C  ......
    Methyl mercury....................  22967926............       C  ......
    Naphthalene.......................  91203...............       C  ......
    o-Cresol..........................  95487...............       C  ......
    o-Phenylphenol....................  90437...............       C  ......
    p-Cresol..........................  106445..............       C  ......
    Quinoline.........................  91225...............       C  ......
    Vinylidene chloride...............  75354...............       C  ......
    p-Dichlorobenzene.................  106467..............       C      2B
    Nitrobenzene......................  98953...............       D      2B
    ------------------------------------------------------------------------

    tri on-site and total releases of osha carcinogens, by state, 1993-1997
        Question. Odd pattern B did one new plant open up in 1995?
        Answer. Wyoming--Two facilities account for most of the increase
    from 1994 to 1995 in total releases of carcinogens in Wyoming. FMC
    Corp. in Sweetwater, WY reported other chemicals in 1994 but did not
    report any OSHA carcinogens until 1995. The large increase is in
    benzene (64,000 pounds of air emissions). Frontier Refining Inc. in
    Cheyenne, WY reported 8,861 pounds releases of benzene in 1994 (mostly
    air emissions) and 25,495 pounds of releases of benzene in 1995 (mostly
    air emissions). The total increase in OSHA carcinogens from 1994 to
    1995 from these two facilities is 78,392 pounds. The total increase for
    Wyoming is 82,994 pounds. Therefore, these two facilities account for
    94 percent of the increase in total release of OSHA carcinogens in
    Wyoming from 1994 to 1995.
        Question. Washington, D.C., Explain the total release change.

    1994..............................................................     5
    1995..............................................................   255
    1996..............................................................   250
    1997....................................................................

        Answer. The facility that reported these numbers is the Bureau of
    Engraving and Printing. This facility has reported to TRI as a federal
    facility since 1994. The above mentioned numbers are transfers to
    dispose of nickel.
        Question. Louisiana--Explain the increase from 1996 to 1997.
        Answer. Two facilities account for the majority of the change from
    1996 to 1997. Borden Chemicals & Plastics Ops. LP, LA HWY. 73 & 30,
    Geismar, LA reported an increase of 1,627,322 pounds. This increase was
    primarily benzene. Monsanto-Luling, 12501 River Rd., Luling, LA
    reported an increase of 1,516,000 pounds. This increase was primarily
    formaldehyde.
        Question. Is the reporting universe the same from 1993-1997?
        Answer. For the purpose of this table (TRI On-site and Total
    Releases of OSHA Carcinogens, by State, 1993-1997), the reporting
    universe is the same for 1993 to 1997. The same list of chemicals is
    used for comparison across all years, see Anote at bottom of table
    regarding this issue.
        Question. If not, should EPA be comparing 1993 to 1997?
        Answer. N/A--answer provided above.
                        mercury thresholds and emissions
        Question. On March 12, 1999, the Governors of the seven New England
    states wrote to you urging that EPA adopt ``dramatically lower
    reporting thresholds for mercury and expand reporting sectors to
    include all the largest sources of mercury emissions.'' The letter went
    on to state that ``the proposed limit of 10 pounds is far too high and
    will not help state efforts to achieve virtual elimination of
    anthropogenic mercury emissions.'' How has EPA responded to the
    Governors? Please provide the subcommittee a copy of that response.
        Answer. The EPA's Administrator received the attached letter dated
    March 12, 1999, from the New England Governors Conference, Inc., urging
    EPA to adopt activity thresholds for mercury dramatically lower than
    the Agency's preferred option of 10 pounds as proposed in the January
    5, 1999 proposed rule expanding and modifying the EPCRA section 313
    reporting requirements for persistent bioaccumulative toxic (PBT)
    chemicals. The letter was routed to the Office of Pollution Prevention
    and Toxics where it was logged into the docket [# OPPTS 400132] created
    for receiving comments on the proposed rule.
        Guided by the requirements and principles of the Administrative
    Procedures Act, the Agency will consider the views of those who
    commented during the public comment period which closed April 7, 1999.
    Typically, all of the comments received are logged-in, categorized by
    issue and evaluated as part of the development of the final rule, which
    is currently scheduled to be issued in late October 1999. As required
    by law, the Agency will respond to significant comments in the preamble
    to the final rule, and the Agency also prepares a more detailed
    Response to Comments document.
        The Agency received well over 37,000 submissions to the docket
    (including 35,000 postcards expressing a similar comment) on the
    proposed rule. The activity threshold level for reporting EPCRA section
    313 PBT's is of concern to many constituents. The Agency received
    numerous comments regarding the threshold levels as proposed, including
    recommendations similar to those submitted by the New England Governors
    Conference, Inc. Serious consideration will be given to those concerns
    regarding the threshold levels for mercury and the other relevant PBT
    chemicals in our deliberations toward development of a final rule.
                         noX trading program
        Question. Regarding the NOX trading program, what are
    EPA's plans and timetable for implementing environmental measures of
    progress for this program? Will those measures reflect regional
    differences?
        Answer. The Acid Rain Program will be developing and operating the
    NOX Allowance and Emissions Tracking Systems for the
    NOX Budget Program, as requested by the 12 States of the
    Ozone Transport Region (OTR). This is in addition to administering the
    SO2 and NOX provisions under Title IV of the
    Clean Air Act. The first year of compliance for this program is 1999
    (with the first compliance certification process being conducted by EPA
    for the OTR States in the first quarter of 2000). Over 900 facilities
    will require certification of emissions monitors and will report
    quarterly emissions to EPA beginning in 1999. The OTR program is
    expected to increase EPA's allowance trading activities by
    approximately 50 percent over the Acid Rain Program.
        Beginning in 1999, we expect that the OTR NOX Budget
    Trading program will result in approximately a 50 percent reduction of
    NOX emissions from the 1990 baseline; this level will be
    maintained annually through 2002. These reduction will be over and
    above those achieved through implementation of Title IV of the Clean
    Air Act Amendments. As with other programs under Title I of the Clean
    Air Act, the OTR States are required to conduct audits to ensure that
    the Program is providing expected environmental outcomes. These audits
    will be conducted every three years beginning in 2002.
      lake champlain: survey of fish and great lakes epidemiological study
        Question. On page II-19 of your fiscal year 2000 request, the
    Agency lists one of the activities to help meet the goal of ensuring
    safe drinking water, fish, and recreational waters continued work on a
    ``nationwide survey of toxic residues in fish and complete
    epidemiological studies in the Great Lakes * * * on health effects of
    exposure to selected bioaccumulative toxics.'' Is there an opportunity
    for Lake Champlain to be included in this survey? What would be the
    cost of including Lake Champlain in the study and does the Agency have
    any plans to expand the survey outside of the Great Lakes?
        Answer. There is a chance that Lake Champlain will be included in
    the national fish tissue survey to determine the extent to which fish
    in waters of the United States are contaminated with persistent
    bioaccumulative toxic chemicals. A set of 900 lakes was randomly
    selected for this study. Lake Champlain was not included in this set.
    The random selection was based on latitude/longitude positions. Upon
    making an actual physical check of the randomly selected sites, we are
    finding that some of the information in the geographic database was not
    correct. Thus, we suspect that many of the 900 in the first set will
    not meet the study definition of a lake. If and when the sample size
    falls below 750 lakes, we will make subsequent selections of 25 lakes
    from a second sample of 900 lakes in the U.S. Lake Champlain is one of
    the randomly selected lakes in this second set; so there is a chance
    that it will be selected.
        The Agency will collect and analyze two composite samples of fish
    (one bottom fish species and one predator/sport fish species) at each
    sampling site. We expect that the two samples will cost about $8,000
    each to analyze. Costs to physically collect the samples in the field
    for the lakes in New York and Vermont could range from $2,000 to
    $4,000. Thus, we expect that total costs for obtaining and analyzing
    the samples from Lake Champlain, if selected, would range from $18,000
    to $20,000.
        The Great Lakes National Program Office also conducts a fish
    contaminant program in the Great Lakes in conjunction with the Great
    Lakes States. Although this program does not include Lake Champlain,
    information and lessons learned in the Great Lakes program are
    transferable to other fish contaminant programs (e.g. the nationwide
    fish survey).
        The Great Lakes epidemiological studies are conducted by the Agency
    for Toxic Substances and Disease (ATSDR). These studies are generally
    local in nature and would not include Lake Champlain.
                      lake champlain: great lakes program
        Question. EPA is requesting an increase over the fiscal year 1999
    enacted funding level to reduce transboundary threats in shared North
    American ecosystems through the Great Lakes National Program. Again, is
    there an opportunity for Lake Champlain to be included in this program?
    What type of activities are currently being undertaken under this
    program?
        Answer. Lake Champlain is not directly included in the Great Lakes
    National Program, which is established by statute, Section 118 of the
    Clean Water Act, and international agreement, the Great Lakes Water
    Quality Agreement with Canada (GLWQA). The Clean Water Act and GLWQA
    both describe the program as encompassing bodies of water ``at or
    upstream from the point at which [the St. Lawrence River] becomes the
    international boundary between the United States and Canada'' (quoting
    from the Great Lakes Water Quality Agreement). Lake Champlain is
    downstream from this point.
        Notwithstanding this limitation, EPA's Great Lakes activities do
    benefit Lake Champlain because of the similarity of the environmental
    problems of both, particularly invasive species, persistent toxics, and
    nutrients. EPA's Great Lakes National Program Office acts as a
    laboratory to pilot ways of addressing those problems. Much of what is
    learned in the Great Lakes is applicable to Lake Champlain.
        Under the Clean Water Act, GLNPO oversees fulfillment of EPA's
    international commitments under the U.S.-Canada Great Lakes Water
    Quality Agreement. It monitors Lake ecosystem indicators; manages and
    provides public access to Great Lakes data; helps communities address
    contaminated sediments in their harbors; supports local protection and
    restoration of important habitats; promotes pollution prevention
    through activities and projects such as the Binational Toxics Strategy
    with Canada; and provides assistance to implement community-based
    Remedial Action Plans for Areas of Concern and for development and
    implementation of Lakewide Management Plans. Assistance is provided in
    all of these areas through grants and the provision of direct technical
    support. In addition, to support efforts for the Lake Champlain
    Management Conference the fiscal year 2000 budget requests $1 million.
                     lake champlain: action plan time frame
        Question. There has been considerable interest within Vermont and
    New York for speeding up the timeframe for the Lake Champlain Action
    Plan from 20 to 10 years. Focusing on the action items where EPA is
    identified as a key federal partner, how much annual funding would be
    required for EPA to meet the goals of the Action Plan within 10 years?
    Since additional agricultural non-point cost share funding is required
    to accelerate phosphorus reduction, will EPA consider committing funds
    to supplement those currently made available by USDA and the states of
    Vermont and New York?
        Answer. Accelerating the Lake Champlain Basin Program (LCBP)
    implementation plan from 20 years to 10 years relates only to
    phosphorus reduction goals. The LCBP's Opportunities for Action plan
    was completed in October 1996 and is based on a 20-year phosphorus
    reduction schedule. Opportunities for Action states that the estimated
    annual cost needed to implement a phosphorus reduction strategy in the
    Lake Champlain Basin is about $12.6 million. This would achieve all in-
    lake phosphorus standards except those established for the southern
    portion of the Lake and Missisquoi Bay.
        On May 18, 1999, the LCBP Steering Committee discussed the growing
    public interest associated with accelerating the Lake Champlain
    phosphorus reduction strategy time frame from 20 years to 10 years.
    Although the Steering Committee embraced the general concept as a
    worthy goal, it was decided more analysis is needed to determine the
    feasibility of accelerating the time frame. In making this decision,
    the Steering Committee must ensure that
      --We look at this issue holistically (recognizing both point and
            nonpoint source needs);
      --The 10-year implementation time frame is a realistic program goal;
      --The public and regulated community are aware of the time frame
            reassessment;
      --Natural Resources Conservation Service (NRCS) technical support
            will increase in the LC Basin during the next 10 years;
      --Funding will not be obtained at the expense of other key Clean
            Water programs; and,
      --Future growth issues are factored in.
        The Steering Committee supported an evaluation of this idea. An
    outline is now being developed to discuss the formation of a focus
    group to consider the strengths and weaknesses of this proposal. The
    focus group will determine a realistic time frame for achieving
    phosphorus goals (20 years as originally intended, 10 years, or other)
    and additional issues associated with technical feasibility, cost,
    staffing, implementation, and monitoring of success. The focus group
    will report back to the Steering Committee in September.
        With respect to supplementing USDA and state funding, EPA has
    provided and continues to provide millions of dollars in Clean Water
    Act funds to Vermont and New York which can be used to implement
    agricultural nonpoint source pollution control practices. The funding
    provided through the Clean Water Act is obligated to the States, who in
    turn make specific funding decisions.
             clean lakes program (section 314): 319 program funding
        Question. EPA has stated that it intends to fund Clean lakes
    Program (Section 314) elements as part of the 319 program. How much
    funding from the 319 program in fiscal year 1998 and 1999 was used to
    address the elements of the Clean Lakes Program such as water quality
    monitoring, feasibility studies and lake demonstration projects? How
    does this compare to when the 314 program was funded separately from
    the 319 program?
        Answer. In recent years, EPA has encouraged states to use the
    section 319 Nonpoint Source Program to support the lakes and reservoir
    work which was previously done under the section 314 Clean Lakes
    Program. In our guidance, we have emphasized that the Clean Lakes
    Program elements (e.g., Statewide Lake Water Quality Assessments to
    assess water quality across a state, Phase I Diagnostic/Feasibility
    Studies to determine the causes of pollution in a specific lake and to
    recommend control actions, Phase II Restoration and Protection
    Implementation Projects to implement needed controls, and Phase III
    Post-Restoration Monitoring Studies to monitor the effectiveness of
    projects)which were previously funded under the section 314 Clean Lakes
    Program are eligible for funding under the section 319 Nonpoint Source
    Program. (Questions and Answers on the Relationship Between the Sec.
    319 Nonpoint Source Program and the Sec. 314 Clean Lakes Program, US
    EPA., Nov. 1996, can be found on the Internet at: http://www.epa.gov/
    owow/NPS/Section319/q percent 26a.html).
        EPA developed a section 319 Grants Reporting and Tracking System
    (GRTS) with the States to track mutually agreed upon mandatory data
    elements for all section 319 grants. GRTS shows that states are using
    section 319 to support restoration and protection activities for lakes
    and reservoirs. However, states do not always refer to their lakes
    activities using historic Clean Lakes Program element nomenclature
    i.e., Lake Water Quality Assessments, Phase I studies, etc.
        To estimate section 319 resources directed specifically to lakes
    and reservoirs in fiscal year 1998 (GRTS data is not yet available for
    fiscal year 1999), EPA queried the tracking system to identify section
    319 projects where ``lake,'' ``reservoir,'' or ``pond'' are included in
    the project title and also where states identify only lakes as the
    water body type benefitted in the project. The tracking system shows
    that in fiscal year 1998 about 9.2 percent of reported section 319
    program funds were used in specific projects for lakes, reservoirs or
    ponds (see Table 1 for a national summary and Table 2 for specific
    lakes projects funded by States in 1998). Based on these figures, we
    estimate that nationally $9.7 million in section 319 grants were
    provided to directly benefit lakes and reservoirs in fiscal year 1998.
        In addition, we queried the GRTS tracking system to determine the
    amount of section 319 funds that states identified as benefitting
    multiple water body types e.g., projects that benefit lakes as well as
    other water bodies in a watershed such as streams, rivers, wetlands,
    etc. The query identified $17.4 million of section 319 funds for fiscal
    year 1998 that states report benefit multiple water bodies (again,
    fiscal year 1999 data is not yet available).
        While it is difficult to determine exactly how much of the above
    funds benefit lakes, clearly a portion of these funds support the
    objective of restoring and protecting lakes and reservoirs. These
    projects that benefit multiple water body types run the gamut of
    nonpoint activities i.e., from statewide educational programs, to
    specific watershed projects, to support for state/local nonpoint source
    personnel.
        Thus, in addition to the section 319 program funds which are used
    in specific projects for lakes, reservoirs or ponds, a portion of the
    projects that benefit watersheds as a whole also help to protect and
    restore lakes. Further, in fiscal year 1999, funds appropriated for the
    section 319 program doubled from $100 million to $200 million. We
    expect that with this increase in resources we will see an increase in
    the amount of lakes work funded under section 319.
        Regarding your second question, in 1994, the last year that the
    section 314 Clean Lakes Program was funded, Congress appropriated $5
    million for the program. Following is the percentage of these funds
    which were awarded for the various Clean Lakes Program elements in
    fiscal year 1994:
      --43 percent were invested in Statewide Lake Water Quality
            Assessments;
      --34 percent were invested in Phase 1 projects;
      --19 percent were invested in Phase II projects; and
      --4 percent were invested in Phase III projects.
        We do not have comparable data in the GRTS system to directly
    compare how much of the section 319 grants are being used for the Clean
    Lake Program elements. But as the above data indicates, a considerable
    amount of lakes work is being funded under section 319. Further, while
    projects may not be identified as ``Phase I'' or ``Phase II'' projects,
    similar lakes-related work as was funded under section 314 is now
    funded under the section 319 program. Table 1 Amount of Lakes Work
    Funded Under the Section 319 Nonpoint Source Program in fiscal year
    1998

       TABLE 1.--AMOUNT OF LAKES \1\ WORK FUNDED UNDER THE SECTION 319 NONPOINT SOURCE PROGRAM IN FISCAL YEAR 1998
    ----------------------------------------------------------------------------------------------------------------
                                                       Amount of 319
                                                      funds reported                                     Estimated
                                       Amount of 319      in 319         Amount of      Percent of    national total
               Fiscal year                 funds         tracking       lakes work     reported 319      amount of
                                       appropriated    system as of     reported by   funds used for   appropriated
                                      (in  millions)    5/3/99 (in      states \2\      lakes work    funds used for
                                                         millions)                                    lakes work \3\
    ----------------------------------------------------------------------------------------------------------------
    1998............................            $105             $51            $4.7             9.2            $9.7
    ----------------------------------------------------------------------------------------------------------------
    \1\ For the purposes of this table, ``Lakes'' refers to lakes as well as reservoirs and ponds.
    \2\ This includes section 319 projects where ``lake,'' ``reservoir'' or ``pond'' is included in the project
      title, and also projects where states identify only lakes as the water body type benefitted in the project.
    \3\ The percentage of section 319 funds used for lakes by states which reported is assumed to be the same for
      all non-reporting states, multiplied by the total section 319 funds appropriated.

     TABLE 2.--CWA SECTION 319 PROJECTS WITH ``LAKES'' IN THE PROJECT TITLE
                   OR IN THE WATER BODY TYPE: FISCAL YEAR 1998
    ------------------------------------------------------------------------
                      Project title                    State      Amount
    ------------------------------------------------------------------------
    LAKE W Q A IN THE BLACK WARRIOR RIVER BASIN.....      AL         $41,800
    LAKE ACWORTH RIPARIAN BUFFER & WETLAND DETENT...      GA        $315,000
    LAKE LANIER WATERSHED NPS IMPROVEMENT PROJ......      GA        $262,804
    CLEAR LAKE ENHANCE. & RESTOR. PROJ..............      IA         $80,000
    STORM LAKE WATERSHED PROJECT....................      IA         $58,000
    CASCADE RESERVOIR W S RDS & FORESTED LANDS......      ID        $100,000
    PROJECT: BIG PAYETTE MARINA PROJECT.............      ID         $27,750
    PITTSFIELD NATIONAL MONITORING PRO..............      IL         $30,000
    PROBABLITY BASED LAKE SURVEY....................      IN         $15,000
    SPRING MILL LAKE................................      IN        $112,500
    DONNELL LAKE....................................      MI          $7,323
    DONNELL LAKE (MSU)..............................      MI         $39,677
    PICKERAL CROOKED LAKES..........................      MI        $200,000
    INTEGRATED CROP MANAGEMENT SPEC.................      MO        $133,000
    CLEAN LAKES NEUSE RIVER STUDY...................      NC         $55,051
    OLIVE CREEK LAKE--SALT VALLEY CLEAN LAKES.......      NE        $120,000
    STANDING BEAR LAKE MGMT. PROGRAM (56-9810)......      NE        $148,897
    98-E BONITO LAKE CRITICAL AREA TREATMENT........      NM         $59,468
    INDIAN LAKE WATERSHED PROJECT...................      OH        $105,880
    LAKE EUCHA WATERSHED IMPLEMENTATION PROJECT.....      OK        $619,598
    GREAT LAKES INITIATIVE..........................      PA         $94,500
    LACKAWANNA LAKE WATERSHED ASSESSMENT............      PA         $19,500
    LAKE GALENA ACCELERATED LAND TREATMENT PROG.....      PA        $116,100
    CROOKED CK/LAKE WALLACE BIO-ASSESS..............      SC         $30,400
    FIRESTEEL CK/LAKE MITCHELL WATERSHED............      SD         $20,000
    LAKE HENDRICKS WATERSHED........................      SD        $213,152
    LAKE POINSETT WATERSHED PROJECT.................      SD         $20,000
    RAVINE LAKE WATERSHED PROJ-PHASE II.............      SD         $20,000
    SHADEHILL LAKE PROTECTION.......................      SD         $20,000
    STATEWIDE LAKE ASSESSMENT.......................      SD         $20,000
    OAK CREEK/LAKE TRAMMELL W Q PROJECT.............      TX        $500,000
    WQMP IMPLEMENTATION ASSISTANCE..................      TX        $878,926
    PROJECT: SALT LAKE CO. SOURCE PROTECTION........      UT         $20,000
    LAKE WATERSHED ASSESSMENT AND MONITORING........      WA        $128,619
    LAKE WHATCOM W S--COOP DRINKING WATER PRO.......      WA         $48,000
    WHEELING CK & MOUNTWOOD PARK LAKE...............      WV         $34,506
                                                             ---------------
          Total 1998................................              $4,715,451
    ------------------------------------------------------------------------

                       nonpoint source pollution projects
        Question. The EPA is requesting authorization for new flexibility
    to allow states to allocate up to 20 percent of their Clean Water State
    Revolving Fund for nonpoint source pollution projects. If this
    authorization is granted, how will EPA monitor the use of these funds
    and will there by any requirements for coordination with the USDA
    Natural Resources Conservation Service priority watershed areas under
    the Environmental Quality Incentives Program? Will the states have the
    flexibility to use the funding by either their agriculture department
    or their environmental agency?
        Answer. EPA will monitor and track the use of the CWSRF nonpoint
    source and estuary management grant funds through the existing CWSRF
    National Information Management System (NIMS). Each year states submit
    data for NIMS regarding all loan activity and the types of projects
    funded. The additional grant flexibility will allow states to provide
    grant resources (not to exceed 60 percent of project costs) separately,
    or in combination with loans to make projects affordable. All proposed
    CWSRF activities are discussed in each state's annual Intended Use Plan
    (IUP), which describes the funds available and proposed projects. The
    IUP is made available to the public for comment. Actual CWSRF
    activities are described in Annual Reports as well as NIMS.
        There are no requirements for coordination with USDA. However,
    under the Clean Water Action Plan, all States have developed Unified
    Watershed Assessments delineating their priority watersheds for
    restoration activities and are now working on specific Watershed
    Restoration Action Strategies for these watersheds. EPA and USDA are
    committed to work with States to target and mutually marshal all
    available funding that can help restore State priority watersheds,
    including CWSRF and EQIP funds.
        The state agency designated to receive the CWSRF capitalization
    grant will receive the entire state allotment. Up to 20 percent of that
    allotment may be used for nonpoint source or estuary management grants,
    at the state's discretion. In most cases, state environmental agencies
    have direct responsibility for the CWSRF program and state agricultural
    agencies have a leadership role on EQIP. States do, however, have the
    flexibility to determine how to best use and coordinate these funds to
    meet their high priority agricultural nonpoint source needs. Projects
    that the Agricultural Department wants to fund would need to be
    included in the state's 319 Nonpoint Source Management Plan or 320
    Estuary Comprehensive Conservation and Management Plan, as well as the
    CWSRF Integrated Priority List. Many state CWSRF loan programs have
    already developed partnerships with state Agricultural Departments to
    provide CWSRF loans for nonpoint source projects. For instance,
    Delaware, Minnesota, West Virginia, and Ohio work with NRCS to identify
    needed agricultural Best Management Practices, design projects, and
    develop cost estimates before making a CWSRF loan.
                                     ______

                     Questions Submitted by Senator Harkin

                    animal waste: livestock permits funding
        Question. I am told that many states lack the personnel to make the
    regular inspections of large animal feeding operations that would be
    required for meaningful environmental oversight under the Clean Water
    Act. What additional funding is EPA making available to states to
    implement the Administration's directives on livestock permits? What
    funding do you think could effectively be used in 2000?
        Answer. In fiscal year 1999, the President requested and Congress
    appropriated a $20 million dollar increase in Clean Water Act (CWA)
    Section 106 grants for State and Tribal water quality program
    administration. The fiscal year 2000 President's Budget continues this
    grant increase. These additional funds can be used by States for
    programs including inspections to address concentrated animal feeding
    operations (CAFOs), which are regulated under the CWA permitting
    program. Also, EPA has awarded a $5 million dollar grant to America's
    Clean Water Foundation (ACWF). ACWF, working with the National Pork
    Producers Council, will train individuals to do environmental
    assessments of pork production facilities.
        One of the actions in the Strategy is for EPA and USDA to develop a
    joint evaluation of the costs and benefits of this Strategy and the
    options that may be considered in developing revised CAFO regulations.
    Currently EPA is focusing on the C-B for the revised CAFO rules. We
    also plan to work with USDA to develop a joint evaluation of the Cost
    Benefits of developing and implementing Comprehensive Nutrient
    Management Plans (CNMPs). EPA and USDA are also working with our State
    partners on ways to coordinate our respective programs to achieve the
    needed water quality goals through proper manure management. In the
    near term, EPA and USDA will continue to support ways to use existing
    programs such as Section 319 (Nonpoint Source), Section 106 State
    Program Funds) and Environmental Quality Incentives Program (EQIP) to
    support implementation of the Strategy. At the same time, EPA and USDA
    expect that the private sector will provide key support for helping
    producers, both technically and financially, to ensure that the 1.37
    billion tons of manure produced by AFOs is managed in a way that
    protects water quality.
        animal waste: research and development techniques for pollution
                                    standard
        Question. The development of a new generation of management tools
    and technologies for handling manure at large-scale livestock
    operations is essential for environmental protection. I understand EPA
    is currently revising its effluent guidelines to specify the kinds of
    technological approaches livestock operations should use to limit water
    pollution. What funding is EPA making available for the research and
    development of a range of affordable technologies that will help
    livestock producers comply with stricter pollution standards?
        Answer. EPA is funding studies to identify a new generation of
    management tools and technologies in support of the effluent guidelines
    regulation. Most of this work focuses on technology operating on a
    full-scale basis at existing animal feeding operations. The focus of
    the studies is to better understand the performance of some of these
    technologies and to quantify the costs to install, operate and maintain
    these technologies.
        Through the Effluent Guidelines effort, EPA has contracted with
    North Carolina State University. They have provided EPA with expertise
    gained through their research at the Animal and Poultry Waste
    Management Center. Other studies being done by EPA to examine
    technology include:
      --Evaluation of the economic and environmental feasibility of
            combustion of poultry litter for energy recovery on the Eastern
            Shore of the Chesapeake Bay. (3/99)
      --Poultry waste incinerator pilot project in Maryland. (in process)
      --Six-State Animal Waste Consortium (IN, IA, NC, MI, OK, MO)
            research. Since the proposals are currently being evaluated by
            a review panel, it is uncertain how many of them may deal with
            researching affordable technologies. (in process)
      --Partial funding of a study in Texas evaluating the feasibility of a
            centralized manure processing facility for dairy waste. (9/98)
        As part of the outreach and education effort that must follow the
    issuance of these revised regulations, EPA will provide guidance to the
    livestock producers regarding manure treatment and how to determine the
    best method for managing their manure to comply with the regulation.
             animal waste: regional mechanism for manure management
        Question. I believe that in certain areas of the country, where
    livestock production is most concentrated, we need to establish
    regional mechanisms for treating and distributing manure and fertilizer
    products. A number of European countries have adopted this kind of
    approach, and I think it would relieve the burden on individual
    producers to adopt new treatment technologies and deal with excess
    manure. Is EPA taking a solid look at what technologies are being used
    in Europe and elsewhere in the World that might be adopted in our
    country?
        What is EPA doing to help states and local governments establish
    regional approaches to manure management and to provide information
    about some of the advanced technologies that are available? What
    research is EPA doing in this area?
        Answer. EPA has met with representatives of European governments
    and companies conducting business in Europe and has become familiar
    with European programs, especially those employed in the Netherlands.
        EPA agrees that regional mechanisms will be necessary for some
    areas to deal with excess manure, and will encourage businesses that
    attempt to establish these mechanisms. For example, EPA has evaluated
    the centralized incineration of poultry litter to generate electricity
    on the Eastern Shore of the Chesapeake Bay.
        EPA's Region III, the Agency's representative at the Poultry
    Dialogue, has worked closely with the poultry industry and businesses
    interested in providing regional mechanisms for handling excess manure.
    Region III has worked with the poultry processors to encourage them to
    take a lead in identifying the technology that best suits their needs
    and the needs of their growers.
        pollution prevention and the federal government: bio-based epps
        Question. What has the EPA accomplished in moving forward towards
    increasing the government's purchase of bio-based EPPs, as required by
    the Executive Order?
        Answer. Under Executive Order 13101, the USDA is responsible for
    issuing a bio-based products list, and the EPA is responsible for
    issuing guidance for Federal agencies to use in identifying
    environmentally preferable products. Bio-based products and
    environmental preferable are defined differently under the Executive
    Order. Our objective is to identify areas of overlap that can benefit
    both efforts.
        For example, in developing the guidance on environmentally
    preferable products, we are identifying rapidly renewable bio-based
    products in our category of products with positive environmental
    attributes. In working with NIST on life cycle assessment decision
    support software, we are evaluating product categories that include
    bio-based alternatives.
        In addition, there are federal pilot projects underway or being
    planned in 17 product categories. 12 of those categories have bio-based
    alternatives. They include:
      --printing, where the products include soy-based inks and bio-based
            press cleaners;
      --alternative fiber paper, made from annual crops (e.g., kenaf) or
            agricultural waste (e.g., wheat, rye, or rice straw) which
            would have been burned;
      --degreasers, where aqueous-based solvents serve as alternatives to
            halogenated solvents in parts washing.
        We are actively seeking opportunities to further the federal goals
    of promoting bio-based products in our environmentally preferable
    purchasing efforts.
        Question. What are the barriers that EPA sees in aggressively
    implementing Executive Order 13101 and moving the government towards
    bio-based EPPs?
        Answer. The most significant barrier is the lack of infrastructure
    to support and sustain environmentally preferable purchasing. Our new
    emphasis on pilots, especially those enlisting traditional voluntary
    standard setting organizations (like Underwriters Laboratories and the
    National Sanitation Foundation) to help develop environmental
    standards, is aimed at building the critical infrastructure at reduced
    cost to the government.
        New EPP tool development contributes to infrastructure, as well. We
    are developing a series of tools for federal purchasers, including a
    training program, a database of existing environmental standards, and
    an assessment tool to incorporate life cycle considerations in
    procurement decisions (developed by NIST). We are trying to build this
    program as much as possible upon existing private sector capabilities
    and expertise.
        Competing goals have been an obstacle. Procurement officials have
    struggled to reconcile environmentally preferable purchasing with the
    goals of procurement reform and there have been sharp conflicts over
    trade and environmental concerns. In addition, industry has generally
    opposed efforts to make environmental impacts of products another
    factor on which they must compete.
        Question. The Committee provided an additional $1 million for this
    initiative in the fiscal year 1999 budget. How are those added funds
    being used?
        Answer. The primary use for these funds will be to engage voluntary
    standard setting organizations in developing environmental standards
    and in developing tools to train and provide environmental information
    to federal procurement officials. The funding break out is as follows:
    Pilots ($405K)
        The National Technology Transfer and Advancement Act of 1996
    obliges the federal government to utilize standards and processes
    developed by voluntary consensus-based organizations. We are drawing on
    the private sector's capacity to develop environmental standards, as
    they have for performance and safety, with this mandate. In particular,
    we are looking to the traditional standard-setting organizations which
    operate on voluntary and consensus basis.
        We recently published a Federal Register notice soliciting private
    sector involvement in identifying environmentally preferable products
    and services. Several organizations, including Underwriters'
    Laboratories, the National Sanitation Foundation, and ASTM, are very
    interested in this effort and we anticipate that they will move forward
    with developing environmental standards for one or more product
    categories. Although this approach is still in the beginning stages, we
    have received very positive reception from stakeholders in federal
    agencies, in congressional offices, and in some environmental
    organizations.
    Tools to reach procurement officials ($310K)
        We are developing tools for procurement officials, to help them
    understand how to bring environmental factors into purchasing
    decisions. We are supporting the development and refinement of the
    National Institute of Standards and Technology (NIST)'s life cycle
    assessment software which measures the environmental and economic
    performance of building products. We are also developing a series of
    tools to help federal purchasers understand the concepts of
    environmental preferability and to facilitate access to available
    environmental standards about products from a variety of sources. These
    tools, which will be accessible through the EPP web-site in May, are
    anticipated to be integrated into the Federal Acquisition Institute's
    training for procurement officials.
    Outreach ($235K)
        Outreach includes case studies, the EPP Update Newsletter, outreach
    to federal agencies, and the EPP website.
    Coordination ($50K)
        Coordination includes funds for Office of Federal Environmental
    Executive, and support for the ``summit'' meeting of state/local/
    federal green purchasing programs.
      radon standards: air mitigation-technical assistance to small water
                             systems in rural areas
        Question. EPA is moving forward with a drinking water standard for
    radon which is usually associated with air pollution.
        I understand that EPA is looking at a set of standards that may set
    two different levels depending on whether a water system is also
    engaged in a mitigation program to reduce radon levels in the air.
    Clearly, air mitigation is a new area for water systems. I believe they
    would need considerable technical assistance, particularly for our
    smaller systems in rural areas.
        If EPA moves ahead with such a dual standards system, what kinds of
    support do you think would be appropriate to provide for smaller water
    systems? What do you estimate would be an appropriate annual cost of
    such a federal effort?
        Answer. The radon rule will be one of the first to follow the new
    cost-benefit analysis requirements of the 1996 Amendments to the Safe
    Drinking Water Act (SDWA) and will be based on an innovative framework
    designed to provide flexibility in risk reduction. The statute provides
    for a Maximum Contaminant Level (MCL) as well as an alternative
    (higher) Maximum Contaminant Level (AMCL) coupled with a multimedia
    mitigation program to reduce radon in indoor air from soil gas. If EPA
    promulgates an MCL ``more stringent than necessary to reduce the
    contribution to radon in indoor air from drinking water to a
    concentration that is equivalent to the national average concentration
    of radon in outdoor air,'' SDWA requires the Agency to establish an
    AMCL. The level of the AMCL is thus linked to the average outdoor radon
    level.
        If an AMCL is established, EPA must publish guidelines for state
    multimedia radon mitigation programs. States may develop (and submit to
    EPA for approval) a multimedia mitigation program to mitigate radon
    levels in indoor air. EPA must approve state multimedia mitigation
    programs if they are expected to achieve ``equal or greater health risk
    reduction benefits'' than compliance with the MCL alone. If EPA
    approves a state multimedia mitigation program, public water supply
    systems within the state may comply with the AMCL. If states elect not
    to develop multimedia mitigation programs, public water systems may
    develop their own such programs and submit them to EPA for review and
    approval.
        We do not expect that State multimedia mitigation programs will
    require that water systems be responsible for any more than meeting the
    AMCL for radon in drinking water. Systems must, however, provide
    information to their customers (through the Consumer Confidence
    Reports) regarding whether they are meeting the MCL or the AMCL. Other
    entities within the state will need to implement programs for the
    reduction of radon in indoor air which comes from soil gas, as is the
    case with the current voluntary state radon-in-air reduction programs.
    We expect that many states will consider and adopt state multimedia
    mitigation programs, thereby obviating the need for public water
    systems to consider doing so independently. Until states make decisions
    regarding whether or not to implement multimedia mitigation programs,
    and until water systems consider their own options, it is difficult to
    estimate what kinds of, and how much, support will be appropriate to
    provide for the needs of smaller water systems. Under any circumstance,
    however, EPA plans to provide both financial and technical assistance
    to aid in the implementation of this rule. In addition, states are
    authorized to use up to 2 percent of their annual Drinking Water State
    Revolving Fund capitalization grant to provide technical assistance to
    systems serving 10,000 or fewer people.
         radon standards: increased costs for radon abatement in water
        Question. I am told that there are about 160 deaths associated with
    radon in water compared to 15,000 to 20,000 from air borne radon. This
    is according to a 1998 National Academy of Sciences Report.
        I am also told that the annualized cost of radon abatement in water
    is estimated to be about $24 million nationwide per year on average to
    meet a 4000 pico-curies per liter standard. It rises to $100 million at
    a 1000 pico-curies standard and $800 million at a 100 pico-curies
    standard. Is that correct?
        Answer. The estimated annual costs of radon abatement mentioned
    above, are drawn from EPA's Health Risk Reduction and Cost Analysis
    (HRRCA). The HRRCA was published in the Federal Register in February
    1999 as required by the 1996 Amendments to the Safe Drinking Water Act
    (SDWA). The 4000 pico-curies per liter standard is the standard that
    will be proposed as the alternative Maximum Contaminant Level (AMCL)
    and is based on the recommendations contained in the National Academy
    of Sciences (NAS) report, referred to above. The 1996 SDWA Amendments
    require that if EPA promulgates a Maximum Contaminant Level (MCL)
    ``more stringent than necessary to reduce the contribution to radon in
    indoor air from drinking water to a concentration that is equivalent to
    the national average concentration of radon in outdoor air,'' the
    Agency must establish an AMCL. The other two standards listed above
    reflect a range within which an MCL will most likely be established.
        We believe the opportunity to realize equal or greater human health
    protection at lower cost from reducing radon in indoor air was the
    principal motivation for the option developed by Congress in the 1996
    SDWA Amendments, which provide for the AMCL and multimedia mitigation
    alternative. We support this approach and will reflect this in the
    regulation, supporting guidance, and in technical assistance to states
    and public water systems.
                     radon standards: effect of radon rule
        Question. Will the likely radon rule create a situation where we
    will be forcing water systems and their customers to spend large sums
    in order to bring the danger of drinking water to a point far below
    that of breathing regular outdoor air?
        Answer. It is likely that the Maximum Contaminant Level (MCL) will
    create a standard that will result in radon levels from drinking water
    in indoor air below the national average concentration of radon in
    outdoor air. To address this possibility, the 1996 Safe Drinking Water
    Act (SDWA) Amendments require that if EPA promulgates an MCL ``more
    stringent than necessary to reduce the contribution to radon in indoor
    air from drinking water to a concentration that is equivalent to the
    national average concentration of radon in outdoor air,'' the Agency
    must establish an Alternative Maximum Contaminant Level (AMCL). The
    level of the AMCL is linked to average outdoor radon levels. The AMCL
    coupled with a multimedia mitigation program to reduce radon in indoor
    air from soil gas is designed to provide a less costly alternative for
    mitigating radon in indoor air while still providing effective public
    health protection. We support this approach and will encourage states
    to develop multimedia mitigation programs that will enable the water
    systems in their states to meet less stringent and more cost effective
    AMCL. Individual water systems have the option of developing multimedia
    mitigation programs in the event that states elect not to do so.
       radon standards: impact of radon reduction on small water systems
        Question. Coming from Iowa, I have a special concern for the impact
    on small systems. And, for small systems the costs can be very high
    indeed. While the cost of radon reduction might be $6 per person in New
    York, it would be $20 in Des Moines and $34 in a system with a couple
    thousand users. For the smallest systems the costs really escalate
    further going to well over $300 per user for systems with fewer than
    100 people. And there are a great many systems like that in Iowa.
        I know you cannot give a figure for what is the maximum sum that
    should be spent. But, I want to know if this subcommittee can have your
    commitment that you will take personal care to establish standards for
    systems that consider the real economic realities of smaller systems?
        Answer. The Administration and EPA are committed to establishing
    standards that fully consider the real economic realities of small
    public water systems. We are acutely aware of the fact that, due in
    large part to poor economies of scale, regulatory costs per household
    dramatically increase for the smaller public water systems. Among other
    steps aimed at fully considering the concerns of small public water
    systems, we convened a panel under the terms of the Small Business
    Regulatory Enforcement and Fairness Act (SBREFA) in which we
    specifically discussed and reported on small entity concerns. This
    report will be a part of the supporting documentation accompanying the
    proposed rule. This panel process was informed by several meetings that
    we conducted with approximately 20 representatives of small drinking
    water utilities from around the country. One specific output of that
    process will be an identification in the proposed regulation, and
    supporting guidances, of affordable and simple-to-operate water
    treatment technologies for small systems.
        As mentioned in our response to some of your related questions on
    the radon provisions of the 1996 Amendments to the Safe Drinking Water
    Act (SDWA), we also think the most economical and cost-effective means
    of compliance with this regulation, in general, will be for small
    systems to meet the higher, alternative Maximum Compliance Level
    (AMCL).
                                     ______

                      Questions Submitted by Senator Byrd

         noX sip call: imbalance between control burden and
                                 nonattainment
        Question. On September 24, 1998, the EPA signed the regional
    nitrogen oxide state implementation plan (NOX SIP Call)
    requiring substantial reductions in emissions of nitrogen oxides from
    various stationary sources in 22 Eastern states. The allocation of the
    emission reduction burden appears to be inequitable and clearly in
    conflict with the alleged purpose of the rule, which is to assist
    downwind states in attaining ozone standards. The burden placed on
    states like West Virginia is extremely high compared to many of the
    Northeastern states. Given the fact that the EPA itself has
    acknowledged that local source controls are more effective at reducing
    ozone than reductions made at sources hundreds of miles away, how can
    you justify this clear imbalance between the imposition of the control
    burden and the need to address remaining nonattainment problems?
        Answer. As you may be aware, the United States Court of Appeals for
    the District of Columbia Circuit has recently issued two opinions that
    may impact the NOX SIP Call. On May 14, 1999, the court
    issued an opinion regarding the ozone and particulate matter air
    quality standards that EPA revised in July 1997. American Trucking
    Associations v. EPA, Nos. 97-1440, 97-1441 (D.C. Cir.). We disagree
    with this decision and are recommending that the Department of Justice
    take all necessary legal steps so that these important public health
    protections may move forward. On May 24, 1999, the court stayed the
    September 30, 1999 SIP submittal date for the NOX SIP call
    pending further court action. State of Michigan v. EPA, No. 98-1497
    (D.C. Cir.). We are currently analyzing the impact of these opinions on
    several of our air quality programs, including the NOX SIP
    Call. We hope to have a more complete picture of the impacts in the
    near future.
        By way of background, the EPA worked in partnership with the 37
    easternmost States and the District of Columbia, industry
    representatives, and environmental groups to address ozone transport.
    From May 1995 to June 1997, the Ozone Transport Assessment Group (OTAG)
    held meetings to identify and evaluate strategies for reducing long-
    range transport of ozone and ozone precursors. This planning body was
    brought together in recognition that ozone is not only a local issue,
    but must be addressed as a regional problem. This multi-year
    collaboration resulted in the most comprehensive analysis of ozone
    transport ever conducted.
        The OTAG and EPA modeling analyses indicate that upwind emissions
    from States such as West Virginia contribute significantly to downwind
    nonattainment problems. As a result, upwind emitters contribute to
    unhealthful levels of ozone. It was EPA's judgment when it issued the
    NOX SIP call that upwind States should reduce at least the
    portion of their emissions for which cost-effective controls are
    available. Further, it should be recognized that the major urban
    nonattainment areas have been required to incur control costs for ozone
    precursors since the early 1970's. These controls have already led to
    substantial reductions in ozone levels. In addition, EPA has reviewed
    the status of the northeastern States' efforts to comply with the
    requirements of the 1990 Clean Air Act Amendments and has found that
    these States have completed the vast majority of the SIP submission
    requirements. In cases where those States have not made the required
    submissions, they are subject to sanctions under the Clean Air Act.
     noX sip call: analysis or studies on impact of individual
                                  air quality
        Question. In the past two years, the EPA has promulgated four major
    new regulatory requirements and has focused much attention on the
    electric utility industry to achieve the air quality goals set forth in
    them. These rules include: (1) a new national ambient air quality
    standard for ozone; (2) a new national ambient air quality standard for
    fine particulates (PM 2.5); (3) the NOX SIP call in 22
    Eastern States; and (4) a regional haze rule designed to improve
    visibility in national parks, forests, and wilderness areas. In
    addition, the EPA is in the process of finalizing a new rule to reform
    the existing New Source Review regulatory program affecting existing
    sources of power generation. The cumulative affects of these actions,
    if they withstand judicial review, will be to drive up the cost of
    electricity and force the premature retirement of some existing plants.
    These policy objectives clearly appear to be in conflict. It is
    troubling to me that these air quality issues are seemingly being
    addressed with little regard for the associated economic, energy
    supply, and national security implications associated with their
    intended implementation. Has the EPA done any analyses or commissioned
    any studies to determine how these individual air quality regulations
    will cumulatively impact specific states of industries and their
    ability to comply with these regulations?
        Answer. As mentioned previously, the United States Court of Appeals
    for the District of Columbia Circuit has recently issued two opinions
    that may impact various air quality programs, including some of the
    ones you mention. The answer that follows does not reflect how these
    decisions may impact our programs, which we are currently analyzing.
        In response to your specific question the EPA has conducted several
    studies which addressed the rules identified in the question and the
    electrical power generation sector. These included the Clean Air Power
    Initiative Study, 1996; the Regulatory Impact Analyses for the
    Particulate Matter and Ozone National Ambient Air Quality Standards and
    Proposed Regional Haze Rule, 1997; the Regulatory Impact Analysis for
    the NOX SIP call, 1998; and, the Regulatory Impact Analysis
    for the Final Regional Haze Rule, 1999.
        These assessments are designed to look at the incremental effects
    of separate but related rule makings. The results of these analyses
    illustrate the complementarity amongst the related rules. Since ozone
    and particulate matter share some of the same precursor gases, control
    strategies designed to reduce emissions of these precursors can lower
    ambient concentrations of both pollutants. Also, because of the
    interrelationship between these pollutants and their precursors,
    strategies aimed at meeting the national ambient air quality standards
    (NAAQS) for both pollutants will also improve visibility at mandatory
    Federal Class I Areas. For example, the Final Regulatory Impact
    Analysis for the Regional Haze Rule found that mandatory Federal Class
    I areas in the Midwest/Northeast and Southeast met or exceeded a
    variety of illustrative reasonable progress goals through 2018 as a
    result of strategies targeted at the particulate matter and ozone
    NAAQS. Hence, although we have issued multiple rules responding to
    different mandates, the impacts are not necessarily additive.
        Although the EPA has not done a cumulative assessment, the
    aforementioned economic studies do address the energy supply and
    economic considerations. In fact, the Department of Energy is part of
    the interagency review process for the Regulatory Impact Analyses. But,
    there are limits to these as well as cumulative impact studies
    especially given the discretion the States have in designing State
    implementation plans, emission management strategies, and reasonable
    progress goals for Regional Haze. Such caveats are noted in the various
    Regulatory Impact Analyses.
        In addition, EPA has conducted extensive analyses of the impacts of
    the NOX SIP call. The Agency assumed only cost-effective and
    technically feasible NOX controls when developing the State
    budgets and supported those assumptions with analyses in the docket. In
    the Agency's report, Analyzing Electric Power Generation Under the
    CAAA, EPA investigated the impacts of the control levels assumed in the
    SIP call on the electric generation sector and found controls of .15
    lb/mmBtu were cost-effective (about $1500/ton). In the Agency's report,
    Feasibility of Installing NOX Control Technologies by May,
    2003, EPA looked specifically at the ability of the electric generation
    sector to install control technologies in the time frame required by
    the NOX SIP call and found that this sector should be able
    to comply with the regulations. In addition, the Agency examined the
    impacts of a section 126 rulemaking or a Federal Implementation Plan on
    small entities as well as municipally-owned entities.
     noX sip call: noX reductions compliance deadline
        Question. The electric utility industry and several states have
    raised concerns about the ability to comply with very stringent
    NOX reduction requirements in a very short time frame
    without threatening the reliability of electrical supply in the
    affected and neighboring states. Midwestern electric utilities will
    have to take many of their facilities offline to install new
    NOX controlling technologies under the NOX SIP
    Call. This could place additional pressures on the electricity grid
    because the seasonal window for installing these technologies is
    limited so as not to disrupt the power supply during high demand
    periods. Given these limited time frames, the North American Electric
    Reliability Council is preparing a comprehensive report to assess this
    issue. If it should determine that the compliance deadline poses a
    certain threat to the reliability of electricity, will the EPA be
    willing to extend the compliance deadline to alleviate this problem?
        Answer. As mentioned previously, the United States Court of Appeals
    for the District of Columbia Circuit has recently issued two opinions
    that may impact various air quality programs, including the
    NOX SIP Call. The answer that follows does not reflect how
    these decisions may impact our programs, which we are currently
    analyzing.
        In response to your particular question the EPA looked thoroughly
    at the issue of threats to the reliability of electricity in developing
    the NOX SIP Call compliance dates and found that reliability
    problems should not emerge. See Feasibility of Installing
    NOX Control Technologies by May, 2003, EPA, September 1998.
    However, in response to concerns about the potential effects of the
    rule on the availability of electricity, the final rule creates an
    additional pool of emission credits for each State to use. States may
    issue the emissions credits to sources that achieve their emission
    reductions earlier than required or to sources that demonstrate a need
    for relief from the compliance deadline.
        The North American Electric Reliability Council (NERC) raised the
    NOX SIP Call as a concern for the future in its 10-Year
    Reliability Assessment report last fall in the executive summary. Two
    other studies, one by a section of NERC, the MAIN region, and a second
    by M.J. Bradley and Associates, did not find that the SIP call would
    cause a reliability problem.
        The Ozone Transport Assessment Group (OTAG) that worked together
    for two years to address the ozone transport issue was a partnership of
    the 37 easternmost States, the District of Columbia, EPA, environmental
    groups, and industry representatives, including the utilities industry.
    EPA has worked with the utilities industry in this and other capacities
    and will continue to work with utilities to develop and implement cost-
    effective pollution controls without compromising the industry's
    ability to provide service to its customers.
                       EXECUTIVE OFFICE OF THE PRESIDENT

      Council on Environmental Quality and Office of Environmental Quality

    STATEMENT OF GEORGE T. FRAMPTON, JR., ACTING CHAIR
        Senator Bond. In order to accommodate Senator Craig, we
    will now call Mr. Frampton up and ask him to begin with a--if
    you would a summary of your opening statement as briefly as
    possible and we will then turn to Senator Craig. We welcome you
    to the committee.
        We are in the home stretch. Mr. Frampton, welcome before
    this committee.
        Mr. Frampton. Mr. Chairman, thank you for the opportunity
    to appear before you and to present the President's proposed
    budget on environmental quality. Since I have not worked with
    this subcommittee in my 4 years with the Interior Department,
    I've tried to get around to see each person personally before
    this hearing. I did not succeed in this but I hope to be able
    to succeed in doing that in the coming week, those members I
    did not get to see before.
        I have submitted a written statement. You have our budget
    justification. Since I know that you and Senator Craig want to
    get to questions, let me just take a minute to summarize. We
    are asking for an increase for fiscal year 2000 of $345,000 for
    a total amount of $3,020,000. It is the same we asked for last
    year and the year before.
        The principal need that I see, as the new acting chair here
    since November, is to have a few more staff people to work on
    issues that relate to building partnerships between Federal
    agencies and stakeholders and partnerships between Federal
    agencies and State and local governments not only in the
    administration of environmental impact statements and reviews,
    but in just seeing that the Federal family speaks with one
    voice and works with State and local government. Two examples,
    Mr. Chairman, and then I will conclude.
        There was some discussion this morning about the Food
    Quality Protection Act. That is an example of a situation in
    which Congress passed really a landmark statute. Tremendous
    opportunity is there to improve health. But after it passed,
    people realized what some of the ramifications were for
    manufacturers and for people who grow the produce. And CEQ was
    instrumental in making sure that EPA and the U.S. Department of
    Agriculture could get together and create a process that would
    give the folks who were regulated and who would grow the
    products some sense that it would be based on science and it
    would be rational.
        I am sorry that last week some of the environmental folks
    walked away. I think we are going to go ahead and do this right
    and I think CEQ is a part of that. I hope we will be successful
    in the future and I hope those people come back.
        The second example is last fall the Governors of Oregon,
    Washington, California and Alaska wrote to the Vice President
    asking that the Government set up a coastal salmon fund, the
    money going directly to the Governors and the Tribes to help
    them deal with salmon restoration challenges. There is a
    proposal in the President's budget fiscal year 2000 to do that.
    They asked that we make sure that the money got to the
    Governors with a minimum of paperwork and rules but that there
    was a system for accountability.

                               prepared statement

        These are the kinds of issues that I think CEQ is uniquely
    well positioned to work on. It is for these kinds of programs
    that we are asking for a budget increase. With that, Mr.
    Chairman, I hope to answer any questions.
        [The statement follows:]

                 Prepared Statement of George T. Frampton, Jr.

        Mr. Chairman, Senator Mikulski, members of the Subcommittee: I am
    pleased to appear before you today to testify on behalf of President
    Clinton's fiscal year 2000 budget request for the Council on
    Environmental Quality (CEQ) and the Office of Environmental Quality
    (OEQ) (hereinafter collectively referred to as CEQ). The President's
    request is the same as in fiscal year 1999--$3,020,000 and 23 Full Time
    Equivalent (FTE) staff positions, an increase of $345,000 over CEQ's
    enacted fiscal year 1999 budget. The increased budget request reflects
    the President's ongoing commitment to a CEQ that fully satisfies its
    statutory obligations under the National Environmental Policy Act
    (NEPA).
        Before outlining for you some of CEQ's major accomplishments this
    past year, and our objectives for the coming year, I would like briefly
    to describe our agency, the role it plays in the Federal family, and
    how we have defined our mission under the leadership of President
    Clinton.
        CEQ was created by the Congress in 1969 with strong bipartisan
    support amid growing concern about the state of our environment. NEPA,
    the statute that established CEQ and defined its goals and
    responsibilities, is truly a landmark law. It declares it to be the
    policy of the Federal government ``to use all practicable means and
    measures * * * to create and maintain the conditions under which man
    and nature coexist in productive harmony, and fulfill the social,
    economic, and other requirements of present and future generations of
    Americans.'' CEQ strives to serve those ends in a number of ways. The
    agency advises and assists the President in developing environmental
    policies and legislation; assesses and reports on trends in
    environmental quality and recommends appropriate response strategies;
    coordinates the environmental activities of all federal agencies and
    departments; fosters cooperation among federal, state and local
    governments, the private sector and the public; oversees agency
    implementation of the environmental impact assessment process; and
    mediates disputes regarding the adequacy of such assessments and the
    policy judgments inherent in them.
        This is an ambitious portfolio for a small agency, and one of
    utmost importance to our Nation. Twenty-nine years after Congress so
    wisely sought fully to integrate environmental concerns into federal
    decision making; our challenges have grown only more daunting, and the
    need for innovative solutions all the more imperative. Our actions are
    guided by three core principles. First--and this is clear in the very
    words of our authorizing statute--our goal is not to balance the
    environment and the economy as if they are competing interests, but
    rather to demonstrate their fundamental interconnection. The choice
    between the economy and the environment is a false one. The economy and
    the environment can and must go hand in hand. Second, we must move
    beyond the chronic conflict that too often characterizes environmental
    decision making and forge collaborative approaches that meet our common
    needs. And third, we must devise innovative, common sense solutions
    that achieve the greatest protection for our environment while
    minimizing the burden on taxpayers and the regulated community.
        I am pleased to report that CEQ has made great strides in advancing
    these principles, both as we carry out our day-to-day responsibilities
    and through focused efforts to reshape federal environmental programs.
        CEQ is working to reinvent the way government goes about protecting
    our environment. For instance, CEQ has helped forge public-private
    partnerships to protect water quality through incentives to landowners
    and to produce the cutting-edge technology that will triple the fuel
    efficiency of the American car. We are encouraging collaborative
    efforts to protect habitat before species become endangered and to
    avoid future flood damage by offering communities a range of options in
    preparing for and responding to floods. We are promoting job creation
    through support for the $180 billion-a-year environmental technology
    industry. We are working with federal agencies to streamline
    regulations and environmental reviews, saving precious time and
    taxpayer dollars. And we helped formulate the Administration's climate
    change policy, which would harness market forces to achieve cost-
    effective reductions in greenhouse gas emissions.
        CEQ is working to break gridlock and resolve longstanding disputes.
    For instance, CEQ intervened to resolve a ten-year impasse among
    federal resource agencies, state environmental agencies, and a local
    development agency concerning the development of a Special Area
    Management Plan for the Hackensack Meadowlands in Northern New Jersey.
    We are hoping to conclude this process, and to develop a better model
    for comprehensive wetlands planning that provides certainty to the
    regulated community and closer partnership with state regulators, while
    enhancing environmental protection.
        CEQ is working to formulate comprehensive policy and coordinate the
    environmental actions of all federal agencies. For instance, CEQ
    coordinated land acquisition strategy with regard to the Everglades
    restoration, including closing on the transaction involving the
    Talisman tract in the Everglades Agricultural Area; helped to develop
    the Administration's initiative to reduce environmental health and
    safety risks to children; and oversees a series of initiatives to
    harmonize our environmental policies as they affect America's farmers
    and ranchers.
        CEQ provides an institutional avenue to address special needs and
    concerns that cannot be addressed in a timely manner without the
    discipline and focus that CEQ can bring to the process. Recently,
    Representative Lowey asked to expedite an interagency process because
    the opportunity to dredge Mamaroneck harbor would have been lost if
    decisions had been delayed past the first of the year. Just last week,
    we helped Governor Vilsack resolve disputes among Federal and State
    agencies concerning permits for the urgently needed closing of
    agriculture drainage wells in Iowa.
        Finally, CEQ is working to restore and preserve precious
    environmental values for future generations of Americans. Over the past
    year, we have played a critical role in efforts to protect Yellowstone,
    the Everglades, and our oceans.
        In fiscal year 1999 CEQ has an approved level of 23 FTE positions.
    This staffing level is below the total allowed by the fiscal year 1993
    enacted level, which itself was less than half the historic peak for
    the agency. I believe the fiscal year 2000 budget request will permit
    CEQ to fulfill its statutory requirements and make continued progress
    toward the goal of common sense, cost-effective environmental
    protection.
                              partnership program
        In the fiscal year 2000 budget request, CEQ is proposing additional
    funding to enhance its ability to assist federal departments and
    agencies in responding to requests from states, metropolitan and local
    governments, and businesses for partnership opportunities. For example,
    the Administration's fiscal year 2000 budget proposes funding:
      --to promote smart growth, where local governments have already
            developed plans and are seeking federal partners;
      --to protect open space including greenways in urban, suburban, and
            near-urban areas;
      --to promote the retention of agricultural land near expanding
            residential areas in traditional agricultural use;
      --to protect sensitive habitat in the context of metropolitan,
            regional, and ecosystem planning; and
      --to clean up and restore bays, estuaries, and rivers.
        These programs pose new partnership opportunities, but additional
    potential challenges for CEQ.
        The President's budget proposals provide the resources that state
    and local governments and community leaders need to advance local and
    regional initiatives for environmental protection in partnership with
    the Federal government. Building more effective partnerships increases
    the need for the leadership and discipline CEQ can bring to issues that
    involve numerous agencies with very different missions. This is
    illustrated by our involvement in our ongoing major partnerships which
    include the following: the Natural Communities Conservation Planning
    process in which Orange, San Diego, and Riverside Counties in southern
    California are doing comprehensive planning with cities, real estate
    developers, environmentalists, businesses and scientists and the
    federal government to avoid future Endangered Species Act and Clean
    Water Act mandates; Everglades Restoration; the use of Habitat
    Conservation Plans (HCPs) with timber companies in the Southeast and
    Northwest; restoration of the San Francisco Bay-Delta (CALFED); a
    recent Utah land purchase; and the protection of Sterling Forest in New
    York and New Jersey.
        We believe that there are additional opportunities for more
    effective partnership. This new partnership approach could foster many
    additional opportunities. For example:
        The Governors of California, Oregon, Washington and Alaska and the
    tribes have asked for new federal funding for coastal salmon
    restoration plans to be developed and implemented by the States, and
    have also asked for federal coordination by the Acting Chair of CEQ to
    ensure that the federal agencies are working together in a partnership
    with the state on these important plans. The Executive of King County
    and the mayors of Seattle and other cities around Puget Sound have
    asked for a similar effort to assist their MetroSmart Growth Initiative
    in a way that also helps them and major businesses in the area recover
    salmon as well as preserve open space and plan urban and suburban
    densities.
        In northern New England, bipartisan legislation has been introduced
    seeking federal funding, technical assistance, and coordination to
    allow the states (and non-profits) to purchase easements protecting the
    working forests from development and pollution. This legislation would
    advance the overall goal of preserving the quality of rivers, the
    working forests, timber-dependent communities, open spaces, and access
    to recreation for millions of Americans--not only those of the region
    but those within a day's drive of these vast forests.
        As issues of watershed degradation, loss of open space and
    agricultural land, and sprawl attract the attention of more Americans
    as a premiere ``quality of life'' issue, urban metropolitan and state
    governments which bear the principal responsibility for addressing
    these issues are seeking federal funding, federal technical assistance,
    and limited strategic use of federal mandates to make their jobs easier
    (or, in some cases, remove federal barriers to solutions).
        Only CEQ in many cases can provide the coordinated federal agency
    response that is helpful in forging these partnerships. No single
    individual at CEQ is tasked to respond to these initiatives. We believe
    that a program allowing us to devote a senior staff member to undertake
    such efforts will pay countless dividends to state and local government
    and their business and environmental partners.
            accomplishments of the council on environmental quality
        Over the past year we have endeavored to live up to the promise of
    NEPA--exercising fully our responsibility to coordinate policy and
    resolve disputes, advancing a new way of doing business, promoting
    consensus-based decisions, providing advice and guidance, responding to
    emergencies and resolving interagency disputes as early as possible,
    thus avoiding the need for more formal, time-consuming processes. We
    also have worked very hard to respond to matters raised by the Congress
    last year. This portion of my testimony will report on some of our
    achievements during the past year and on some projects that we hope to
    accomplish in the coming year.
                             statutory integration
        CEQ is identifying sites for pilot projects that integrate
    compliance requirements under a range of statutory authorities and
    programs. The purpose of this effort is to develop local, on-the-ground
    models of comprehensive environmental planning that build on the
    objectives and principles explored by the Center for Strategic and
    International Studies (CSIS), the National Academy of Public
    Administration, the Keystone Center, and others (see The Environmental
    System in Transition: Final Report of the Enterprise for the
    Environment (CSIS 1998)). Ideally, these models would provide more
    effective resource protection strategies while offering greater
    certainty and flexibility to the regulated community. In many cases,
    initial planning done under the Endangered Species Act, particularly
    for HCPs, can be the building block or the model for more comprehensive
    strategies that employ a ``no surprises'' approach incorporating a
    broader array of statutory requirements. The following examples suggest
    promising areas for this approach.
        Pacific Northwest.--Successful coordination among Federal, state,
    and tribal resource agencies to respond to threatened and endangered
    salmon has established framework for regional coordination under the
    Endangered Species Act and the Clean Water Act. An integrated approach
    would expand this model to integrate remedial work under Superfund and
    the Natural Resource Damage programs and offer expedited resolution of
    compliance and restoration issues for responsible parties.
        Southern California.--Dairy producers in the Santa Ana Watershed
    have asked for CEQ's assistance in integrating agricultural and clean
    water requirements in the area. Residents in Irvine and Newport,
    California, have asked for CEQ's assistance in expanding their Natural
    Communities Conservation Plans (HCPs in Orange County and San Diego
    County) under the Endangered Species Act (administered by the
    Department of the Interior and the National Oceanic and Atmospheric
    Administration) to incorporate a comprehensive wetlands management plan
    under the Clean Water Act (administered by the Army Corps of Engineers
    and the Environmental Protection Agency (EPA)).
                               dispute resolution
        CEQ is a mediator between agencies and our efforts often prevent
    stalemates and litigation.
        The U.S. Institute for Environmental Dispute Resolution,
    established by Congress in 1998, is open for business in fiscal year
    1999. The Institute is authorized to resolve environmental disputes
    among federal agencies or between a federal agency and a non-federal
    party, as well as offering training and other services associated with
    alternative dispute resolution. Congress placed the Institute under the
    auspices of the Morris K. Udall Foundation, which was established in
    1992 as an independent agency of the Executive branch and is governed
    by a Presidentially-appointed, Senate confirmed board. Because the
    Institute's role is linked to the NEPA and CEQ's role in interagency
    dispute resolution, Congress made CEQ an ex officio member of the Udall
    Foundation Board when it created the Institute. In that role, CEQ has
    been helping to advise the leadership of the Institute as it
    establishes its program. In addition, under the authorizing
    legislation, CEQ must concur in federal interagency disputes being
    referred to the Institute.
        CEQ worked with the Idaho Congressional Delegation to ensure that
    the Air Force and the Bureau of Land Management worked together to
    provide a streamlined and efficient NEPA analysis upon which to base a
    decision on the Idaho Bombing Range. Further, CEQ worked with the
    Congressional delegation to provide sufficient mitigation measures to
    ensure the habitat for the bighorn sheep and other sensitive species
    was preserved.
        A large number of the nation's hydropower facilities will be under
    consideration for relicensing by the Federal Energy Regulatory
    Commission (FERC) in the near future. These relicensing processes
    involve consideration of a number of environmental issues within the
    expertise and jurisdiction of a variety of Executive Branch agencies
    including the Departments of Agriculture (USDA), Commerce, Interior and
    the EPA. CEQ is working with a team of all agencies involved in the
    relicensing process including the FERC to ensure consistency and
    efficiency of consideration of environmental issues during the
    relicensing process.
        CEQ has worked with the Departments of Defense, Transportation, and
    the EPA, and interested Members of Congress to address serious public
    health, environmental, and worker safety concerns that have been raised
    in connection with export of surplus vessels for scrapping by overseas
    scrapping yards. This work culminated in an Administration decision
    (September 23, 1998) to extend for one year an initial moratorium on
    overseas ship-scrapping while agencies work to identify opportunities
    to scrap surplus vessels under appropriate safeguards in U.S. yards.
    CEQ will continue to oversee implementation of the directive as well as
    to decide any requests for exceptions.
        CEQ managed an interagency team including the Federal Aviation
    Administration, Department of Interior, National Park Service and
    Department of Transportation to craft a solution to the contentious
    issue of parks overflights. This effort culminated in issuance of final
    rules governing overflights in Grand Canyon and Rocky Mountain National
    Parks published on October 31, 1997, which balanced the needs of
    aircraft operators with those who prefer maximizing quiet in those
    parks. Administration work continues on additional aspects of the Grand
    Canyon issue including drafting of new flight corridors. In addition,
    CEQ coordinates the ongoing work on a national rule to provide general
    guidance to those grappling with these issues in other parks, as well
    as to interagency efforts to ensure that any regulation of overflights
    deemed necessary is streamlined, efficient, and fair to all concerned.
    An advisory group of stakeholders established as part of this
    interagency effort to assist the agencies has produced a template for
    this rule that also has been a model for legislative initiatives to
    address this issue.
                              policy coordination
        As mandated by the National Environmental Policy Act, CEQ's role is
    to advise the President on environmental policy matters and coordinate
    activities of the federal agencies and departments with regard to
    environmental matters that cross agency jurisdictional lines. In the
    past year, CEQ has played a role in the development and coordination of
    policies that have more effectively integrated environmental, economic,
    and social objectives into federal decision making. Outlined below are
    a few recent efforts undertaken by CEQ.
        CEQ has coordinated the federal response to the environmental
    threat and public health concerns associated with Pfiesteria
    piscicidia, the organism linked to massive fish kills in Maryland,
    North Carolina, and Virginia. After pfiesteria outbreaks resulted in
    closure of several Chesapeake Bay tributaries in the summer in 1997,
    CEQ organized the work of federal agencies to provide affected states
    with needed federal support, ensuring that federal resources were
    deployed effectively and wisely. CEQ has been monitoring the work of
    involved federal agencies through regular meetings to develop a
    coordinated research strategy and to ensure that other steps are
    closely coordinated and responsive to the states. CEQ also worked
    directly with Congressional offices to arrange briefings for the
    delegations of affected states to keep Members fully informed
    concerning the Administration's efforts. On August 6, 1998, Chief of
    Staff Erskine Bowles announced targeted support for North Carolina in
    response to a significant pfiesteria outbreak in the Neuse River. CEQ
    coordinated this response.
        CEQ continues its work with EPA and USDA, the co-chairs of the
    Clean Water Action Plan announced by President Clinton on February 19,
    1998, to coordinate the efforts of all of the federal agencies in
    addressing the second generation of water quality protection under the
    Clean Water Act. Through the Action Plan, CEQ is developing and
    supporting a series of locally-led water quality initiatives, beginning
    with the Administration's Seacoast Estuary initiative in New Hampshire,
    which will cut in half the time required to reopen shellfish beds that
    have been closed by polluted runoff.
        CEQ has overseen a series of initiatives to harmonize our
    environmental policies as they affect America's farmers and ranchers.
    CEQ has worked with USDA to focus conservation programs on
    environmental goals. CEQ developed the Administration's process for
    ensuring that agricultural groups and other affected constituencies are
    effectively heard as EPA implements tougher public health protections
    under the Food Quality Protection Act. CEQ is coordinating the work of
    the White House Wetlands working group on a new policy for wetlands
    delineation on agricultural lands, so that farmers and ranchers, to the
    extent the law permits, will get reliable wetlands guidance from one
    agency. Working with USDA and interested states, CEQ has accelerated
    development of Conservation Reserve Enhancement Program agreements,
    such as those announced recently in Oregon and Washington, which
    deliver more than $200 million in new support in each state for farmers
    acting to protect critical habitat and water quality.
        CEQ has initiated a dialogue among academics, citizen groups, and
    interested Federal agencies concerning the erosion of citizen access to
    courts to enforce environmental laws, particularly with respect to
    community right-to-know about toxic releases. We expect that this
    dialogue will help shape legislative proposals that could be considered
    as freestanding legislation or in the context of major statutory
    reauthorizations.
        To celebrate the U.N. Year of the Ocean, the Administration held a
    National Oceans Conference in Monterey, California in June, 1998. The
    conference, co-chaired by the Department of Commerce and the Department
    of Navy, involved departments and agencies that manage programs
    affecting the oceans, a vital natural resource. CEQ is monitoring
    progress toward implementing those proposals.
        Working with the Domestic Policy Council, other White House
    offices, and affected agencies, CEQ helped to develop President
    Clinton's initiative to reduce environmental health and safety risks to
    children. A Presidential Executive Order, which was announced on April
    21, 1997, requires federal agencies to assign high priority to
    addressing these risks, to strengthen policies to protect children, to
    coordinate agency research focused on children's health, and, as
    suggested by the report of the National Academy of Sciences, to ensure
    that agency standards take into account special risks to children. The
    Administration's fiscal year 2000 contains an expanded effort to
    achieve these objectives.
        The Administration's effort to restore the Everglades made
    significant progress in 1998. The Army Corps of Engineers released the
    draft ``restudy'' of the Everglades ecosystem and went through an
    extensive public comment period. CEQ coordinated land acquisition
    strategy, including closing on the transaction involving the Talisman
    tract in the Everglades Agricultural Area. CEQ continued to help
    resolve interagency disputes involving Everglades restoration including
    the issues involved in the preparation of the Supplemental
    Environmental Impact Analysis on the redevelopment of Homestead Air
    Force Base and measures needed to ensure the protection of the Cape
    Sable Seaside Sparrow.
                          a new way of doing business
        The Clinton Administration is committed to reinventing the way
    government operates so that it works better and costs less. CEQ
    continues to take the lead in reinventing federal environment policy by
    encouraging approaches that work to reduce burdens, break gridlock,
    provide incentives, and build partnerships with state and local
    government and the private sector. Below are some examples of how CEQ
    accomplishes this task.
        The introduction and spread of invasive species in the United
    States is a major ecological and economic problem for diverse
    environments and economies in the United States. Invasive species are
    generally considered to be the second biggest threat to native wildlife
    (following habitat destruction). Approximately $5 billion per year are
    spent by ranchers and farmers in this country for noxious weed control,
    and indirect costs in losses to crop and rangeland productivity are
    estimated at about $7.4 billion per year. Utilities spent $3.1 billion
    over the last ten years to control invasive species.
        To address this difficult problem in a coordinated, systematic
    manner, the President recently issued an Executive Order on invasive
    species. The Order establishes an interagency council to coordinate
    federal efforts to address this problem, as well as an advisory
    committee to involve state, tribal and local governments, scientists,
    commercial interests, conservation organizations and academic
    institutions in developing and implementing solutions.
        CEQ has worked with EPA, the Chemical Manufacturers Association,
    and the American Petroleum Institute on a challenge to industry to
    produce basic public health data on the 3000 chemicals now in high-
    volume use in the United States. Under a voluntary agreement announced
    on October 14, 1998, U.S. chemical firms have agreed to a schedule to
    produce all of this data and to make the data available to the public.
    CEQ is working to support the domestic effort by ensuring continued
    Administration pressure on overseas firms and governments to contribute
    their fair share to the testing effort.
        CEQ initiated and is overseeing an ongoing process to develop
    administrative reforms to guide programs for restoring natural
    resources and recovering damages for the costs of such restoration.
    This process is a response to concerns among natural resource trustees
    about the extent to which federal and state cleanup programs take
    natural resource issues into account and strong concern in the business
    community that natural resource trustees might require cleanup measures
    that would be inconsistent with remedial steps required by EPA and
    state response agencies responsible for toxic waste cleanup.
        As part of President Clinton's initiatives for reforming
    environmental regulation, CEQ coordinated the development of bipartisan
    alternative compliance legislation to provide greater regulatory
    flexibility to firms that can achieve superior environmental results at
    reduced cost. This bill, introduced in the Senate by Senator Lieberman
    and in the House by a bipartisan coalition of Members, builds on the
    success of EPA's Project XL program, enabling EPA to overcome statutory
    impediments to greater program flexibility. CEQ will coordinate the
    Administration's work in advancing this or similar proposals and is
    currently working with Members of Congress who have been developing new
    alternative compliance proposals as the basis of bipartisan legislation
    in the 106th Congress.
        The President's Council on Sustainable Development (PCSD) is a
    federal advisory committee that includes members of the President's
    cabinet, corporate CEOs, national environmental leaders, local
    officials, and representatives of other interests. CEQ is the lead
    agency coordinating the work of the PCSD. In March 1996, the PCSD
    produced a report entitled, ``Sustainable America; A New Consensus for
    Prosperity, Opportunity, and a Healthy Environment.'' Since 1996, the
    PCSD has continued to work to implement recommendations in
    ``Sustainable America,'' as well as developing new policy
    recommendations for the Administration. The PCSD is also the sponsor of
    the ``National Town Meeting for a Sustainable America.'' This event
    will occur from May 2 to May 5, 1999. The hub event will be in Detroit,
    Michigan, with concurrent events to be held simultaneously in
    communities across the nation. The National Town Meeting will serve as
    a means to foster and promote innovative practices in business, in
    government, and in communities that can help harmonize our nation's
    economic, social, and environmental goals.
        Among the recommendations contained in the PCSD's ``Sustainable
    America'' report, are policies to build more sustainable communities,
    including recommendations concerning ``collaborative regional
    planning.'' These recommendations reflect a growing concern across the
    nation about the traffic congestion, loss of open space, and reduction
    of quality of life that can result from sprawl development. They also
    respond to growing interest in encouraging greater cooperation among
    cities, suburbs, and surrounding rural areas within a region to address
    transportation and land use issues that cross local jurisdictional
    boundaries. These issues will remain a high priority at CEQ in the year
    ahead.
                                nepa reinvention
        One of the overarching goals of CEQ is to achieve higher levels of
    environmental protection with lower costs and less red tape. CEQ has
    made important strides in improving the way NEPA operates in its day-
    to-day administration. Improving NEPA implementation fundamentally is
    the purpose of the NEPA Reinvention Project, a multi-phased effort
    aimed at the NEPA process across all federal agencies. CEQ was given a
    small increase in fiscal year 1999 appropriations to build on our work
    to reinvent NEPA through this project. However, a statutory restriction
    in the CEQ appropriations bill continued a prohibition on the use of
    agency detailees by CEQ, preventing CEQ from using a detailee to
    support NEPA reinvention work in fiscal year 1999 as CEQ had in fiscal
    year 1997.
        Last year, CEQ was able to make notable progress in our efforts to
    reinvent NEPA. For example:
        CEQ has been working with the Army throughout the year to provide
    advice and assistance in streamlining its NEPA regulation. We expect in
    the coming year the Army will issue a draft regulation for public
    comment.
        CEQ has been working with the Department of Energy throughout the
    last year in its efforts with NEPA reinvention by participating in a
    symposium hosted by the National Association of Public Administrators.
    A final report was issued by NAPA on further actions DOE should take to
    make their regulations more efficient and effective.
        CEQ has been working with the National Oceanic and Atmospheric
    Administration (NOAA) to streamline the NEPA process that is part of
    the national marine sanctuaries' management plan revision process. The
    majority of the nation's twelve national marine sanctuaries will be
    revising their management plans within the next few years, and CEQ has
    worked with the sanctuary managers and NOAA headquarters to establish a
    blueprint for moving forward with revisions in an organized, efficient
    and timely manner.
        In energy policy, CEQ has started to work with the appropriate
    agencies to expedite review of natural gas pipeline projects and has
    also supported the Federal Energy Regulatory Commission's recent
    proposal to eliminate ex parte requirements for purposes for the
    environmental impact assessment process.
        Mr. Chairman, Senator Mikulski and members of the Subcommittee, as
    the Acting Chair of CEQ, I am committed to continue the work that our
    agency was chartered to do 29 years ago. CEQ plays an important role in
    making sure that the federal family speaks with one voice on
    environmental issues. With the modest additional resources that we have
    requested, we can fulfill this role with an even greater effectiveness.
    I look forward to working with you in the coming year.
        Thank you for the opportunity to appear before the Subcommittee. I
    am happy to answer any questions you might have.

        Senator Bond. Thank you very much, Mr. Frampton. Senator
    Craig.

                               ceq responsibility

        Senator Craig. Thank you very much, Mr. Chairman.
        George, it is good to have you before the committee and I
    hope we can reschedule the meeting. We were not able to get
    together today. I have got several areas I would want to visit
    you about.
        I guess the value of the length of time we spent with Carol
    gave me time to read your testimony because I had not had that
    opportunity yet. Let me suggest one thing to you, which is my
    first impression of it, and I know a first impression is not
    the best approach. I am a bit astonished at the broadened, wide
    range of responsibility that you suggest CEQ ought to have or
    does have. I say that because I always felt, as many do, that
    some of these problems we have can best be solved at a more
    local level, and I am not sure that CEQ is headed in that
    direction.

                            fish mitigation process

        For instance, you cite on Page 5 of your testimony that you
    have successfully coordinated or are successfully coordinating
    among Federal, State and Tribal resource agencies to respond to
    threatened and endangered species of salmon in the Northwest.
    That is something I am spending much time on in the West and in
    the Northwest. Quite honestly, I am not aware of any successful
    coordination yet. I am very aware of struggling, power
    struggles, lawsuits and a region that now feels very, very
    threatened by the potential impact of decisions made by Federal
    agencies as it relates to a fish mitigation process.
        And I suggest to you that there is not yet time to take
    credit for having solved a problem that is still in the phases
    of being designated. And tragically the lines are still getting
    drawn out there as to how big the battle is going to be over
    this issue. That is a tragedy. That is my first reaction.

                               different purposes

        Let me also suggest, you conclude in your testimony that
    CEQ plays an important role in making sure--you mention the
    Federal family speaks with one voice and you cite. I want the
    right hand and the left hand of Government to know what they
    are doing. Let me suggest to you, and you know it, that U.S.
    Fish and Wildlife Service is required to protect and enhance
    fisheries throughout the country. FERC is required to balance
    that interest with the need for power development. And my guess
    is those are two very different roles. And I am not sure that
    FERC speaks of coordinating actively with Fish and Wildlife
    Service. There are different purposes. Isn't there a natural
    relationship that agencies must have, some degree of
    understanding? That is another concern.
        So I guess the question is if CEQ's job is to oversee the
    balancing work of FERC and if that is the case, who is in
    charge? And the same thing would be with U.S. Fish and Wildlife
    Service.
        I have grown to be very concerned that CEQ gets into
    micromanaging decision making that goes on in other agencies
    simply because of where it rests in the hierarchy of any
    administration and sometimes that becomes a political decision
    and not a decision based on good science. It is the politics of
    the administration or of the day, instead of the right decision
    coming out of the process of long term working it through the
    laws of these different agencies.
        I would tell you that not on my watch will CEQ become the
    super agency of managing the Federal Government. I don't think
    that was our intent. And if that is where it appears to be
    headed, then it will be my intent to work with the Chairman to
    make sure that doesn't happen.
        I want you to have tools but I do not want you to have the
    power to cram it down Interior or U.S. Fish and Wildlife or
    FERC's throat that which they, by law, by policy of the
    Congress and Government have the right to do.
        I guess that is my question and my concern, George.
        Senator Bond. What was the question?
        Senator Craig. It is a multiple.
        Mr. Frampton. Let me try to put a question together and----
        Senator Craig. First of all, are you planning to become a
    super agency?
        Mr. Frampton. No. I think it is--you asked me for a
    personal response and I gave that. After 4 years at the
    Interior Department, which was a very good preparation for
    coming to CEQ because I have seen this from an agency
    perspective. And I have no desire to either run or micro-manage
    agencies. In fact, to the contrary. I have said for the last
    few months and keep saying to my own staff and others from the
    agencies and the White House, we are here to help the agencies
    do their job and make them work together and solve
    discontinuities and help them work with State and local
    governments. We are not here to run their programs. So that is
    a strong philosophy that I have, to push things back to the
    agencies where they belong.
        On the salmon issue, I did not intend in my testimony to
    take credit for any great coordination to be achieved, only to
    identify a great challenge. I agree with you, there are
    terrible problems, lots of agencies, Tribes and States. But CEQ
    was created in some part by Congress in 1969 as a place free of
    what commentators have called agency bias, commitment to a
    particular regulatory scheme or a particular agency mission, to
    try to harmonize different agency objectives and also to
    balance them with social and economic considerations.
        So I think there is an important role for CEQ. But it is
    the role of a mediator and a catalyzer, not the role of a czar.
        Senator Craig. Thank you. Mr. Chairman, thank you for the
    courtesy.
        Senator Bond. Thank you very much, Senator Craig.

                                   superfund

        Mr. Frampton, I am interested in discussing Superfund. What
    you said yesterday, we are looking at introducing a limited
    Superfund bill. But is it not time to begin to ramp down the
    program? Are we reaching the conclusion on Superfund?
        Mr. Frampton. Senator, it is certainly a mature program.
    The point that I made to the Environment and Public Works
    Committee yesterday was that perhaps unlike 6 years ago,
    cleanup has been accelerated. Most of the fundamental cleanup,
    at that time, decisions have been made. And while the
    administration has been very committed to work toward
    comprehensive reform over the last several years, perhaps we
    need to work on a few things to speed it up. I think that the
    program is naturally ramping down but the administration does
    support obviously, the reauthorization of the Superfund Act
    because without that the program, we will go off the boat ramp
    into the water pretty quickly.
        Senator Bond. But we are moving to the point where we are
    cleaning up the most significant ones. So there is less of an
    urgency for any new resources in it.
        Mr. Frampton. I think there is a need for 5 or 6 more years
    of significant resources but we are looking toward a time
    around 2005 when a very substantial amount of the site
    construction will be completed.

                            ceq's coordination role

        Senator Bond. You mentioned in your discussions earlier, in
    your testimony that you coordinated activities in the Federal
    Government. Do you see areas where you can assist in
    coordinating with our partners? We have talked a lot about
    devolution of environmental responsibilities to State and local
    entities. What role do you see CEQ playing? And do you have any
    specifics on where you may be heading in working with Governors
    or others to devolve additional environmental responsibilities
    to State and local governments where it could be more
    expeditiously handled and where the results might be quicker?
        Mr. Frampton. I think the coastal salmon fund that I
    mentioned is to provide resources--to have the Federal
    Government to rely on those States to do their own salmon
    recovery plan. I think there are a number of new initiatives in
    the President's proposed budget for this year which try to
    respond to the philosophy that we cannot do everything by
    regulation, and put some resources on the ground.
        Administrator Browner talked about Better America Bonds,
    whether it is wetland protection or urban recreation, to try to
    put the money and decision making in local government. The same
    thing is true of the Clean Air Fund that is proposed in EPA's
    budget.

                              better america bond

        Senator Bond. Let me assure you that we do not have the
    money for those new priorities when we are talking about
    devolving those responsibilities.
        You have heard many comments on the Clean Water SRFs. We
    are going to fund that before we fund any of those new things.
    And, frankly, when you look at the Build a Better America, that
    bonding activity to get EPA into local land use management, you
    are going to have to convince a lot of people who will have to
    vote to overcome my objection before you ever see that one see
    the light of day. When we are talking about devolving
    responsibilities, this is not a year where we are going to find
    new dollars.
        Mr. Frampton. I understand what you are saying. Just to
    respond to the Better America Bond issue for a second. The
    proposal here uses EPA as the conduit because the purpose is
    for, among other things, clean water and brownfields and people
    working those fields, but it is going to be an interagency
    program. EPA is simply a conduit.
        Number two, there is nothing in that proposal for the new
    tax-exempt bond system that involves EPA or any Federal agency
    in any way in any land-use decisions. All the initiatives to
    propose bond issues to use the money that comes in will be with
    State, local and county governments.
        Senator Bond. And my State has developed an 8-percent sales
    tax for conservation needs. I think that is the appropriate
    way. It enables the State, in this instance, to be the
    conservation agency to implement. We have land and water
    conservation funds and I think this Build a Better America bond
    is--has not too rosy a future. I would not spend a lot of time
    devoting energies to how that is going to be implemented.
        Mr. Frampton, I thank you for your testimony. For the
    record, I am going to add--do you have any further questions?
        Mr. Frampton. No, Mr. Chairman.

                             chemical safety board

        Senator Bond. I am going to add a brief statement about the
    Chemical Safety Board which is subject to the jurisdiction of
    this committee. Concerns have been raised by the operations of
    the board and based on the questions we asked, the General
    Accounting Office is to do a formal review of the board. GAO is
    presented in testimony.
        The General Accounting Office has identified significant
    problems with the timeliness and with inappropriate resource
    allocation, including the fact that there are as many external
    affairs personnel as there are investigators. About two-thirds
    of the board's contract dollars is not related to
    investigation.
        And the board has had problems managing its contracts
    because it has no formal written procedures for staff to follow
    in awarding and managing contracts. Ineffective use of
    resources resulted in an announcement recently not to begin any
    new investigations this fiscal year, but the year is only half
    over.
        [The information follows:]

                [The General Accounting Office, April 29, 1999]

            Chemical Safety Board: Status of Implementation Efforts

                               (By David G. Wood)

        Mr. Chairman and Members of the Subcommittee: We appreciate this
    opportunity to provide a statement for the record for use in the
    Subcommittee's hearing on the fiscal year 2000 budget request for the
    Chemical Safety and Hazard Investigation Board (the Board). The Board
    recommends steps to enhance industrial safety based on its
    investigations of accidental release of toxic and hazardous chemicals
    and its other activities. The Board was funded at $4 million in fiscal
    year 1998, its first year of operation, and $6.5 million in fiscal year
    1999. The Board is required to submit its budget request concurrently
    to the Office of Management and Budget (OMB) and the Congress. For
    fiscal year 2000, the Board has requested $12.5 million while the
    President's budget, after OMB's review, has requested $7.5 million for
    the Board.
        You expressed concern that the new organization's operational
    costs, especially salaries, might grow too quickly and become
    excessive. At your request, we reviewed the status of the Board's
    efforts to carry out its mission. Specifically, we are providing
    information on the status of the Board's (1) investigations and
    recommendations, (2) pay structure and use of staff, and (3)
    contracting activities. We are also providing information on our
    concerns about the Board's actions.
        In summary, we found the following:
        The Board has undertaken 11 full-scale investigations of chemical
    incidents and issued reports with recommendations on 2 of them. In
    addition, draft reports are in process for the remaining
    investigations. The Board's recommendations have aimed at encouraging
    industry and government agencies to upgrade their procedures, training,
    and communication of hazards.
        As of February 1, 1999, the Board had 20 employees widely
    distributed among its offices, such as investigations, general counsel,
    and external relations, and 4 Board members. The average compensation
    is about $89,000 in salary and benefits. The Board expects this average
    compensation to be reduced to about $68,000 if it receives approval to
    hire up to 60 employees.
        We identified eight contracts between the Board and other entities
    that cost $100,000 or more. The total cost of the 8 contracts was about
    $3 million. About one-third of this amount directly supported the
    Board's investigations. The balance involved acquiring such goods and
    services as the development of a web site, the establishment of a
    chemical incident data base, and the production of an informational
    video.
        We have two main concerns about the Board's actions to date. First,
    the Board has not updated its August 1997 Business Plan to reflect the
    unanticipated backlog of ongoing investigations. Critical to any
    effective plan for addressing this backlog is an examination of how the
    Board chooses cases to investigate and how it allocates its existing
    and future resources. Second, the Board has not instituted formal,
    written procedures for its staff to follow in awarding and managing
    contracts. Such procedures can help ensure adequate internal controls
    and help avoid some contracting problems encountered by the Board.
                                   background
        The Board was created as an independent agency under the Clean Air
    Act Amendments of 1990.\1\ However, the Board did not become
    operational until 1998 because of funding constraints. The act directed
    the Board to (1) investigate and report on the circumstances and
    probable causes of any accidental release of toxic or hazardous
    chemicals resulting in a fatality, serious injury, or substantial
    property damages; (2) recommend measures to reduce the likelihood or
    the consequences of accidental releases and propose corrective
    measures; and (3) establish regulations for the reporting of accidental
    releases. The act authorized the Board to conduct research and studies
    with respect to the potential for accidental releases and to issue
    reports concerning the prevention of chemical accidents to the
    Environmental Protection Agency (EPA) and Occupational Safety and
    Health Administration (OSHA). Furthermore, the Board is to coordinate
    its activities with other federal agencies such as the National
    Transportation Safety Board (NTSB) and OSHA.
    ---------------------------------------------------------------------------
        \1\ 42 U.S.C. Sec. 7412(r)(6).
    ---------------------------------------------------------------------------
        According to relevant legislative committee reports, the Board is
    modeled after the NTSB, which retained the lead role in investigating
    transportation-related chemical incidents. The Board has no enforcement
    authority and a very limited regulatory role. Because the EPA and OSHA
    also have responsibilities in responding to chemical incidents, the
    Board has developed memorandums of understanding with these agencies to
    coordinate efforts and minimize potential duplication if they are
    investigating the same incident.
        Chemical incidents occur regularly and often have serious
    consequences. According to a Board report, during the period 1987 to
    1996, about 605,000 known chemical incidents occurred, including about
    250,000 chemical incidents that occurred at fixed locations occupied by
    industrial and commercial businesses and about 260,000 incidents
    related to the transportation of chemicals.\2\ On average, 127
    incidents per year involved fatalities.
    ---------------------------------------------------------------------------
        \2\ The 600K Report--Commercial Chemical Incidents in the United
    States, 1987-1996. February 1999.
    ---------------------------------------------------------------------------
                  status of investigations and recommendations
        To carry out its mission of enhancing industrial safety, the Board
    conducts full-scale investigations and limited investigations (called
    reviews) of chemical incidents and makes recommendations. The status of
    these activities is discussed in the following sections.
    Investigations
        By statute, the Board investigates accidental chemical releases
    resulting in a fatality, serious injury, or substantial property
    damage. These investigations often involve extensive site visits,
    evidence collection, and analytical work. Because of limited resources,
    the Board decides where to initiate investigations. In these decisions,
    it weighs such factors as the expected impact of its work and the
    potential for similar incidents at other locations. The Board uses in-
    house and contractor staff, but assigns leadership to its own staff.
    The lead investigator is expected to direct the work, visit the site as
    necessary, and manage the report writing process. While the Board
    currently follows the Department of Energy protocols for accident
    investigations, it is now developing its procedures and expects to
    complete them by next year.
        The Board started five full-scale investigations in 1998 and,
    through March 30, six in 1999.\3\ Of the 11 investigations, 2 from 1998
    have been closed and in each case, a report was issued. The first
    investigation took about 9 months and the second about 11 months from
    start to finish. Draft reports are in process for the remaining three
    investigations begun in 1998 and the six investigations begun in 1999.
    ---------------------------------------------------------------------------
        \3\ Unless otherwise noted, all references to years will be fiscal
    years.
    ---------------------------------------------------------------------------
    Reviews
        The Board conducts reviews when resources are not available to
    perform a field investigation, but knowledge about an incident could
    still provide valuable information for preventing future incidents. A
    review is performed within the Board's offices and relies mainly on
    documents and reports from other federal agencies and state agencies,
    as well as the companies' internal investigations. According to the
    Board, it takes about 40 days to gather and analyze information, which
    may not be available until 6 months after the incident, and additional
    time may be used to verify the facts and resolve legal and technical
    issues.
        The Board started 14 reviews in 1998 and 9 in 1999. The Board has
    not issued any reports stemming from its reviews. As of March 30, 1999,
    it had closed 6 reviews with no report, was preparing a draft report
    for 3 ongoing reviews, and had yet to begin drafting a report for 14
    ongoing reviews. According to an agency document, the six reviews were
    closed without reporting because, among other reasons, information was
    insufficient or conflicting, and some cases had limited application.
    Board officials told us, however, that the draft reports for the
    ongoing reviews are expected to result in valuable information for
    preventing future incidents.
    Recommendations
        As of March 30, 1999, the Board made a total of 22 recommendations
    in its two issued reports. The first report, dated September 1998,
    involved an accident at the Sierra Chemical Company in Nevada, where
    four workers were killed. The report contained 16 recommendations. The
    Board directed 10 recommendations to Sierra Chemical and other
    explosive manufacturers, 3 to the Institute of Makers of Explosives, 2
    to the Department of Defense, and 1 to the Nevada Occupational Safety
    and Health Enforcement Section. The recipients of the first report have
    agreed to take corrective actions on 3 recommendations and are
    considering whether to take actions on the remaining 13.
        The second report, dated February 1999, involved an accident at a
    Union Carbide plant in Louisiana, where 1 worker was killed. The report
    contained six recommendations. The Board directed two recommendations
    to Union Carbide and one each to the National Institute for
    Occupational Safety and Health, OSHA, the Center for Chemical Process
    Safety, and the Compressed Gas Association. The Board has received a
    formal response from Union Carbide and is aware of actions being
    considered by two other recipients of the recommendations. The company
    identified new safety policies that it would follow.
        The Board's recommendations have aimed at encouraging industry and
    government agencies to upgrade their procedures, training, and
    communication of hazards. For example, the Board suggested that
    explosive manufacturers evaluate their safety programs to ensure that
    (1) written operating procedures are specific to the process being
    controlled; and (2) procedures and chemical hazards are communicated in
    the languages understood by personnel. It also suggested that the
    Institute of Makers of Explosives develop safety training guidelines
    and distribute the Board's report to its member companies. A listing of
    each recommendation and its status is provided in appendix I.
        To obtain recipients' reactions to the Board's recommendations, we
    contacted the Department of the Army and OSHA. Officials from both
    agencies told us that the reports were on target. An Army official
    indicated that his agency was considering the recommendations, and an
    OSHA official confirmed that the agency intended to implement the
    recommendation.
        A Board official said the Board plans to have a system in place to
    track recommendations by the spring of 1999. According to a draft
    directive, this system will be called the Safety Recommendation
    Tracking System and will track recommendations from the time they are
    issued until they are closed. The system will be used to follow-up on
    open recommendations and keep a permanent record of all
    recommendations.
      current and planned staffing levels, responsibilities, and salaries
        The Board established a single-location organization with a central
    management office and five program functions, located in Washington,
    D.C.
    Current Staffing Level and Responsibilities
        As of February 1, 1999, the Board had 24 employees, including 4 of
    the 5 Board members. It expects to grow from 24 to 30 employees,
    including an additional board member, by the end of fiscal year 1999
    and to 60 employees by the end of 2000 if its budget request of $12.5
    million is approved. According to its August 1997 Business Plan, the
    Board planned to grow to 88 employees in 2000, but it has now extended
    its timeline for this level of staffing to the end of 2001.
        Table 1 identifies the allocation of staff, both current and
    planned, and assigned responsibilities in the agency organizational
    structure.

        TABLE 1.--THE BOARD'S STAFFING LEVELS, CURRENT AND PLANNED, AND RESPONSIBILITIES, BY ORGANIZATIONAL UNIT
    ----------------------------------------------------------------------------------------------------------------
                                                               End of     End of
                                                    Current     1999       2000
                        Office                     staffing   staffing   staffing           Responsibilities
                                                   (2/1/99)  (planned)  (planned)
    ----------------------------------------------------------------------------------------------------------------
    Board member.................................         3         4          4   Reviews and approves reports
                                                                                    recommendations end regulations.
    Chairman/Chief Executive Officer and                  4         7          9   Provides daily program
     Management.                                                                    supervision and ongoing
                                                                                    operational planning and
                                                                                    evaluation; provides budgeting
                                                                                    technical writing and overall
                                                                                    support to the organization.
    General Counsel..............................         3         3          9   Provides full range of
                                                                                    administrative and programmatic
                                                                                    legal services.
    Safety programs..............................         1         2          7   Directs design of safety policies
                                                                                    and programs for the Board;
                                                                                    oversees recommendations.
    Investigations...............................         5         6         13   Conducts accident investigations
                                                                                    and reviews; prepares reports.
    External relations...........................         4         4          9   Disseminates public and media
                                                                                    information; acts as liaison
                                                                                    with business and academia;
                                                                                    conducts governmental relations
                                                                                    and international activities.
    Information technology.......................         4         4          9   Oversees information technology
                                                                                    systems and operational
                                                                                    programs; conducts
                                                                                    administrative operations.
                                                  --------------------------------
          Total..................................        24        30         60

    ----------------------------------------------------------------------------------------------------------------
    Note: The head of the Office of General Counsel also acts as head of the Office of Safety Programs.

    Source: The Chemical Safety Board.

    Salaries
        As of February 1, 1999, the Board had one GS-7 staff member, one
    GS-12, two GS-13s, 16 GS-14s or above, and 4 Board members. With this
    grade structure in place, the average annual salary is $81,146,
    excluding benefits, for on-board employees. (See app. II for more
    details.) Combining salaries and benefits, the average annual
    compensation per employee will be an estimated $89,100 at the end of
    1999. Board officials said that the 1999 average salary will decrease
    as the Board hires more employees and the personnel base on which the
    average salary is computed increases. In fact, the Board is requesting
    $4.1 million in personnel compensation and benefits in 2000 for 60
    positions; that would result in an average annual compensation package,
    combining salaries and benefits, of $68,183 per employee in 2000.
        In a proposal to the Office of Personnel Management, the Board
    asked approval for six senior executive positions. After consulting
    with OMB, the Office of Personnel Management approved one permanent and
    two temporary positions. The Office said that it was awaiting the
    completion of this ongoing GAO study and it was obligated to maintain a
    reduced number of senior executives in the government. The Office of
    Personnel Management told the Board that its request would be re-
    evaluated during the fall, 2000-2001 biennial assessment period.
                             contracting activities
        The Board contracted with outside entities to help carry out its
    mission during 1998 and 1999. Excluding the contract for renting office
    space, we identified eight contracts costing $100,000 or more.\4\ The
    total cost of these contracts was about $3 million. Table 2 provides
    information on these contracts.
    ---------------------------------------------------------------------------
        \4\ We excluded the contract for leasing office space because of
    its nondiscretionary nature.

          TABLE 2.--BOARD CONTRACTS OF $100,000 OR MORE, 1998 AND 1999
    ------------------------------------------------------------------------
                                      Purpose/description of      Amount
               Contractors                   contracts           obligated
    ------------------------------------------------------------------------
    Oak Ridge National Laboratory     Investigative                 $758,000
     (ORNL).                           support.--The                 915,000
                                       contractor assists
                                       the Board by
                                       conducting several
                                       investigations and
                                       preparing reports,
                                       including managing
                                       investigations,
                                       collecting evidence,
                                       and conducting
                                       interviews. Strategic
                                       Plan.--The contractor
                                       assists the Board in
                                       the development of a
                                       5-year information
                                       technology plan. ORNL
                                       is a Department of
                                       Energy laboratory
                                       that provides support
                                       to various federal
                                       agencies. The
                                       $758,000 listed here
                                       is the cost of
                                       requested services
                                       during 1998; as of
                                       March 1999, the Board
                                       has requested an
                                       additional $915,000
                                       of services.
    Battelle Memorial Institute.....  Investigative                  410,000
                                       support.--The
                                       contractor assisted
                                       the Board in
                                       conducting the Sierra
                                       Chemical
                                       investigation in
                                       Nevada, including
                                       labor and material
                                       for technical
                                       services and
                                       preparing a written
                                       report of the
                                       chemical incident.
    Tri-Data........................  Establishment of               350,000
                                       chemical incident
                                       baseline and
                                       database.--The
                                       contractor analyzed
                                       and prepared a
                                       summary report on 10
                                       years of data from
                                       five federal
                                       government agencies'
                                       data bases to
                                       establish a chemical
                                       incident baseline.
                                       Currently, the Board
                                       is designing a
                                       chemical incident
                                       data base that will
                                       be located at the
                                       Board and populated
                                       with data from at
                                       least the five
                                       government data
                                       bases. The data base
                                       is to be used to help
                                       show where, when, and
                                       how often incidents
                                       are occurring in a
                                       particular area. The
                                       information will form
                                       the basis for
                                       recommendations on
                                       programs,
                                       regulations, and
                                       other actions to help
                                       reduce chemical
                                       incidents. The report
                                       is scheduled for
                                       completion by May 31,
                                       1999.
    Bell-Atlantic...................  Internet and Intranet          231,000
                                       web site
                                       development.--The
                                       contractor is
                                       expected to create
                                       and maintain a web
                                       site with
                                       documentation that
                                       includes file
                                       structures, database
                                       table structure, site
                                       architecture, and
                                       security information.
                                       A technical person
                                       from the contractor
                                       is dedicated fulltime
                                       to the Board. The
                                       cost is not to exceed
                                       $231,000 through
                                       September 1999.
    Rowland Productions.............  Informational video.           160,000
                                       In August 1998, the
                                       Board contracted with
                                       Rowland to produce a
                                       video that portrays
                                       what the agency does.
                                       The intended audience
                                       for the video
                                       includes the general
                                       public, industry,
                                       employee and
                                       environmental groups,
                                       and government
                                       officials. Five
                                       companies competed
                                       for the contract. The
                                       selected vendor's
                                       offer includes plans
                                       for video insets
                                       tailored for specific
                                       audiences. Work was
                                       temporarily suspended
                                       on the video because
                                       of the press of other
                                       business in early
                                       1999.
    Federal Emergency Management      Internet service.--The         137,000
     Agency (FEMA).                    Board contracted with
                                       FEMA to host, update,
                                       and administer the
                                       Board's web site and
                                       e-mail at a cost up
                                       to $100,000 in 1998.
                                       National Emergency
                                       Coordination Center.--
                                       During 1998 and 1999,
                                       FEMA provides the
                                       Board with a 24-hours-
                                       a-day, 7 days-a-week
                                       communications center
                                       that supports the
                                       Board at a cost of
                                       $50,000 per year.
                                       (The 1998 charge was
                                       prorated.).
    Bell-Atlantic...................  Helpdesk support.--            130,000
                                       This is a 1999 award
                                       that covers helpdesk
                                       support and local
                                       area network support.
    National Ground Intelligence      Software development.--        100,000
     Center.                           In July 1998, the
                                       Board contracted with
                                       the National Ground
                                       Intelligence Center,
                                       an oarganization
                                       within the Department
                                       of Defense, to
                                       develop a civilian
                                       version of military
                                       intelligence software
                                       that will help a
                                       facility determine
                                       where its safety
                                       systems are prone to
                                       failure and how to
                                       best address the
                                       problems. The Center
                                       would develop a
                                       prototype intitially
                                       then build toward a
                                       full operational
                                       capability that the
                                       Board plans to make
                                       available to
                                       companies for their
                                       confidential use.
                                       Software development
                                       would continue for a
                                       number of years. The
                                       total cost is not yet
                                       known, but the Board
                                       obligated $100,000 in
                                       1998 funds for this
                                       purpose and expectgs
                                       to spend another
                                       $200,000 each year
                                       from 2000 through
                                       2002, if funds are
                                       made available..
                                                             ---------------
          Total.....................  ......................       3,191,000

    ------------------------------------------------------------------------
    Note: Dollar amounts are rounded to the nearest thousand.

    Source: The Chemical Safety Board.

                       concerns about the board's actions
        On the basis of our review of the Board's actions to date, we have
    two main concerns. First, the Board has not updated its Business Plan
    to reflect the unanticipated backlog of ongoing investigations. Second,
    the Board has no written procedures for its staff to follow in awarding
    and managing contracts with outside entities.
    Updated Business Plan
        In its August 1997 Business Plan and support for its 1999 budget
    submission, the Board set forth its expectations that it would be able
    to complete its investigations within 6 months and conduct from 5 to 10
    investigations during 1998 and from 13 to 19 investigations during
    1999. However, the Board has completed and reported the results for two
    investigations since commencing operations in January 1998. These
    investigations took 9 and 11 months from start to finish. Actual in-
    the-field investigations have been concluded for another seven
    investigations, and draft reports have been in process since as long as
    April 1998. The Board has also yet to issue any reports based on its
    reviews. It closed 6 reviews without a report and, as of March 30,
    1999, has 17 open reviews. Draft reports are in process for 3 of the 17
    open reviews. Board officials told us that their expectations for
    conducting investigations in 1999 were based on getting requested
    funding. Also, their agency was not yet fully operating, and existing
    investigation resources were needed to complete the backlog of open
    investigations and reviews. As a result, the Board could undertake no
    new investigations from mid-March 1999 through the end of the fiscal
    year in September. On March 29, the Board wrote to this Subcommittee
    confirming its freeze on new investigations.
        In our view, the unanticipated backlog and the slower-than-expected
    progress in completing ongoing investigations and reviews raise
    questions about how the Board decides which incidents to look into and
    how it allocates its staffing and financial resources. The Board does
    not intend to update its August 1997 Business Plan but is working with
    OMB to develop a strategic plan by February 2000 that complies with the
    Government Performance and Results Act. The Board intends to identify
    the criteria for selecting incidents in this strategic plan and
    reallocate resources as a management decision after addressing the
    backlog.
    Criteria for Selecting Incidents to Investigate and Review
        According to Board officials, about 200 chemical incidents are
    reported to the Board each day. Fatalities, serious injuries, and
    significant property damage often occur, and the Board does not have
    the resources to conduct an on-site, full-scale investigation of every
    incident with serious consequences or even a limited review of such
    incidents. In deciding which incidents to investigate and review, the
    Board uses criteria weighted toward accidents in which fatalities
    occur. Some judgment is still, of course, involved, and the Board uses
    factors such as a high level of interest that should make it easier to
    implement recommendations and the potential for similar incidents at
    other locations. The Board would have to weigh the various consequences
    of revising the criteria in ways that would either raise or lower the
    barin other words, be more or less selective in choosing which cases to
    pursue. By raising the bar, workload would be limited. Although factors
    such as complexity of the incident and the extent of cooperation by
    company officials affect how quickly cases can be completed, a more
    limited workload would help to speed up the closure of existing cases.
    By lowering the bar, workload would be increased and existing cases
    would tend to take longer to close or additional resources would need
    to be allocated to investigations, helping the Board to complete these
    cases more quickly.
    Allocation of Resources
        The Board's Business Plan, in setting expectations for the new
    organization, assumed a $4 million budget in 1998 and a $7 million
    budget in 1999. In its formal budget request, the Board asked for $8.2
    million for 1999. In its actual appropriations, the Board received the
    full $4 million in its first year and $6.5 million in 1999. According
    to the Board, it spent 30 percent of its $4 million budget in 1998 on
    incident prevention (primarily investigations and reviews). The Board
    expects to spend 37 percent of its 1999 budget and 44 percent of its
    2000 request for this purpose.
        Regardless of what the Board expected its funding levels to be, the
    Board has encountered difficulties in handling its workload. An
    examination of how the Board would allocate its existing resources and
    spend future fundsassuming differing levels of funding in 2000 and
    beyondis critical to any effective plan for addressing the backlog of
    ongoing investigations and reviews.
        One area for review is the Board's staffing allocation. According
    to the plan, the Board would establish a flat organization. To the
    maximum extent possible, it would buy services when and as needed,
    thereby keeping staffing levels and overhead costs low, and permitting
    the bulk of resources to be devoted to its mission. As of February 1,
    1999, the Board employed four in-house investigators; one began work in
    July 1998, two in September 1998, and the other one in November 1998.
    The investigators have a caseload of two to three investigations and
    five to six reviews. At times, the Board also uses noninvestigative
    staff, such as program analysts, to assist with investigations and
    reviews. The Board also allocated four staff members to its external
    relations and three to its general counsel offices. If its budget
    request for 2000 is approved, the Board intends to have 13 (or 22
    percent) of its 60 total personnel in its investigations unit compared
    with 9 each in its external relations and general counsel units
    (together equaling 30 percent of total staffing). The Board would
    allocate the remaining 29 staff (48 percent) to other offices, such as
    the Chairman's staff, safety programs, and information technology.
        For comparison purposes, we obtained resource allocation
    information from NTSBthe agency considered in the legislative history
    as the model for the Chemical Safety Board. NTSB investigators comprise
    40 percent of the organization's staffing while personnel in its legal
    and public affairs offices together comprise about 5 percent.\5\ Like
    the Board, NTSB investigators work on multiple investigations at a time
    and use contractors to support their work. Unlike the Board, NTSB can
    obtain voluntary serviceslabor hours that are not reimbursedfrom
    outside entities. The Board has recommended to the Congress that it be
    authorized to obtain these voluntary services.
    ---------------------------------------------------------------------------
        \5\ Of the 402 personnel on board in April 1999, NTSB has 162
    investigators, 11 employees in its Office of General Counsel, and 11
    staff members (excluding those performing the function of working with
    affected families after an accident) in its Office of Government,
    Public, and Family Affairs. NTSB also has other staff, such as
    Administrative Law Judges, performing legal-related work.
    ---------------------------------------------------------------------------
        To deal with the existing backlog of cases and expected new cases,
    the Board could also review its use of funds now spent on contracting.
    About two-thirds of these funds are not related directly to
    investigations but support accomplishment of its mission in other ways.
    An updated Business Plan would help the Board to determine the
    appropriate balance, at different levels of funding, between using more
    of its resources to do investigations versus investing in other
    mission-related activities.
    Controls Over Contracts
        In its Business Plan and other key documents, the Board stated that
    its approach to doing business would emphasize contracting out or
    outsourcing. The Board contended that doing so would enable it to avoid
    the expense associated with establishing a large permanent
    administrative infrastructure and having to make a long-term commitment
    of funds for such items as space and equipment.
        The Board pursued this approach within a week of its commencing
    operations when it asked an outside entity to investigate an accident.
    A chemical incident causing four fatalities occurred at Sierra Chemical
    Company's plant in Mustang, Nevada, on January 7, 1998. Two days later,
    the Board wrote a letter to Battelle authorizing the contractor to
    begin incurring labor and travel costs starting January 8 and before a
    formal contract had been signed. According to the statement of work,
    Battelle would provide labor and materials to assist the Board in the
    investigation and would also provide a written report delineating the
    explosion. The Board estimated the contract would be in the $250,000
    range. The Board believed that it was entering into a work for others
    arrangement with the Pacific Northwest National Laboratory, which is
    owned by the Department of Energy (DOE) and run by Battelle. Under a
    work for others arrangement, a DOE laboratory may conduct work for
    other federal agencies on a cost-reimbursable basis.
        On the basis of our file reviews and interviews with Board
    officials, we found that concerns surfaced almost immediately about the
    growing costs of Battelle's work. The Board was surprised to learn that
    it was using Battelle directly rather than working through DOE's
    Pacific Northwest National Laboratory, with Battelle as a
    subcontractor. As a result, the Board noted that it was being charged
    higher rates under a noncompetitive arrangement with Battelle.
    According to Board officials, they attempted to control costs by asking
    Battelle to take people off of the investigation and proposing contract
    terms that put Battelle in the position of working through the federal
    laboratory. The Board ultimately signed an agreement with Battelle
    directly, dated March 17, 1998, to pay $410,000, including a fixed fee
    of $54,000, for its services. On that day, a Board official wrote a
    memorandum to the file that the Board was still trying to get
    information from Battelle that would support the contract cost.
        The Board has taken some steps to ensure that a repeat of the
    problems described earlier would not recur. First, it has decided not
    to use Battelle directly again in a noncompetitive arrangement. Second,
    the Board has employed a more structured approach for acquiring support
    for its investigations. In an agreement with DOE's Oak Ridge National
    Laboratory, the Board identifies tasks, the laboratory estimates the
    costs for performing those tasks, and the Board provides authorization
    and reimbursement for services provided by the laboratory as
    appropriate. The Board also receives a monthly report from the
    laboratory on progress, accomplishments, status, and planned work for
    the next month. We believe these are prudent steps for protecting the
    government's interests.
        In the Battelle case, formal, written contracting procedures--based
    on the Federal Acquisition Regulation but tailored to the Board's
    needs--were not available to the staff. The Board told us that these
    procedures are now being developed. However, more than a year has
    elapsed since it signed the agreement with Battelle for which the Board
    expressed such concern. The importance of instituting formal procedures
    is even greater given the Board's reliance on contracted support for
    not only investigations but also other mission-related tasks.
        Under the Federal Acquisition Regulation, contracting officers are
    responsible for ensuring that applicable procedures have been followed
    before an agency enters into a contract. For the major contracts we
    reviewed, we found that the contracting officer has been the Board's
    Program Officer, the second-in-command in the organization, who has
    multiple responsibilities. We asked the Board about its need for a
    full-time contracting officer. The Board told us that there were only
    seven full-time-equivalent employees in 1998, and the Board did not
    award enough contracts to justify establishing and filling a
    contracting officer position. The Board did not comment on its reasons
    for not establishing such a position in 1999. In the Battelle case,
    even with a limited staff, such an officer could have informed the
    Board of the proper procedures for obtaining work-for-others-type
    assistance. If the Board does not consider it cost-effective to
    establish a contracting officer position in-house, alternatives such as
    the use of technical support from the General Services Administration
    or another federal agency could be explored.
                             scope and methodology
        To review the status of the Board's efforts to carry out its
    mission, we reviewed documents supplied by the Board related to its
    planning, budgeting, and programs; personnel data such as salary
    information; and contract files. We interviewed officials from the
    Board; other federal agencies, including the NTSB, OSHA, the Department
    of the Army, and OMB. We conducted our work between January through
    April 1999 in accordance with generally accepted government auditing
    standards.
                                agency comments
        We provided a draft of this statement to the Board for its review
    and comment. We met with the Chairman and other Board officials. They
    generally agreed with the information contained in this statement but
    provided clarifications and corrections, which we incorporated as
    appropriate.
        The Board also pointed to considerations that it believes, in the
    interest of fairness, should be recognized. First, the Board has the
    unique status of being a start-up agency. It did not have the
    advantages of having staff or even office space and found itself
    putting an infrastructure in place to provide services while at the
    same time beginning to provide those services. The Board stated that
    our concerns about the unanticipated backlog of investigations and
    absence of written procedures for contracting should be viewed in the
    context of their being a new agency. Second, the Board is expected to
    accomplish a broad and complex mission but has only limited resources
    to do so. The Board said that while this mission extends beyond
    investigations to other activities designed to enhance industrial
    safety, the Board has had the equivalent of only 5 full-time employees
    in 1998 and 24 in 1999.
        We recognize in our statement that the Board is a start-up agency.
    Accordingly, we believe the Board's comments highlight the opportunity
    the Board now has to consider its future allocation of staff and
    financial resources. For example, the Board has greater flexibility as
    a start-up agency to find the appropriate balance, at different levels
    of funding, between using its resources to do investigations versus
    investing in other mission-related activities.
    [GRAPHIC] [TIFF OMITTED] T05AP29.026

    [GRAPHIC] [TIFF OMITTED] T05AP29.027

    [GRAPHIC] [TIFF OMITTED] T05AP29.028

    [GRAPHIC] [TIFF OMITTED] T05AP29.029

                  FIGURE II.1.--GRADE STRUCTURE AND SALARIES OF BOARD EMPLOYEES, AS OF FEBRUARY 1, 1999
    ----------------------------------------------------------------------------------------------------------------
                  Office                     Start date          Position title             Grade           Salary
    ----------------------------------------------------------------------------------------------------------------
    Board members.....................  11/97...............  Board member........  EX-4................    $118,400
                                        11/98...............  Board member........  EX-4................     118,400
                                        12/98...............  Board member........  EX-4................     118,400
    Chairman/CEO and management.......  11/97...............  Chairman/Board        EX-4................     118,400
                                        12/97...............   member.              GS-15...............      94,098
                                        7/98................  Program Officer.....  GS-14...............      70,855
                                        11/98...............  Management Analyst..  GS-14...............      68,570
                                                              Program Analyst.....
    Investigations....................  9/98................  Senior Investigator.  GS-15...............      80,658
                                        7/98................  Investigator........  GS-14...............      82,284
                                        9/98................  Investigator........  GS-14...............      75,427
                                        10/98...............  Program Analyst.....  GS-7................      27,508
                                        11/98...............  Investigator........  GS-14...............      82,284
    Safety program....................  6/98................  Program Analyst.....  GS-14...............      68,570
    General counsel...................  2/98................  Attorney............  GS-15...............      99,474
                                        7/98................  Attorney............  GS-14...............      79,999
                                        10/98...............  Attorney............  GS-13...............      63,829
    External relations................  1/98................  Public Affairs        GS-15...............      94,098
                                        2/98................   Specialist.          GS-14...............      70,855
                                        8/98................  Public Affairs        GS-14...............      70,855
                                        1/99................   Specialist.          GS-14...............      68,570
                                                              Intergov. Relations
                                                               Mgr.
                                                              Constituent
                                                               Relations Mgr.
    Information technology............  12/97...............  Program Analyst.....  GS-12...............      48,769
                                        6/98................  Program Analyst.....  GS-13...............      65,763
                                        7/98................  Computer Specialist.  GS-15...............      86,034
                                        2/99................  Program Analyst.....  GS-14...............      75,427
                                                                                                         -----------
          Average Salary..............  ....................  ....................  ....................      81,147

    ----------------------------------------------------------------------------------------------------------------
    Source: The Chemical Safety Board.

                             conclusion of hearings

        Senator Bond. We recognize this is a new agency and some
    time is needed to for it to become fully operational. We
    acknowledge the mission set forth for the board is important.
    The message needs to be heard loud and clear from us. However,
    the agency needs to improve significantly its operations if it
    expects to continue receiving support from this Committee.
        And with that statement, we will conclude the hearing.
        [Whereupon, at 12 p.m., Thursday, April 29, the hearing
    were concluded, and the subcommittee was recessed, to reconvene
    subject to the call of the Chair.]

     DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
            INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2000

                                  ----------

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

        MATERIAL SUBMITTED BY AGENCIES NOT APPEARING FOR FORMAL HEARINGS

        [Clerk's note.--The following agencies of the Subcommittee
    on VA, HUD, and Independent Agencies did not appear before the
    subcommittee this year. Chairman Bond requested these agencies
    to submit testimony in support of their fiscal year 2000 budget
    request. The statements submitted by the chairman follow:]

                              INDEPENDENT AGENCIES

                    Department of Health and Human Services

                Agency for Toxic Substances and Disease Registry

             Prepared Statement of Jeffrey P. Koplan, Administrator

        Thank you for the opportunity to provide a written statement
    regarding the Agency for Toxic Substances and Disease Registry's
    (ATSDR) President's budget for fiscal year 2000.
        ATSDR is a federal agency created by Congress in 1980 by the
    Comprehensive Environmental Response, Compensation, and Liability Act
    (CERCLA), or what is more commonly known as Superfund legislation. As
    such, ATSDR is the public health agency charged with determining the
    nature and extent of health problems at Superfund sites, and advising
    the U.S. Environmental Protection Agency (EPA) and State environmental
    agencies on needed clean-up and other actions to protect the public's
    health. To accomplish this mandate, ATSDR received $76 million in
    fiscal year 1999.
        We are proud of our accomplishments in addressing a key mandate--
    learning more about the association between exposure to toxic
    substances and adverse health effects and the prevention of illness at
    Superfund sites. As presented in other Congressional testimonies,
    ATSDR's health studies have revealed an increased risk of birth
    defects, certain cancers, respiratory illness, neurologic disease and
    other health conditions in populations living near hazardous waste
    sites.
        ATSDR works in close collaboration with the EPA, other federal,
    state, local, and tribal governments, health care providers and
    affected communities. The agency has made a difference to all of these
    partners by providing new information to assist in remedial decision-
    making, answering the health questions of impacted community members,
    recommending preventive measures to protect public health, and
    providing diagnosis/treatment information to local health care
    providers.
        The President's budget of $64 million will allow the agency to
    continue to conduct many programs that support our mandate (see Program
    Output table on the following page). ATSDR will administer public
    health activities through: state partnerships; public health assessment
    and consultation activities; exposure investigations; health studies
    and registry activities; development of toxicological profiles and
    attendant research; emergency response; health education and health
    promotion; and community involvement during fiscal year 2000.
        determining nature and extent of public health problems at sites
    Public health assessment and consultation activities
        ATSDR's public health assessment and consultation program is the
    starting point for all of the agency's site-specific health activities.
    The assessment is the basis for public health advisories or other
    health recommendations, and for identifying studies or actions needed
    to evaluate human health effects and mitigate or prevent adverse health
    effects. During the initial phase, ATSDR evaluates the available
    information, determines data needs, assesses the exposure scenarios
    (e.g., whether or not people are being exposed to environmental hazards
    and how exposure may be occurring) and determines which actions,
    products and services are necessary to provide an effective and
    efficient public health response.

                                               ATSDR PROGRAM OUTPUT TABLE
    ----------------------------------------------------------------------------------------------------------------
                                                                                  Fiscal years--
                                                            --------------------------------------------------------
                            Program                           $74 million 1998   $76 million 1999   $64 million 2000
                                                                   actual           estimated          projected
    ----------------------------------------------------------------------------------------------------------------
    Cooperative Agreement States...........................                 26                 29                 23
    Sites Addressed........................................                495                500                400
    Public Health Assessment Documents.....................                110                110                 90
    Health Consultations...................................                915              1,000                800
    Exposure Investigations................................                 50                 65                 30
    Site-Specific Environmental Health Intervention........                 10                  8                  6
    Backlogged Sites Addressed.............................                 38                 56  .................
    Health Studies:
        New................................................                 10                 12  .................
        Continued..........................................                 22                 23                 27
    Exposure Registry (number of sites)....................                 21                 22                 21
    Minority Health Professions Foundation Research                         13                 12                  9
     Projects..............................................
    Great Lakes Research Projects..........................                 10                 10                  5
    Toxicological Profiles.................................              \1\ 6                  8                  6
    Pediatric Environmental Health Specialty Units.........                  3                  6                  1
    Medical Monitoring.....................................              \2\ 1              \3\ 1  .................
    ----------------------------------------------------------------------------------------------------------------
    \1\ In addition to beginning six profiles in FY 1998, ATSDR updated 21 profiles with children's health sections.
    \2\ Feasibility study in fiscal year 1998.
    \3\ To be initiated in FY 1999 depending on outcome of feasibility study.

        ATSDR's public health assessment (PHA) program evaluates data and
    information on the release of hazardous substances into the environment
    and assesses past, current, or future effects on public health. The PHA
    program is ATSDR's principal tool for identifying communities that need
    further public health follow-up. In fiscal year 2000, ATSDR anticipates
    developing 90 public health assessment documents.
        ATSDR develops health consultations to provide advice and/or
    technical assistance on specific public health issues that result from
    actual or potential human exposure to a hazardous material. A health
    consultation is often quickly needed to permit mitigation or prevention
    of adverse human health effects from such exposure. The agency provides
    consultations on hazardous waste sites to EPA, other federal agencies,
    state and local health and environmental agencies, individual members
    of the public, and communities. ATSDR will provide approximately 800
    health consultations in fiscal year 2000.
        In May 1997, ATSDR presented to Congress 234 hazardous waste sites
    for which the agency and its public health partners were not able to
    conduct necessary public health activities. In fiscal year 1998 and
    1999, ATSDR addressed 94 of these sites through public health
    assessment activities, health education and promotion activities,
    exposure assessments, and health studies. Significant results have been
    noted, with five sites found to be public health hazards and ten sites
    requiring follow-up health activities. In fiscal year 2000, the agency
    will be unable to initiate action at any of these historic
    ``backlogged'' sites, and the number of such sites is anticipated to
    increase.
    State partnerships
        When Congress reauthorized Superfund, the health section of the
    statute was strengthened, and a partnership was envisioned between
    states and ATSDR. The agency committed to building or enhancing state
    health departments' capacity in environmental health. For the last
    three years, ATSDR has provided more than $10 million per year to
    states for health assessments, health studies and health education and
    promotion activities at the sites where we work. This cooperative
    agreement program enhances the collaboration between Federal, state,
    local, and tribal health and environmental officials who are the
    experts on issues related to site characterization, contaminant removal
    activities, site remediation, site-specific health education and health
    promotion, and health studies. This collaboration ensures that risk
    managers are provided timely public health input throughout the site
    characterization, assessment, and remediation process; and that
    community and health professional educational needs are met with early,
    integrated involvement. It further insures that health outcome data,
    environmental monitoring results, and demographic data are collected
    and analyzed in a scientifically valid manner. In fiscal year 2000,
    ATSDR anticipates supporting 23 states through the state cooperative
    agreement program.
    Exposure investigations
        The lack of reliable information on actual human exposure has
    hampered ATSDR's assessments of adverse impacts of environmental
    contamination. ATSDR has therefore initiated independent activities to
    provide better measures of exposure, to better define populations
    likely to be exposed, and to develop more accurate estimates of
    exposure. An exposure investigation is a key approach that ATSDR uses
    to develop better characterization of past, current, and future human
    exposures to hazardous substances in the environment and to evaluate
    existing and possible health effects related to those exposures. ATSDR
    will conduct exposure investigations in fiscal year 2000 at 30 sites.
    Emergency response
        ATSDR is responsible for providing technical assistance to Federal,
    state, and local government and emergency organizations during
    emergency situations resulting from the unplanned release of hazardous
    substances. In emergency situations, site-specific or chemical-specific
    consultation teams can be convened to provide immediate pubic health
    support 24 hours a day, seven days a week--usually within 30 minutes.
    Consultation teams can operate independently on focused, short-term
    tasks or can serve as part of a large multi-agency task team addressing
    more complex issues. ATSDR will continue emergency response activities
    in fiscal year 2000.
    Health education and promotion
        ATSDR's health education and promotion program encompasses the
    overall goals of educating individuals, communities, and health-care
    providers about the health effects of hazardous substances in the
    environment; working with affected communities to develop and promote
    public health strategies to mitigate the health impact of hazardous
    substances; and disseminating environmental health education materials,
    training, and information. The agency will conduct a range of site-
    specific health education activities at a total of 400 sites in fiscal
    year 2000.
        A critical part of ATSDR health education activities is involving
    communities in public health decisions and actions that affect them. We
    assure collaborative opportunities are available for communities by
    integrating them into the process of planning, goal-setting, and the
    design and implementation of public health activities. This interactive
    process requires new and creative ways of thinking and working that
    lead to broad understanding of agency public health activities and
    responses.
        The hallmark of ATSDR's health promotion program is the use of
    community-driven approaches to promote education and training for
    health care providers and other health professionals, to facilitate
    access to environmental medical services, and to establish the
    connection between environmental and public health practice. Provider
    education affords health care practitioners with a better understanding
    of the situation so that they can assist in making appropriate public
    health decisions for the community and themselves.
        Health promotion activities also include site-specific
    environmental health interventions (EHI). These interventions cover
    such services as specialty clinical evaluations, diagnosis, and
    referrals for exposed individuals at risk of adverse health effects.
    The EHI establishes a partnership between public health professionals,
    primary care practitioners, and environmental specialists and involves
    the diagnosis and prevention of illness caused or influenced by
    hazardous substances in a community environment. In fiscal year 2000,
    ATSDR will support anticipated site-specific environmental health
    interventions at six sites.
        A medical monitoring program is broader in scope than an EHI, and
    may be conducted over a longer period of time. ATSDR is currently
    conducting the first phase of the Bunker Hill medical monitoring
    program. Approximately 8,500 persons living in the area around a
    refinery located in Kellogg, Idaho, between the years 1973 and 1981,
    were placed at significantly increased risk of adverse health effects
    as a result of excessive exposure to lead, cadmium, and arsenic.
    Initial outreach and feasibility assessment activities are being
    conduced in the State of Idaho, where an estimated 1,700 persons who
    were exposed to contaminants continue to live.
                 association between toxic exposure and illness
    Health studies
        ATSDR conducts and supports health studies to evaluate the
    relationship between exposure to hazardous substances and adverse human
    health effects. This relationship can be described as a sequence of
    events leading from contamination in the environment to possible
    presence of illness in exposed people.
        As ATSDR has reported previously, when evaluated in aggregate
    (i.e., by combining health data from many Superfund sites), living near
    hazardous waste sites seems to be associated with increased risk of
    some kinds of birth defects and, though less well documented, some
    specific cancers. Several ATSDR health studies completed in the last
    couple of years confirm and help clarify this finding. For example:
      --Women who live within \1/4\ mile of National Priorities List (NPL)
            sites in California were more than three times as likely to
            have infants with conotruncal heart defects and more than twice
            as likely to have infants with neural tube defects.
      --Women who were 35 years old or older and who had been exposed to
            tetrachloroethylene (PCE) in drinking water at Camp Lejeune,
            North Carolina, were four times more likely to have infants who
            were small for their gestational age.
      --Women who lived closest to 38 landfills in New York had a fourfold
            elevation in incidence of bladder cancer and leukemia, in
            comparison to women living further away.
      --Women who lived near a Connecticut NPL site in areas where exposure
            to TCE was estimated to be highest had an elevated risk for
            non-Hodgkin's lymphoma.
        Examples of other adverse health outcomes include:
      --Nineteen to 20 years later, young adults who had been exposed
            during childhood to high levels of lead at the Bunker Hill NPL
            site were more likely to have neurologic signs and symptoms and
            infertility than were young adults in a comparison group.
      --Children in Groton, Massachusetts, who were most likely exposed to
            solvents in drinking water generally had lower scores on two of
            four tests that indicate they had learning disabilities.
      --Women formerly employed at a lead smelter, now an NPL site, in
            Silver Valley, Idaho, had an earlier onset of menopause than
            did women in a comparison group.
        As the above findings demonstrate health studies are key to
    formulating public health actions for specific Superfund sites. Ongoing
    studies will continue in fiscal year 2000.
        In the past year, ATSDR has initiated activities to investigate
    possible links between elevated rates of children's cancers in Toms
    River and exposures to hazardous substances. These actions include: a
    multi-site study examining the rates of brain cancer among residents, a
    multi-state case control study of childhood brain cancers, a review of
    available chemical data for the Dover Township area, and public health
    intervention activities including health care provider updates.
    Elevations in overall cancer incidence were confirmed for Dover
    Township and the Toms River section, particularly among female children
    under 5 years of age. At the $64 million level, ATSDR will continue
    many of these activities in Toms River.
    Health registry activities
        The ATSDR National Exposure Registry catalogs reported health
    information from individuals with documented exposures into chemical-
    specific sub-registries. These sub-registries are designed to aid in
    assessing the long-term health consequences of low-level, long-term
    exposures to hazardous chemicals identified at hazardous waste sites.
    The National Exposure Registry currently consists of four established
    subregistries: Trichloroethylene (TCE), Dioxin, Trichloroethane (TCA),
    and Benzene. Registrants on all four subregistries have reported
    increases of such problems as birth defects, diabetes, stroke, anemia,
    and learning disorders.
        Analysis of the approximately 5,000 female registrants across all
    registries revealed statistically significant increases in reports of
    several health outcomes. Those found predominantly in women included
    diabetes, kidney problems, liver problems and urinary tract disorders.
    A more definitive assessment of these associations is currently
    underway.
    Substance specific information and research
        Serious gaps exist in scientific knowledge about the toxicity,
    bioavailability, and human health effects from individual hazardous
    substances and mixtures of substances released from Superfund sites and
    during emergency releases. ATSDR's Applied Research Plan heavily
    emphasizes the collection of human data to validate the substance-
    specific exposure and toxicity findings of animal and human studies
    that are currently open to interpretation.
        ATSDR's mechanisms for filling priority data needs include
    academic-based research conducted through the Minority Health
    Professions Foundation, a congressionally mandated program. ATSDR-
    supported research on lead has found (1) a highly significant
    relationship between lead levels in blood and blood-pressure in
    pregnant women; and (2) that infants born to mothers with higher blood-
    lead levels demonstrate differences in the areas of motor skill
    development, general muscle tone, and hand-to-mouth activities shortly
    after birth. Another significant study is being conducted on di-n-
    butlyphthalate, a compound often used in making plastic products--there
    is a great potential for exposure to babies and young children through
    items such as soft plastic toys, pacifiers, and teething rings. Results
    have shown that this compound caused endocrine disruption in laboratory
    animals. In fiscal year 2000, ATSDR will continue research for filling
    critical data needs.
        ATSDR supports another congressionally earmarked research program
    which investigates the potential for adverse human health effects
    resulting from consumption of contaminated fish. Contaminants of
    concern include dichlorodiphenyl trichloroethane (DDT), methylmercury,
    polychlorinated biphenyls (PCBs), dioxin and alkylated lead.
    Principally focused in the Great Lakes area, current activities include
    analyzing biologic samples of study populations; analyzing sub-clinical
    health effects data and other identified sensitive health endpoints;
    conducting tests to identify neurobehavioral impacts in newborns,
    infants, the elderly, and native Americans; assessing the impact of
    exposure to toxic substances on male and female fertility; initiating
    studies for trans-generational effects in at-risk populations; and
    evaluating mercury levels in women before, during and after pregnancy.
    In fiscal year 2000, activities will continue.
        ATSDR provides critical information to Federal, state, and local
    public health agencies and other organizations that respond to toxic
    chemical emergencies and assess hazardous waste sites through our
    toxicological profiles. The profiles interpret the available exposure
    and health effects data of a substance, determine the levels of
    exposure that present a significant risk to humans, and identify the
    research necessary to determine the types or levels of exposure that
    might present significant risks for adverse health effects in humans.
    At the President's budget of $64 million, ATSDR will develop six
    toxicological profiles.
                          atsdr has made a difference
    Improved remediation decision making
        ATSDR's recommendations to EPA (or the state counterpart) have been
    routinely adopted. Our data show that more than 80 percent of the
    recommendations we have made in public health assessments or
    consultations have been accepted or are still pending. This percentage
    is even higher for those recommendations dealing with reducing
    exposure.
        A good example of this close positive working relationship is the
    use of ATSDR's work by EPA in the clean-up of methyl parathion in
    Mississippi and then later in Alabama, Arkansas, Illinois, Louisiana,
    Tennessee and Texas. Using both the EPA environmental sampling coupled
    with ATSDR's biological measurements, the agencies jointly developed
    criteria to set priorities concerning temporary relocation of
    residents, reentry back into homes, and referral to local health care
    providers. Overall, approximately 18,000 people (including 10,000
    children) were positively impacted by this collaboration.
    Responded to community concerns
        ATSDR has made a concerted effort in the past several years to be
    more proactive in dealing with community concerns. We have revised the
    public health assessment process to actively seek out health data from
    the affected community as an integral part of the process. This has
    also resulted in a new group of individuals hired by the agency whose
    sole job is to routinely interact with the affected community early in
    the process and throughout ATSDR's involvement at their site. At sites
    where there are heightened concerns, ATSDR has formed community
    assistance panels to insure ongoing partnerships in investigating the
    site to insure full community involvement in health assessments and
    health studies.
        One example of a site where ATSDR successfully dealt with a
    community's concerns is the Trinity American Site in Glenola, North
    Carolina. Local residents petitioned ATSDR with concerns about possible
    air emissions from a foam-making process which resulted in chronic and
    acute adverse health affects in nearby residents. ATSDR's investigation
    of these complaints included environmental monitoring which showed
    elevated levels of toluene diisocyanate (TDI) at the plant and in the
    community, and blood testing which indicated the community's exposure
    to TDI. ATSDR's public health advisory alerted the State and EPA to the
    problem. As a result the plant stopped manufacture of fiber and foam
    until the company could come into compliance with air emission
    standards, and individuals with high antibody levels for TDI were
    referred to the Duke University Medical Center for clinical evaluation.
    Improved access to and training for health care providers
        ATSDR's data indicates that over 1.5 million children 6 years and
    younger live within a one- mile boundary of current NPL sites. Compared
    to adults, children often have greater exposures, greater potential for
    health problems, and less ability to avoid exposures. Most
    pediatricians need a reliable clinical resource for specialty referrals
    and training in environmental medicine. As one method to address this
    issue, the children's health program is in the process of establishing
    environmental and pediatric cross-specialty units focused on pediatric
    environmental medicine, education, training, and expert consultation,
    as well as clinical specialty referrals for children.
        ATSDR, and its partners, have developed a national strategy
    establishing Pediatric Environmental Health Specialty Units (PEHSUs).
    PEHSUs are designed to develop medical expertise in pediatric
    environmental health by: (1) implementing regional pediatric
    environmental medical education and health promotion programs; (2)
    serving as pediatric environmental medicine consultants; and (3)
    functioning as referral centers for clinical evaluations of children
    exposed to hazardous substances.
        In fiscal year 1999, ATSDR will maintain the three existing PEHSUs
    and add three additional clinics. The three new units will
    significantly enhance ATSDR's and EPA's ability to address the wide
    ranging environmental health problems. PEHSUs collaborate with ATSDR in
    the development of pediatric environmental medicine clinical evaluation
    guidelines.
        In addition, ATSDR is working with other federal agencies to
    evaluate the feasibility of developing a national childhood cancer
    registry; strengthening and accelerating focused research into the
    environmental factors that cause or worsen childhood asthma; examining
    associations between childhood autism spectrum disorders and pre-natal/
    post-natal exposures to environmental pollution; and determining the
    magnitude of children's inordinate risk of exposure to hazardous waste
    sites due to the proximity of schools to these sites. In fiscal year
    2000, ATSDR will maintain one operational PEHSU to provide physician
    training, consultation and referrals for children who have had
    environmental exposures and health-related problems.
        ATSDR has for more than 15 years applied the disciplines of
    environmental health science, epidemiology, toxicology, and health
    education to assess real and potential human health effects as related
    to hazardous substances. The agency has learned valuable information
    about the association of certain diseases and exposure to toxic
    substances and has used this information to help communities and
    environmental and health organizations to prevent and reduce
    potentially hazardous exposures. The agency has made a difference in
    the daily lives of many communities and in the body of knowledge in
    environmental health science. As the principal public health agency
    charged with determining the nature and extent of health problems at
    Superfund sites we will continue to strive to prevent exposures to
    hazardous substances and adverse human health effects.
        This concludes our testimony. Once again, we want to thank the
    Subcommittee for the opportunity to provide written testimony on our
    budget. We would welcome any questions subcommittee members might have
    and will be happy to provide written answers for the record.
                                     ______

                      American Battle Monuments Commission

               Prepared Statement of Gen. Fred Woerner, Chairman

        Mr. Chairman and Members of the Committee: Thank you for the
    opportunity to testify on our fiscal year 2000 Appropriation Request.
    The special nature of the American Battle Monuments Commission places
    it in a unique and highly responsible position with the American
    people. The manner in which we care for our country's Honored War Dead
    is, and should remain, a reflection of the high regard in which we, as
    a nation, respect their service and sacrifice.
        As you know, the American Battle Monuments Commission is a small,
    one-of-a-kind organization, that is responsible for commemorating the
    services of American Armed Forces where they have served since April 6,
    1917 (the date of U.S. entry into World War I) through the
    establishment of suitable memorial shrines; for designing,
    constructing, operating, and maintaining permanent American burial
    grounds in foreign countries. In performing these functions, the
    American Battle Monuments Commission administers, operates, and
    maintains twenty-four permanent memorial cemeteries and twenty-seven
    monuments, memorials, and markers in the United States and fifteen
    countries around the world.
        We have eight World War I and 14 World War II cemeteries located in
    Europe, the Mediterranean, North Africa and the Philippines. All of
    these cemeteries are closed to burials except for the remains of the
    War Dead who may occasionally be discovered in World War I or World War
    II battlefield areas. In addition, we are responsible for the American
    cemeteries in Mexico City, established after the Mexican War, and in
    Panama.
        Presently, 124,914 U.S. War Dead are interred in these cemeteries--
    30,921 of World War I, 93,243 of World War II and 750 of the Mexican
    War. Additionally 5,857 American veterans and others are interred in
    the Mexico City and Corozal (Panama) American Cemeteries. Commemorated
    individually by name on stone tablets at the World War I and II
    cemeteries and three memorials on U.S. soil are the 94,120 U.S.
    servicemen and women who were Missing in Action, or lost or buried at
    sea during the World Wars and the Korean and Vietnam Wars.
        We continue to provide services and information to the public,
    friends, and relatives of those interred in, or memorialized at ABMC
    cemeteries and memorials. This includes information about grave and
    memorialization sites as well as location, suggested routes, and modes
    of travel to the cemeteries or memorials. Immediate family members are
    provided letters authorizing fee-free passports for overseas travel to
    specifically visit a loved one's grave or memorial site. Photographs of
    headstones and sections of the Tablets of the Missing on which the
    service person's name is engraved are also available. These photographs
    are mounted on large color lithographs of the cemeteries or memorials.
    In addition, we assist those who wish to purchase floral decorations
    for placement at a grave or memorial site in our cemeteries. A
    photograph of the in-place floral arrangement is provided to the donor.
        The care of these shrines to our War Dead requires a formidable
    annual program of maintenance and repair of facilities, equipment, and
    grounds. This care includes upkeep of 131,000 graves and headstones; 73
    memorial structures; 41 quarters, utilities, and maintenance
    facilities; 67 miles of roadways and walkways; 911 acres of flowering
    plants, fine lawns and meadows; nearly 3,000,000 square feet of shrubs
    and hedges and over 11,000 ornamental trees. Care and maintenance of
    these resources is exceptionally labor intensive, therefore, personnel
    costs account for nearly 62 percent of our budget for fiscal year 2000.
    Some of this maintenance is performed by casual labor, in peak seasons,
    since the permanent cemetery staffs are not large enough to provide the
    required maintenance during the peak-growing season. The remaining 38
    percent of our budget is required to fund our engineering, maintenance,
    utilities, equipment, and administrative costs.
        As an organization responsible for permanent burial facilities, we
    do not have the option of closing or consolidating cemeteries. In light
    of this, we have increased our efforts to achieve greater efficiency
    and effectiveness, through automating and contracting, in the
    operational and financial management areas, where we do have
    alternatives. This Commission recognizes and fully supports the efforts
    of the President and the Congress to improve efficiency, focus on
    results, and streamline the government overall.
        During fiscal year 1998, we completed work on our second Strategic
    (FY 1999-2004) and Annual Performance Plans (FY 1999). We have
    subsequently forwarded copies to Congress and the Office of Management
    and Budget. We believe these plans provide our agency a comprehensive
    roadmap for the future.
        During fiscal year 1998, as part of our Strategic Plan, and at the
    request of the Office of Management and Budget (OMB), we conducted the
    first comprehensive manpower study of our European and Mediterranean
    cemeteries since 1982. The study consisted of a review of current
    position descriptions and interviews with top management officials in
    our Paris and Rome Offices, cemetery superintendents, foreman, guides,
    and most key personnel such as equipment mechanics, masons, gardeners,
    and others.
        This study will help us define the manpower requirements for each
    of our cemeteries. To ensure that we are taking advantage of
    streamlining opportunities from additional outsourcing and automation
    and to maintain productivity and efficiency incentives, ABMC and OMB
    will jointly review the manpower survey. This review will consider the
    changing capital /labor ratio regarding the work week and employee
    standards. We will develop a comprehensive long-term automation,
    employment, and funding plan. We will also undertake a joint study to
    determine if automation, technology, and outsourcing improvements can
    reduce the growing costs of foreign employment.
        In line with the study, the Office of Management and Budget has
    approved the addition of two positions, a personnel specialist for the
    agency, who will be located in our European Regional Office, and a
    systems accountant for our Headquarters Office.
        In 1996, Congress specifically directed (Public Law 104-275) that
    ABMC prepare agency-wide financial statements annually beginning with
    fiscal year 1997, and that the financial statements be audited by the
    U.S. General Accounting Office (GAO) in accordance with accepted
    government auditing standards. Our first audit resulted in an
    unqualified opinion on our balance sheet, which is not normally earned
    on initial financial statement audits. We were one of the first
    agencies in the Executive Branch to ``early comply'' with the fiscal
    year 1998 accounting standards prescribed by the Office of Management
    and Budget in Bulletin No. 97-01, Form and Content of Agency Financial
    Statements. We have recently completed the second audit and are
    awaiting the results.
        As I reported to you last year, we contracted with the Department
    of Treasury's Financial Management Services Center regarding the
    replacement of our accounting system. During fiscal year 1998, we
    selected a new system which will be implemented in March of this year.
    Implementation of this new, single and integrated accounting system
    will resolve a long-standing problem of non-integrated systems.
        With our initial success in auditing and the implementation of a
    new financial system, we expect ABMC to achieve a higher level of
    management excellence in the next two to three years.
        During fiscal year 1998 a large part of our focus was on the World
    War II Memorial. President Clinton unveiled the winning design by
    Friedrich St.Florian at a White House ceremony on January 17, 1997.
    Since that time, reviews by the Commission of Fine Arts (CFA) and the
    National Capital Planning Commission (NCPC) have resulted in the
    requirement to modify the design to more appropriately fit the Rainbow
    Pool site. On April 7, 1998, the ABMC forwarded Professor St.Florian's
    revised design concept to the CFA and the NCPC for their consideration
    and approval. On May 21, 1998, in a public hearing, the CFA unanimously
    and enthusiastically approved the location, site plan, and revised
    design concept. On July 9, 1998, in a public hearing, the NCPC approved
    the revised design concept of the World War II Memorial.
        Our National Capital Campaign Chairman, former Senator Robert Dole,
    and our Co-Chairman, Mr. Fred Smith of Federal Express, continue to
    work diligently to raise the $100 Million required for construction of
    the Memorial. The introduction of new films, e.g., Saving Private Ryan,
    has substantially raised awareness of the sacrifices of the WW II
    generation and the planned recognition through the National World War
    II Memorial. Mr. Tom Hanks, star of Saving Private Ryan, has
    volunteered his support to the World War II Memorial Project's Public
    Service Advertising (PSA) Campaign. He will be featured in television,
    radio, and print public service ads. Distribution of these PSA's is
    scheduled to run for two years beginning in March 1999 and continuing
    through 2000. In addition, prominent corporate and public sector
    leaders have been enlisted to assist with the solicitation and advocacy
    process.
        ABMC faces several significant challenges concerning the World War
    II Memorial. Our greatest challenge is to collect private contributions
    to ensure that construction is completed so that as many of the World
    War II generation as possible will live to see and be honored by the
    Memorial. Our goal is to break ground for the Memorial in the year
    2000. However, this is dependent on our ability to raise the required
    funding by the year 2000.
        To respond to these challenges, the ABMC is proposing legislation
    which would extend the authorization to fiscal year 2005 in order to
    obtain a construction permit and develop the Memorial. The current
    authority on the Memorial's construction permit lapses in May 2000. In
    addition, the legislative proposal allows ABMC the necessary
    intellectual property authority, confirms ABMC's authority to accept
    voluntary services in furtherance of the activities of the Commission,
    and permits future acceptance of funds. The Office of Management and
    Budget advises that, from the standpoint of the Administration's
    program, there is no objection to the presentation of this proposal for
    the consideration of Congress.
        While our attention has been focused on management improvements and
    the design and construction of the World War II Memorial, we have not
    ignored our primary mission of operating and maintaining twenty-four
    memorial cemeteries and twenty-seven monuments, memorials, and markers.
        The Congress has been instrumental in our success in maintaining a
    high standard of excellence by providing the funds required to
    accomplish our objectives. The additional funding of $3 Million in
    fiscal year 1998 and $2.5 Million in fiscal year 1999, for engineering
    and maintenance projects, allowed us to significantly reduce our
    backlog of essential projects. We have grouped together certain types
    of projects, such as sprinkler systems, replacement of fuel tanks, and
    repair of roadways and walkways, in order to achieve economies of
    scale. Grouping these projects by region has and will allow contractors
    to consolidate bids and provides ABMC with the most cost-effective use
    of managing available resources.
        Our fiscal year 2000 request provides $3.0 Million for engineering
    and $1.3 Million for maintenance projects which will allow us to
    continue to reduce our backlog of projects. In addition, our request
    provides for cost of living increases for our U.S. and foreign national
    personnel, funding to develop a maintenance data base, establishment of
    an information systems contract, the addition of two FTE previously
    mentioned, and the OMB suggested studies of our personnel survey and
    capital improvement plans. We have focused our fiscal year 2000 program
    to ensure we accomplish these essential high priority projects.
        For the third year, in agreement with the Office of Management and
    Budget, we have repriced our budget to conform to the Fiscal year 2000
    foreign currency rates established for the Department of Defense.
        Since 1923, the American Battle Monuments Commission's memorials
    and cemeteries have been held to a high standard in order to reflect
    America's continuing commitment to its Honored War Dead, their
    families, and the U.S. national image. The Commission intends to
    continue to fulfill this sacred trust while ensuring the prudent
    expenditure of appropriated funds.
        The American Battle Monuments Commission appropriation request for
    fiscal year 2000 is $26,466,526.
        This concludes my prepared statement. I will be pleased to respond
    to your questions.
                                     ______

                 Chemical Safety and Hazard Investigation Board

                                 Justification

                                general overview
        Mission.--The Chemical Safety and Hazard Investigation Board's (the
    Agency) mission is to reduce the occurrence of chemical incidents,
    thereby protecting workers, the public and the environment and
    lessening associated economic consequences. The Agency's major
    responsibilities include: (1) conducting chemical incident-related
    investigations under the Clean Air Act Amendments of 1990; (2)
    providing the Congress and the President with independent, expert fact
    finding and technical advice to assist in the development,
    implementation and evaluation of chemical safety policy and government-
    wide resource allocation decisions; (3) performing statutory
    responsibilities pertaining to chemical safety-related matters, ranging
    from special studies and analyses to quasi-legislative functions (e.g.,
    recommending operational improvements in federal chemical safety
    programs within the Occupational Safety and Health Administration, the
    Environmental Protection Agency, and other organizations); (4)
    responding to requests for information from the Congress and the
    President on various matters affecting chemical safety; and (5)
    providing technical information and assistance to government, business
    and industry on causes of and ways to prevent chemical incidents. To
    carry out these responsibilities and to improve the current picture of
    chemical safety, the Agency must maintain the highest level of
    expertise.
        Challenges.--The Agency first opened its doors in January 1998,
    with the need to address a full range of both the most basic
    organizational and the most sophisticated mission-specific
    requirements. For fiscal year (FY) 1998, the Agency had a $4 million
    budget and an authorized staffing level of 20 full-time equivalent
    employees (FTE's) to begin building a new independent federal agency
    from the ground up. The Agency began without any inherited
    infrastructure, personnel, agency-specific policies or procedures,
    space, or other fundamental resources. Nevertheless, by the end of
    September it had two of its five Presidential-appointed Board Members,
    had hired the annual full-time equivalent (FTE) of 5 employees, and had
    prioritized use of its resources to initiate development of the most
    critical baseline operations. One key baseline operation involved
    measuring the scope of the national chemical incident problem, which
    had not before been attempted by any organization. The importance of
    this effort was emphasized to the Agency during a February 1998 meeting
    between Agency staff and representatives from a variety of offices
    within the General Accounting Office (GAO). The GAO recommended the
    Agency focus on the results it was established to achieve. The GAO said
    ``rather than focus on the number of accidents CSHIB plans to
    investigate, or the number of reports it plans to review, [we] suggest
    focusing on the results of doing this work, such as preventing or
    eliminating accidents shown by the analysis of data trends. . . . it
    will take time to see some of the results of these actions and the
    board needs to begin by establishing a baseline.'' The Agency followed
    this advice and, by the end of fiscal year 1998, had plans in place to
    assess federal data on the scope of the chemical incident problem.
        Structure.--The Agency's business plan, prepared in 1997, serves as
    the overall strategic plan for building the Agency during its formative
    years. This is supplemented with complementary, functional-level
    strategic plans and operating procedures subsequently developed to
    shape and support specific program activities. By fiscal year 2001 the
    business plan will be replaced by a GPRA-compliant, agency-wide
    strategic plan, to be prepared in fiscal year 2000. Agency growth from
    nascent to functional level was originally scheduled to occur over a
    three-year period (fiscal year 1998-fiscal year 2000), during which
    time the staff would develop the knowledge, infrastructure, and
    programs that would permit the Agency to function as a mature
    organization. This timeline now has been extended to four years (fiscal
    year 1998-fiscal year 2001) as the result of a better assessment of the
    effort required to reach full operational capability. The Agency's
    intent, based on its concept of operations, is to grow to an estimated
    staffing level of 100 FTE's by fiscal year 2002, and its organization
    and staffing reflect this plan. The Agency is a flat organization with
    only a single layer of management. It acquires, to the maximum extent
    possible, and has its staff manage requisite administrative and
    technical services from outside sources. The reasons for this mode of
    operation are the use of FTE's to provide administrative services
    reduces the number of staff available for technical, mission-related
    duties. Also, because chemical incidents occur in such diverse
    industries under a wide variety of circumstances, the Agency cannot
    have individuals on staff with technical expertise on all subjects that
    could be factors in all possible chemical incidents. As a result of
    these constraints, the Agency will continue to contract for or
    otherwise obtain (e.g., through interagency agreements) the expertise
    as needed for specific investigations and other programmatic
    activities.
        Resources.--In fiscal year 1999, the Agency budget grew to $6.5
    million for 12 months of operation from the $4 million appropriated for
    and expended over nine months of operation during fiscal year 1998, and
    its authorized staffing level increased from 20 to 30 FTE's. The Agency
    requests $12.5 million for the necessary expenses to carry out its
    mission and meet its goals during fiscal year 2000. This represents a
    $6 million increase from the fiscal year 1999 funding level, and is $5
    million above the $7.5 million requested in the President's fiscal year
    2000 Budget. The $12.5 million request will allow the Agency to
    continue moving from a startup to a fully operational federal agency.
    The Agency has learned through its efforts to date that the volume,
    scope and complexity of its work is greater than purported by others.
    Nevertheless, the Agency has limited its budget request to ensure the
    fiscal year 2000 increase is consistent with the growth projected in
    the Agency's business plan, which was submitted to Congress, the Office
    of Management and Budget (OMB), and the GAO. Judicious use of
    government contracting opportunities (i.e., buying, not building
    capabilities) have already enabled the Agency to realize significant
    savings over more traditional operating strategies. Through continued
    use of these alternative venues, the Agency expects to be able to meet
    its fiscal year 2000 goals in a cost-effective manner.
                               budget application
        The Agency requests $12.5 million to accomplish the work planned
    for fiscal year 2000. Funding at this level will allow the Agency to
    continue its development by hiring additional staff, providing the
    concomitant needs for space, equipment and supplies, and contracting
    for requisite services. We note that OMB elected to arbitrarily reduce
    this request by $5 million, in spite of statutory language regarding
    the independence of the Agency [42 U.S. Code Sec. 7412 (6)(R)]. If the
    Agency's request is reduced by $5 million, it will not be able to grow
    because most of the $1 million increase over the fiscal year 1999
    budget level will be used to fund mandatory increases. The following
    are the significant consequences that will result if the Agency's
    budget request is reduced to $7.5 million.
      --The Agency will not be able to hire any new employees. As a result,
            the planned increase in the investigative workload will not be
            realized.
      --The studies on chemical incident reporting and on federal chemical
            incident prevention programs, designed to determine ways to
            improve program performance and to reduce costs and burdens on
            government and business, will be delayed due to lack of staff
            to execute these projects.
      --Development of technical guides and educational materials for
            industry and other stakeholders will not occur.
      --The Agency will curtail efforts to develop technical training
            programs for its staff to help them perform their various
            technical duties (e.g., conduct investigations, review others'
            investigative reports, and plan and manage special studies).
      --No further information technology development work in support of
            the Agency's mission will be funded. For example, the Agency
            uses the Internet to disseminate information about chemical
            safety and prevention. Without sufficient funding, work will
            not continue enhancing the information-sharing process the
            Agency began in fiscal year 1999. In addition, the Agency will
            not develop a program to collect ``near miss'' information from
            industry (similar to what the aviation industry voluntarily
            provides to help prevent aircraft incidents).
      --The ten-year consolidated incident database will not be expanded
            through the planned annual inclusion of new (e.g., the prior
            year's) incident reports and additional types of available
            government data. Failure to keep this database current, and to
            expand the depth of the information it contains, will prevent
            this resource from being used by the Agency for operational
            planning and evaluation purposes, and by Congress to evaluate
            agencies' performance and budget requests, adjust laws and the
            federal chemical safety system, reduce costs and otherwise
            improve effectiveness, and to track progress in addressing the
            problem of chemical incidents.
                               budget utilization
    Incident prevention
        One of the Agency's primary responsibilities is to conduct chemical
    incident-related investigations under the Clean Air Act Amendments of
    1990. These investigations result in reports addressing the nature,
    causes and recommendations for preventing incidents. The ultimate goal
    of the investigation activity is to persuade those to whom safety
    recommendations are directed to implement these recommendations.
    Incident examinations, which are conducted pursuant to Section
    112(r)(6)(C)(i) of the Clean Air Act Amendments of 1990, may take the
    form of either field investigations or reviews of work done by others.
    Each incident is unique. Extensive time must be devoted to researching
    and verifying all aspects of the incident, waiting for production of
    documents by the company and other investigative authorities, and
    conducting analyses of evidence. Depending upon the complexity of the
    incident, availability of documents, and other matters that may impede
    progress, a report may take 9 to 12 months to complete.
        The Agency learned in its first year of conducting investigations
    that a variety of personnel are required on a field investigation team
    to ensure the effectiveness of each phase of the investigation. For
    each investigation, we assign at least one staff member from the
    Offices of Investigations, Safety Programs, General Counsel, and
    External Relations, for a total Agency investigation team of four or
    more staff members. These teams are responsible for the activities
    outlined below.
    Office of investigations
      --Establishing and operating the field command center, which provides
            assistance to investigators by obtaining documents, scheduling
            witness interviews, maintaining technical communication with
            Agency headquarters, and otherwise supporting the investigative
            work.
      --Compiling business and technical details about the company involved
            in the incident, previous incidents within the same industry or
            involving similar circumstances.
      --Surveying the incident site, determining the scope of the
            investigation, and working with local jurisdictional officials
            to secure the incident scene and to assure that evidence is not
            jeopardized. Coordinating Agency and contractor personnel at
            the site.
      --Ensuring the investigation is conducted in accordance with Agency
            policy, and that methods and techniques are used that will
            promptly and effectively identify pertinent facts, conditions
            or circumstances surrounding the accident and result in the
            timely completion of the field phase of the investigation.
      --Developing and preparing documentation from the incident including
            reports, photographs, records and other relevant material.
            Determining requirements for special tests, studies and
            assistance that may be necessary for one or more aspects of the
            investigation.
      --Reconstructing incident dynamic and sequence of events; determining
            the authenticity and adequacy of data; examining the reported
            facts, conditions and circumstances of the incident and their
            relationship to determination and support of probable cause;
            assuring that analyses are consistent with applicable
            scientific, technical and engineering methods and standards.
      --Preparing the formal incident report in accordance with Agency
            policies, procedures, and technical requirements, and defending
            the report's contents, conclusions, and recommendations at
            formal Board meetings.
    Office of safety programs
      --Crafting sound recommendations based on the comprehensive
            evaluation of what caused the incident. The recommendations are
            based on the best scientific solutions to prevent a
            reoccurrence and must be feasible to implement.
      --Identifying appropriate audiences to which recommendations should
            be addressed.
      --Developing and implementing a tracking system to ensure
            recommendations are closed.
      --Evaluating the long-term effectiveness of recommendations.
    Office of general counsel
      --Obtaining access for Agency investigators to incident sites,
            company employees and documents.
      --Resolving legal issues with law enforcement and other responding
            local, state and federal agencies.
      --Working with attorneys from the company involved, as well as
            attorneys representing other interested parties, to resolve
            matters so the investigation process proceeds efficiently and
            effectively.
      --Working with Agency investigators to share draft reports, including
            the confidential business information, with the company's
            attorneys.
      --Processing Freedom of Information Act requests and other civil
            litigation matters, which invariably follow chemical incident
            investigations.
    Office of external relations
      --Establishing incident-driven external-relations operations in the
            field and at headquarters.
      --Serving as a liaison and source of information to local, state and
            federal officials, industry, labor and the public.
      --Identifying organizations (governmental and non-governmental) to be
            informed of the Agency's reports and recommendations.
      --Arranging for the broadest possible dissemination of reports;
            arranging for articles, op-ed pieces, editorials and other
            published materials that support acting on Agency findings.
      --Responding to questions about Agency actions; monitoring
            communications media for evidence of action in response to
            Agency recommendations; making presentations (or supporting
            presentations by others) on Agency findings and
            recommendations.
        In addition to the Agency investigation team, the Agency acquires
    external support for investigations. Sources of this support include
    other federal agencies, the Department of Energy's National
    Laboratories, private contractors with specialized technical expertise,
    and private laboratories. The Agency also uses contracted support for
    technical writing and graphic design of our reports. An average of four
    contract staff are used for an investigation.
        Due to the complexity of chemical processes, the technical and
    legal issues involved in unraveling every incident, and the sheer
    quantity of chemical incidents that occur annually, the Agency
    carefully screens chemical incidents to decide whether to undertake an
    investigation. The Agency usually conducts an initial assessment of the
    incident to determine whether a field investigation is warranted.
    Factors considered include whether: (1) commonly used chemicals or
    processes are involved, (2) hazards of the chemical or the process are
    not apparent, (3) regulatory coverage is lacking, (3) the industry
    sector is large or is growing, (4) the process or operation involved is
    labor intensive, (5) state or local agencies, or safety organizations
    have specifically requested Agency involvement, and (6) the industry is
    aware of and committed to chemical safety and incident prevention.
        The Agency is an independent, scientific, nonregulatory
    organization. As a result, its investigations differ from those
    conducted by other federal organizations in their focus, depth, purpose
    and outcome. The Agency is not limited to examining incidents involving
    only certain industries, chemicals or processes. Rather, it selects for
    investigation those incidents which appear will provide the widest
    audiences with the most useful information on causes of and means of
    preventing chemical incidents. As the Agency is precluded by law with
    finding fault, matters of regulatory compliance and punitive actions
    are outside its investigative purview. Instead, it seeks to determine
    the root causes of incidents in order to develop recommendations aimed
    at improving safety and preventing future incidents. These
    recommendations may be targeted at private industry, government bodies,
    professional associations or any other organization in a position to
    implement the recommendations. The Agency's investigations result in
    objective, technical reports, not enforcement actions and fines. The
    Board-approved reports cannot, by law, be used in civil litigation, a
    fact which encourages companies to cooperate fully with the Agency as
    it conducts its investigations. The Agency disseminates its reports to
    key federal, state and local government entities, specific companies
    and industries, safety professionals, first responders, trade
    associations, and the general public.
        No one can say with certainty what the demographics (e.g., size,
    characteristics, cost to the economy) are of the annual universe of
    United States chemical incidents. Therefore, any assertions as to these
    factors are suspect and cannot be relied upon with confidence. The
    Agency's preliminary findings from its study of 10 years of incident
    data reveal that the numbers, just for incidents resulting in one or
    more deaths, are far greater than the Agency could hope to investigate.
    Annually, an average of 127 incidents occur that result in at least one
    death. In fiscal year 2000 the Agency will continue to examine a select
    number of incidents to continue to expand its first-hand knowledge
    about problems, but will devote at least equal attention to alternative
    strategies for bringing about change.
        In fiscal year 1999, the Agency initiated work, to continue in
    fiscal year 2000, on development of the federal government's first
    comprehensive national database of chemical incidents. As emphasized by
    the GAO, absent this resource and the baseline it establishes, there is
    no objective way to determine the scope, nature or change in the
    chemical incident picture within the United States. There is no
    objective way to determine how best and at what level of effort to
    apply the Agency's (and the totality of the federal government's)
    resources to address the problem posed by chemical incidents, or how to
    devise and implement meaningful prevention strategies. Consequently,
    there is no way to establish and report on performance measures
    required by Congress under the Government Performance and Results Act.
    Representatives from the GAO endorsed, as an efficient use of
    government resources, the Agency's plan to develop a basline using
    information contained in databases already developed by other agencies.
    The GAO noted that when using data from different sources, it is
    important to recognize that both data comparability and data
    reliability are key issues to address.
        For this function the Agency projects the use of 24.2 workyears and
    $5,493,000 in direct costs in fiscal year 2000, compared to 10.7
    workyears and $2,421,000 in fiscal year 1999.
    Safety studies
        These are discrete activities to support specific program
    operations within the Agency or develop products and services for
    stakeholders to assist them in improving chemical safety. In fiscal
    year 2000 the focus of the work under this function will be on
    technical training for Agency staff and assessment of the effectiveness
    of federal chemical safety programs in contributing to attainment of
    the government's goal of eliminating chemical incidents.
        Currently, available technical training dealing with investigation
    of chemical incidents does not address with specificity matters within
    the purview of the Agency, i.e., how to identify root causes of
    incidents and design recommendations to correct those causes. The vast
    number of industries and their varied operations complicate the process
    of conducting investigations and make it imperative that Agency
    investigators have available to them the training and references needed
    to understand the facility at which an incident has occurred. By
    developing training for Agency staff, materials also become available
    for industry use, which may assist in identification of problems before
    they lead to incidents. Agency training materials are to be multi-
    dimensional and multi-purpose, designed for use both in the office as
    an educational tool and at an incident site as a reference tool. These
    materials will provide technical treatment of pertinent laws,
    regulations, industry standards and current safety research, and
    checklists and other aids to guide and assist in the conduct of an
    investigation. In fiscal year 2000 the Agency intends to develop
    targeted training for its staff, focusing on particular technical
    issues and on the process of conducting an investigation and writing
    reports. It also intends to develop training on human factors, in order
    to address issues noted by the Congress in the Agency's legislative
    history: ``. . . special emphasis should be put on expertise in ``human
    factors'' and the role that operator failures play in causing
    accidents. In other fields, the United States has fallen behind the
    international community in the use of operator training and the
    development of operating and emergency procedures to prevent accidents
    and minimize their consequences.'' [Senate Report No. 101-228 (1989);
    Page 229]
        The Agency is required by law to provide Congress and the President
    with an annual report that addresses, among other matters,
    recommendations for legislation or regulatory changes. Congress further
    suggested the Agency ``. . . may issue more general reports to the
    Congress and make recommendations to other Federal or State or local
    agencies and to owners and operators of facilities engaged in chemical
    production or handling to suggest measures that might be taken to
    improve the safety of operations.'' [Senate Report No. 101-228 (1989);
    Page 235] In addition to issuing formal reports, Congress suggested in
    the legislative history that the Agency ``. . . may also serve as a
    point of communication among the various Federal agencies to improve
    the effectiveness of accident prevention programs and reduce the burden
    of duplicative requirements on regulated entities.'' [Senate Report No.
    101-228 (1989); Page 208] In order to offer sound recommendations for
    improving the performance, streamlining the operation and reducing the
    cost of the federal government's chemical safety programs, the Agency
    first needs an in-depth understanding of the various programs. To gain
    this understanding, in fiscal year 2000 the Agency will initiate a
    comprehensive, multi-phase study of the federal government's chemical
    safety system. The Agency will issue reports to Congress and other
    appropriate parties that contain findings and any recommendations for
    improving the system and the coordination between the federal agencies
    involved with chemical safety. The Agency also intends to undertake a
    study of the economic cost of chemical incidents to industry, state and
    federal government, and other definable entities.
        For these activities the Agency projects the use of 1.9 workyears
    and $417,000 in direct costs in fiscal year 2000, compared to 1.0
    workyears and $211,000 in fiscal year 1999.
    Information dissemination
        The main product of the Agency is chemical safety information.
    Chemical safety information includes not only the safety
    recommendations generated from incident investigations, but also
    various other types of safety information--data, operational guidance,
    technical references--that exist throughout the commercial and
    government sectors, or that will be developed by the Agency. The
    information will help a variety of stakeholders make decisions about
    chemical safety, e.g., the Congress and federal agencies, corporate
    management, workers, communities, first responders and safety
    professionals.
        The intended repository of and distribution point for information
    is the Agency's safety information center. A variety of products,
    accessible via the World Wide Web and other venues, will be available
    from the center to assist stakeholders in improving safety and reducing
    the number of incidents. The Agency's web site, designed to serve as an
    entry point to the center, already is serving a large and varied
    domestic and international clientele in both the public and private
    sector. It provides more information on what is currently happening
    relative to chemical safety than has ever been available on a real-time
    or near-real-time basis in one place before. The regularity with which
    the Agency's web site is consulted is evidence of the desire for and
    interest in a centralized center, where safety professionals can share
    information, benchmark their safety practices and the safety of their
    technologies, and locate safety-related references and statistics.
        In fiscal year 2000 information dissemination efforts will more
    formally identify and begin to satisfy needs for chemical safety
    information. As part of this initiative, the Agency will broaden the
    depth and breadth of Agency interactions and communications with
    external audiences and expand the availability of electronic
    information via the Internet. The Agency will for the first time devote
    one full-time equivalent position to supporting the content development
    tasks associated with the Agency's World Wide Web site. Content
    development in fiscal year 1998 and fiscal year 1999 was handled solely
    as additional duties by other staff. As the Agency has developed
    significantly more original materials and has engaged in significantly
    more interaction with external parties, the content development
    workload has exceeded the ability of staff to keep pace. In addition,
    the development of large databases, investigation reports and
    recommendations, and special studies requires corresponding Internet-
    specific platforms, and information technology staff to develop,
    support, and administer the databases and web site.
        In fiscal year 2000 the Agency will continue building the nation's
    primary repository of chemical safety data, which is modeled after the
    Federal Aviation Administration's National Aviation Safety Data
    Analysis Center. Chemical safety data will be used by the Agency in
    decision-making, resource allocation, and to support investigative and
    safety program analyses. Chemical safety data will also be available to
    our stakeholders. However, many of the repository's source databases
    from other government agencies contain incomplete and sometimes
    inaccurate historical incident data. Moreover, even similar data from
    different sources are inconsistent due to confusing and often
    contradictory regulatory reporting requirements. To build and use the
    chemical safety data repository, and to effectively disseminate
    information to the Agency staff and stakeholders, the information
    technology operations require additional staff to identify data
    sources, and to acquire, manage and analyze the data.
        Another critical information dissemination function is the
    monitoring of chemical incident reports received from a number of real-
    time sources, such as the U.S. Coast Guard's National Response Center
    and commercial news wire services. This information plays a role in
    deciding whether to conduct an investigation. In fiscal year 2000 the
    Agency plans to produce, for publication on its web site and inclusion
    in its incident database, short synopses of incidents based on this
    information. In this way the Agency expects to compile incident details
    that may be searched for insight into causes of those incidents not
    investigated due to resource constraints. The Agency also expects to
    design in fiscal year 2000 a voluntary, confidential reporting program
    on ``near miss'' events (similar to the one developed for use by the
    aviation industry and operated by NASA for the FAA) that provides early
    warning of conditions that may lead to actual incidents.
        Information dissemination activities also are intended to comply
    with several government-wide mandates. For example, the Agency must
    inform Legislative and Executive Branch members, and the taxpayers,
    about its routine and non-routine activities. At a minimum, such
    notification occurs via the Agency's Annual Report and budget materials
    it submits to the Congress.
        For information dissemination activities, the Agency projects the
    use of 11.1 workyears and $2,723,000 in direct costs in fiscal year
    2000, compared to 5.6 workyears and $1,342,000 in fiscal year 1999.
    Board members
        In fiscal year 2000, it is anticipated the Agency's five-member
    Board will, for the first time, be fully staffed for an entire fiscal
    year. The Board Members are Presidential appointees whose salaries are
    set by law. The Board Chairman manages the Agency in his concurrent
    role as its Chief Executive Officer. The Board was established by law
    to perform a technical review and vote on release of investigation
    reports and recommendations prepared by Agency staff. Board Members may
    also pursue personal projects of interest to them in the field of
    incident prevention, may be called upon by Agency staff for expert
    assistance in addressing specific Agency concerns, and may perform
    outreach services on behalf of the Agency at the CEO's request.
        For this function the Agency projects the use of 4.5 workyears and
    $1,325,000 in direct costs in fiscal year 2000, compared to 3.6
    workyears and $1,002,000 in fiscal year 1999. We note that workyears
    are projected to be 4.5 in fiscal year 2000, because the Chairman's
    time is split between activities performed as a Board Member and as
    Chief Executive Officer.
    Executive direction
        These are general management activities (e.g., developing the
    Agency's strategic plan, and evaluating Agency-wide operations)
    performed by the Agency's Chief Executive Officer, the Chief Operating
    Officer, the Executive Officer (responsible for execution of
    administrative functions), and individuals responsible for directing
    the work of the Agency's program offices.
        For this function the Agency projects the use of 1.8 workyears and
    $503,000 in direct costs in fiscal year 2000, compared to 2.1 workyears
    and $537,000 in fiscal year 1999.
    Indirect costs
        This encompasses all administrative operations (human resources,
    finance and budget, and management services), whether performed by
    Agency staff or by public or private sector vendors operating under
    their direction, and all activities pertaining to installation and
    maintenance of the Agency's information technology infrastructure. It
    also includes time to devoted by staff to develop written procedures
    for Agency activities such as contracting, and time devoted to general
    Agency-wide activities, such as regularly scheduled briefings for Board
    Members to keep them aware of work being performed by the Agency.
        These activities also include work benefiting the entire Agency,
    such as provision of legal services. This is a new agency with unique
    statutory provisions. It is continually faced with complex, novel legal
    issues that it must resolve. In many legal areas, such as the Agency's
    authority to compel companies and other agencies to cooperate with it,
    there are no precedents. In addition, because this is a new agency, it
    has no legal structure in place to assist it in complying with the
    various federal laws. For example, the Agency still has not published
    in the Federal Register any regulations, directives, orders, or other
    institutional documents to guide its activities. Consequently, it needs
    lawyers to draft and promulgate these comprehensive documents. Finally,
    the Office of General Counsel serves as advisor to the Chairman of the
    Agency and assists in providing advice to concerns raised by specific
    Board members. As the five-member Board becomes fully functional,
    additional legal time will be necessary to meet their demands.
        These activities also include work undertaken by that person
    serving as the Agency's Inspector General. That individual is
    responsible for directing and carrying out financial and management
    audits of the Agency's operations, and for reviewing and commenting on
    proposed procedures and other documents regarding their economy,
    efficiency, and effectiveness. In fiscal year 1999 financial statements
    for the Agency's first year of operations (fiscal year 1998) were
    produced, and it is anticipated that in fiscal year 2000 this work will
    be expanded to address the Agency's system of records, internal control
    procedures, policies for marking and controlling sensitive data, and
    the ability to report on performance measurement goals.
        In addition, the Agency must acquire appropriately configured,
    permanent office space. The Agency has grown from an onboard staff of
    15 employees at the end of fiscal year 1998 to a current level of 27
    employees. The Agency plans to hire an additional 30 FTE's in fiscal
    year 2000, and to have 100 FTE's by fiscal year 2002. It was not cost-
    effective or even financially possible to enter into a long-term lease
    for space that could accommodate the needs of a 100-employee agency
    when the Agency was staffed with only a few employees. Accordingly, the
    Agency leases temporary space to accommodate the startup staffing
    levels. In fiscal year 2000, the Agency will locate and prepare its
    permanent office space. Build-out costs to prepare the space include
    standard expenses incurred by the government in preparing space for
    occupancy (architectural design services and space alterations). It
    also includes creation of such technology infrastructure to support the
    Agency as fiber optic network wiring, primary uninterruptible power
    supply (UPS) installation, air conditioning, and specialized electrical
    wiring to support the infrastructure.
        The Agency projects the use of 8.5 workyears and $2,039,000 in
    fiscal year 2000, compared to 3.8 workyears and $987,000 in fiscal year
    1999 for the indirect cost category.
                                     ______

                       Consumer Product Safety Commission

                   Prepared Statement of Ann Brown, Chairman

        Mr. Chairman, and members of the Subcommittee, I am Ann Brown,
    Chairman of the U.S. Consumer Product Safety Commission (CPSC).
        I am pleased to have this opportunity to testify in support of our
    fiscal year 2000 appropriation request. The modest increase in our
    budget to $50.5 million, the establishment of a small, carefully
    targeted, applied research program and other initiatives assure the
    Agency will continue on the effective path we have followed for the
    past five years.
        Before I begin my testimony on our budget, I want to give you a
    quick update on the two tasks given us by the conferees on our fiscal
    year 1999 appropriations. As you will recall, Section 423(a) of the
    Conference Report directed us to contract with the National Academy of
    Sciences within 90 days, for a 12-month study of the potential
    toxicologic risks of all flame-retardant chemicals identified by the
    NAS and the Commission as likely candidates for use in residential
    upholstered furniture. These chemicals could be used to comply with our
    draft proposed regulations for flame resistance of this furniture. We
    entered into the contract with the NAS prior to the deadline on January
    15 of this year.
        Section 429(a) of the Conference Report directed us to propose for
    comment within 90 days, a revocation of the amendments to the
    children's sleepwear standard previously issued on September 9, 1996.
    FR Vol. 61, No. 175, p. 47634 et. seq. The proposed revocation was
    published in the Federal Register on January 19 of this year, which was
    also prior to the deadline.
        Section 429(c) directed us to promulgate a final rule revoking,
    maintaining or modifying these latest sleepwear amendments by July 1,
    1999. We will complete that assignment on time.
                             awards for innovations
        The Commission has recently received two prestigious awards for
    innovations in the way we carry out our work. The first award for
    innovation is from the Ford Foundation, the Council for Excellence in
    Government and the JFK School of Government, which administers the
    awards program. Last year, CPSC was chosen from over 1,400 entries as
    one of 10 winners of the 1998 Innovations in American Government Award.
    We received the award for our Fast Track Product Recall Program. With
    this new program we are seeing dangerous products removed from store
    shelves more quickly and three times as many returned as with a regular
    product recall--without a preliminary product defect against a company.
        The second award was from the Institute for Dispute Resolution,
    which honored us for our innovative use of mediation in carrying out a
    recall of defective high temperature plastic vent pipes, that are part
    of certain furnaces and boilers, which could leak deadly carbon
    monoxide. Instead of lengthy and costly litigation involving many
    companies, CPSC employed the services of an experienced mediator who
    persuaded the companies to accept a program to replace the dangerous
    pipes at no cost to consumers.
        These two awards from highly respected organizations demonstrate
    that CPSC is an innovative, effective organization that performs its
    work in a praiseworthy manner.
                            fiscal year 2000 budget
        Despite the progress in product safety in recent years, there are
    still an average of 22,000 deaths and 29.5 million injuries annually
    due to unsafe consumer products. These deaths, injuries and associated
    property damage cost the nation about $400 billion a year.
        To carry out the second year of our six year strategic plan to
    reduce further the number of deaths and injuries and property damage,
    we propose a budget of $50.5 million for fiscal year 2000.
        As you will recall, last year we set forth and discussed in detail
    our eight strategic goals. They are:
      --Reduce the head injury rate to children from consumer products by
            15 percent.
      --Prevent any increase in the death rate from poisonings to children.
      --Reduce the death rate from fires by 10 percent
      --Reduce the death rate from carbon monoxide poisonings by 20
            percent.
      --Reduce the death rate from electrocutions by 20 percent.
      --Increase public contacts through the Worldwide Web by 500 percent
            and through the Consumer Product Safety Review by 200 percent.
            Maintain capability to handle 250,000 Hotline calls annually.
      --Attain 85 percent success with services CPSC provides industry
            through the Fast Track Product Recall Program, and 80 percent
            success in the Ombudsman Program.
      --Sustain the current satisfaction of consumers with CPSC's Hotline
            and Clearinghouse, and sustain the states' satisfaction with
            CPSC's State Partners Program at 90 percent or better.
        This year we have restructured our budget to more closely reflect
    our goals in these specific areas. Previously, we organized our budget
    along functional lines. Thus, compliance, consumer information, hazard
    assessment and reduction and agency management were each separate
    categories.
        In our new format we have just two categories, reducing product
    hazards to children and families and identifying and researching
    product hazards. There are four activity areas included in the first
    category.
      --Children's Hazards
      --Fire and Electrocution Hazards
      --Household and Recreation Hazards
      --Child Poisoning and other Chemical Hazards
                                research budget
        There are two activity areas in the second category:
      --Hazard Identification and Analysis
      --Applied Product Hazard Research
        For the first time this year, we are proposing a separate, specific
    research budget. We have always done some product research, when funds
    were available. Section 5(b)(1) of the Consumer Product Safety Act
    specifically authorizes the Commission to ``conduct research, studies
    and investigations on the safety of consumer products and on improving
    the safety of such products.''
        Our proposal is supported by the recent report of the highly
    regarded National Academy of Sciences Institute of Medicine. After
    reviewing the Commission's performance in recent years, the report
    concluded:

        ``The committee believes that the CPSC is on the right course,
    relying heavily upon cooperative efforts with industry to raise
    prevailing standards of safety . . . the committee believes the
    agency's capacity to carry out this strategy needs to be strengthened
    by increasing its resources for . . . applied research.'' Report p.
    215-216.

        The committee recommended that research funds be used ``to enhance
    the CPSC's capacity to study safety problems and stimulate product
    innovations, examine the feasibility and efficacy of safer product
    designs and proposed safety standards and develop and test
    methodologies for setting performance standards and for monitoring
    compliance with such standards.'' Report p. 217.
        One of the research projects we are considering could improve the
    safety of certain House office buildings. In a compliance investigation
    last year, we found that certain fire sprinklers, like those in the
    House office buildings, are defective. Accordingly, they have been
    recalled, by the manufacturer with an offer of free replacement. We
    have been unable to obtain any information about defects in the
    sprinklers in the Senate office buildings, because the Architect of the
    Capitol has not responded to our requests for such information. If you
    grant our research request, one of the projects we are considering is
    an investigation into the adequacy of existing fire sprinkler
    standards. We would study the reliability and performance of these
    products to determine what improvements are needed.
              information technology and other program initiatives
        In recent years we have repeatedly stressed to you our need for
    improvements in our information technology. We do so again this year.
    As a data-driven agency, we must strengthen the tools we use to
    identify and analyze product hazards if we are to continue making sound
    risk-based decisions. CPSC requests $500,000 for an integrated hazard
    database. This is a key improvement because it will speed up hazard
    analysis and investigations.
        We further ask an additional $355,000 to fund various initiatives
    that strengthen the agency's ability to reduce death and injury to
    children and those resulting from fire and electrocution hazards,
    household and recreation hazards, and child poisonings and other
    chemical hazards. Some of these initiatives include oversight of the
    all-terrain-vehicle (ATV) industry safety program, the distribution of
    safety information to the nation's families through pediatricians, the
    purchase of laboratory testing equipment, expanded consumer Hotline
    services, and an additional safety video news release.
        The balance of the additional request, $2.1 million, is to maintain
    the agency's current safety effort at 2000 prices. The $2.1 million
    will fund projected increases for salaries and benefits of $2 million
    and General Services Administration estimates for space rent increases
    of $126,000. These costs are outside the control of CPSC. CPSC did not
    increase our office space; the increase represents the GSA allocation
    of cost increases GSA projects it will need to operate the Federal
    office space program in 2000.
        The National Electronic Injury Surveillance System (NEISS) is the
    foundation for Commission efforts to collect information on product-
    related injuries. NEISS provides estimates of the frequency and
    severity of product-related injuries treated in hospital emergency
    rooms. In fiscal year 2000, CPSC is planning to expand the NEISS, which
    is currently limited to consumer product injuries, to include all
    injuries. This will be done in partnership with other Federal health
    and safety agencies at no additional cost to CPSC. In its recent report
    on injury, the Institute of Medicine recommended that the federal
    government expand CPSC's NEISS to increase our knowledge of the causes
    and severity of nonfatal injuries. This endorsement of the NEISS is
    another example of the increasingly important role that CPSC plays in
    the injury-prevention community.
                                new partnership
        In previous years I have told you about our partnership with Gerber
    Products and other companies to promote consumer product safety. I have
    recently announced a new partnership with CNA, a major insurance
    organization based in Chicago. With CNA's support we are issuing today
    a new free brochure highlighting low-cost safety devices for making
    homes safer for young children: Childproofing your home: 12 Devices to
    Protect Your Children. Each year over 2.5 million young children are
    injured or killed in often-preventable incidents in their own home.
    This brochure will tell parents about safety devices that will help
    keep children safe in their homes. CNA Financial Corporation of Chicago
    has underwritten the costs of producing and distributing this colorful
    easy-to-read brochure that will be distributed free of charge by the
    Consumer Information Center. This is the kind of public/private
    cooperation that helps us get our life-saving information to the
    American public without regulation or red tape.
                        cpsc is a cost effective agency
        Mr. Chairman, and members of the Subcommittee, we take great pride
    in the awards we have recently received. They inspire us to rededicate
    ourselves to the mission of our agency--keeping children and families
    safe.
        As we prepare for our 26th year, I want to cite just a few of our
    accomplishments. We have played a key role in the 30 percent decline in
    the rate of deaths and injuries related to consumer products since
    1973. During this time we have:
      --Saved the nation about $10 billion annually in health care,
            property damage, and other societal costs through past agency
            work on electrocutions, children's poisonings, children's
            cribs, power mowers, and fire safety. These savings are almost
            200 times CPSC's request for 2000 or about $200 million in
            savings for each $1 million of the agency's request.
      --Required cigarette lighters to be child-resistant. This action is
            expected to prevent over 100 deaths annually and provide net
            benefits of over $500 million in societal costs.
      --Reduced societal costs by about $1 billion annually by working to
            curb carbon monoxide (CO) poisoning.
      --Prevented about 50,000 injuries and reduced societal costs by over
            $1 billion each year by removing dangerous fireworks from the
            marketplace.
        These and other recent achievements are strong evidence supporting
    the conclusion of the Institute of Medicine report that CPSC is now ``a
    model of regulatory efficiency.''
        Mr. Chairman, the $50.5 million we are requesting is equal to about
    1/1,000 of the $400 billion annual cost of deaths, injuries and
    property damage caused by hazardous consumer products. Your approval of
    the full amount of our budget will be returned many times over in
    better health and safety for all American children and families.
                                     ______

                      Court of Appeals for Veterans Claims

            Prepared Statement of Hon. Frank Q. Nebeker, Chief Judge

        Mr. Chairman and distinguished members of the Committee: On behalf
    of the Court, I present for your consideration the fiscal year 2000
    budget of $11,450,000 for the United States Court of Appeals for
    Veterans Claims. (The Court was renamed last year by the Veterans
    Programs Enhancement Act, Sec. 511, Pub. L. No. 105-368, 112 Stat.
    3315, 3341 (1998), effective on March 1, 1999.)
        The Court's fiscal year 2000 budget request includes $910,000
    requested by the Veterans Consortium Pro Bono Program (Representation
    Program). The Representation Program provided its own supporting
    statement to accompany its budget request.
        The budget request of $11,450,000 reflects a $1,255,000 increase
    over the funding for Court and Representation Program operations
    appropriated for fiscal year 1999. The net increase for Court
    operations is $1,210,000. This increase is based primarily on a request
    for funding of 8 full-time equivalent (FTE) positions, above the fiscal
    year 1999 authorized level of 80 FTEs, for a total of 88 FTE positions.
    This funding would permit the Court to hire a third law clerk for each
    judge and an additional staff attorney in the Central Legal Staff
    (CLS). The additional personnel are needed, in response to a sharp
    increase in the number of cases filed in the Court during the last two
    years, to prevent the backlog of cases from growing further and causing
    dramatic delay in the resolution of veterans' appeals.
        As background for the current situation, I will give you a quick
    synopsis of the Court's caseload history. The Court began operations on
    October 16, 1989. The number of new cases filed in the Court fluctuated
    substantially during the first few years, and leveled off at slightly
    more than 1,200 per year by fiscal year 1995. In fiscal year 1996 there
    were 1620 new case filings, an increase of 27 percent over fiscal year
    1995, and in fiscal year 1997 case filings jumped to 2,229, an increase
    of almost 38 percent over fiscal year 1996. The upward trend continued
    in fiscal year 1998, with 2,371 case filings, a 6 percent increase over
    fiscal year 1997. Our current rate of case filings is approximately 200
    cases per month. In recent months, there has been a dramatic increase
    (approximately 11 fold during the first quarter of fiscal year 1999) in
    petitions for extraordinary relief--cases that demand prompt action. In
    addition, since the 1992 enactment of legislation extending the Equal
    Access to Justice Act (EAJA) to the Court, the number of EAJA
    applications acted upon by the Court has increased dramatically (from
    290 in fiscal year 1995 to 527 in fiscal year 1998).
        I anticipate that the number of cases filed in the Court will
    either continue at the current elevated level (about 200 per month), or
    increase further. I will tell you why this is likely. The number of
    denials by the Board of Veterans' Appeals (Board or BVA), from whose
    decisions the Court's appeals derive, increased from 6407 denials in
    fiscal year 1995, to 10,444 denials in fiscal year 1996, and to 15,865
    denials in fiscal year 1997. The numbers remained at that high level in
    fiscal year 1998 with 15,360 denials. The Court anticipates a
    corresponding continued proportion of appeals to the Court.
    Furthermore, as noted in the Court's budget submission, the statistics
    kept by the Board on ``denials'' do not include Board decisions that
    deny some, but not all, of the benefits sought. The denials in such
    partial-denial cases are also appealable to the Court. Finally, the
    Board's jurisdiction, and the Court's, was broadened by legislation
    that became effective in November 1997 (see Pub. L. No. 105-111, 111
    Stat. 2271 (1997) (codified at 38 U.S. Sec. 7111)) to include review of
    claims of clear and unmistakable error (CUE) in past Board decisions
    that have become final. In January 1999, the Secretary promulgated
    final rules governing review for CUE, permitting the Board to issue
    decisions in all such cases, including those stayed awaiting the mid-
    February effective date of the rules. Thus, especially in view of the
    present dramatic increase in petitions for extraordinary relief and new
    CUE cases, the number of pending cases may exceed the rate that would
    be predictable as a set percentage of the number of ``denials''
    reported by the Board.
        Another factor affecting the Court's workload is the effect of
    unrepresented appeals. Unrepresented appeals continue to pose a
    challenge. The percentage of appeals filed by unrepresented appellants
    remained almost constant at 74 percent in fiscal year 1996 and 73
    percent in fiscal year 1997, down from its highest level--80 percent--
    in fiscal year 1995. In fiscal year 1998 the trend was upward, with 77
    percent of appeals filed by unrepresented appellants. This rate remains
    much higher than the unrepresented civil appeal rate in U.S. courts of
    appeals. The rate is not surprising because nearly half of the
    claimants who were denied all benefits by the BVA were unrepresented
    there, or were represented by organizations that do not provide
    representation before the Court. In addition, by law, attorney fees may
    not be charged for representation until the BVA has rendered a final
    decision on a case. Although by the time of merits disposition the rate
    of unrepresented appeals is reduced to about 47 percent, all
    unrepresented cases require extra processing attention as they progress
    through the various appeal stages.
        Late in fiscal year 1998, as a result of the growing backlog of
    cases in the Court's CLS and in chambers, the Court comprehensively
    reevaluated its personnel requirements and determined that the
    increasing caseload necessitated hiring additional staff for each judge
    and the CLS. At that time, the Court reported to this Subcommittee that
    it planned to reprogram fiscal year 1999 funds from operations to pay
    and benefit accounts to cover the additional salary expenses for these
    new personnel in the fourth quarter of fiscal year 1999. However,
    because of the possibility of a period of operation under a Continuing
    Resolution, the Court has concluded that it should not employ
    additional staff until the fiscal year 2000 appropriation is in place.
    Should the Court's appropriation be for the amount requested, the new
    staff members would be hired at that time.
        As I summarize the reasons for this request for increased staffing,
    I am reminded of the Chinese proverb: be careful what you wish for,
    because you may get your wish. In past years, I have joined those who
    supported the BVA's being given sufficient resources to reduce a
    burgeoning backlog and cut down the amount of time that benefits
    claimants had to wait for a BVA decision. In addition, when I testified
    concerning the Court's fiscal year 1999 appropriations request, I urged
    that sufficient funding be provided to VA General Counsel Group VII
    (the appellate attorneys who represent the Secretary before the Court)
    for adequate staffing and equipment to cut down on the very large
    number of requests by Secretary's counsel for extensions of time.
    Overburdened attorneys were slowing proceedings before the Court by
    repeated requests for extensions of time for the actions, required of
    the Secretary's General Counsel by statute and Court rules, to develop
    a case for disposition by the Court. Both the BVA and VA General
    Counsel Group VII have been given needed funding. Their increased
    capability has moved the ``bubble'' to the Court and has dramatically
    raised the number of cases ready for action by the Court. To move cases
    expeditiously and with integrity is, and must be, the Court's goal. Our
    request for increased staffing will permit us to avoid an unacceptably
    high, further backlog in the face of the enhanced production by the
    Board and VA General Counsel's Group VII. The injustice done by delays
    at the Board level and in the General Counsel's Group VII must not be
    allowed to occur at the Court's level of adjudication when the cost is
    relatively small, compared to that experienced by the other two
    entities. The requested 88 FTE positions are required to maintain
    timely and careful case processing and dispositions for benefits
    claimants seeking judicial review, particularly those who come to the
    Court unrepresented.
        In addition to personnel requirements, the Court's fiscal year 2000
    budget request reflects funding to continue revision and upgrade of the
    court's automated case management system to accommodate changes in the
    Court's processes and to complete updating a now-obsolete system for
    Windows.
        Finally, in the last two years I have urged that the Representation
    Program be authorized and funded outside the Court's appropriation. I
    continue to be concerned that linking the Court to any party before the
    Court can serve to undermine the public's trust and confidence in
    judicial review of veterans' claims. However, the Appropriations
    Committee's consideration of the Program's request as separate from the
    Court's budget request and the removal of discretion from the Court
    over the Program's funding level has separated the Court, to the
    greatest extent possible under current legislation, from direct
    involvement in the Program. Accordingly, consistent with Congress'
    direction, the Court has forwarded to the Congress the Pro Bono
    Representation Program's own supporting statement for its fiscal year
    2000 request for $910,000 as an appendix to the Court's budget
    submission and, also consistent with that direction, has included that
    amount in the Court's total fiscal year 2000 budget request. The Court
    has also communicated to the Representation Program's Executive Board
    the Subcommittee's request for a statement in support of the fiscal
    year 2000 budget request.
        In conclusion, I appreciate the opportunity to present this
    statement in support of the Court's budget request for fiscal year
    2000. On behalf of the judges and staff, I thank you for your past
    support and request your continued assistance.
                                     ______

    Prepared Statement of David B. Isbell, Chair, Executive Board, Veterans
                                   Consortium
        Mr. Chairman and distinguished members of the Committee: On behalf
    of the Executive Board (formerly called the Advisory Committee) of the
    Veterans Consortium, I submit this statement in support of the request
    for a fiscal year 2000 appropriation of $910,000 for the Pro Bono
    Program of the United States Court of Appeals for Veterans Claims--a
    program for which the Consortium has, from inception, had operational
    responsibility. The appropriation requested would represent an increase
    of $45,000, or 5.2 percent, from the fiscal year 1999 appropriation of
    $865,000.
        I understand that the Subcommittee has previously received the
    Program's proposed fiscal year 2000 budget (bearing the title The
    Veterans Consortium Pro Bono Program, fiscal year 2000 Budget and
    Narrative), as an attachment to the fiscal year 2000 budget submission
    by Chief Judge Nebeker on behalf of the Court. For ease of reference,
    however, I have also attached a copy hereto as Exhibit A. That
    document, I believe, provides a full explanation of the reasons for the
    increase in the level of anticipated expenditures, and I will not
    repeat its substance here. Two points do, however, deserve brief
    mention.
        First, it will be noted that the proposed budget calls for
    expenditures totalling $909,014, or slightly less than the rounded
    amount of the requested apppropriation.
        Second, and of more substance, let me offer a comment on a question
    that arose in connection with the hearing on the Court's fiscal year
    2000 budget by the House Appropriations Subcommittee (on March 3 of
    this year). The Court has requested a proportionately larger increase
    in its budget for fiscal year 2000 than has the Program. Given that the
    Court's request rests largely on an anticipated increase in the Court's
    caseload, the question was raised in that hearing, as to whether the
    Program has asked for a sufficiently substantial increase to deal with
    a similarly enlarged caseload. The answer is, we believe that what we
    have requested will in fact suffice. The principal reason for this is
    that, as noted in Exhibit A (p. 1), the Program in 1998 processed
    roughly 150 more requests than it received in that year--i.e.,
    approximately 750 compared to 600--thereby substantially eliminating an
    accumulated backlog of requests. Although this required an
    extraordinary effort on the part of the staff involved, it demonstrated
    that we have the capability, if need arises, of dealing with a larger
    caseload than we anticipate. In addition, we do not anticipate as large
    an increase in our caseload as is the case with the Court. The reason
    for this is that Program seems to be experiencing a somewhat lower rate
    of requests for assistance from appellants before the Court than has
    been the case in the past, presumably because a larger proportion of
    those who would otherwise be unrepresented are being offered and
    accepting representation on a fee-paying basis before they have been
    advised that pro bono representation might be available. Thus, the
    overall pro se rate among those filing notices of appeal with the Court
    has been declining; and it appears that the proportion of those who are
    at that point pro se and who subsequently seek assistance from the
    Program is also declining. In consequence, we believe that the Program
    has the capability of dealing with its share of the expanded caseload
    that the Court is planning for.
        Finally, I would mention two significant statistics about the
    Program. By the end of 1998, the Program had recruited and offered
    training to 536 volunteer pro bono lawyers, and had provided pro bono
    counsel in a total of 1351 cases.
        The Veterans Consortium Executive Board is grateful for this
    Committee's consideration of our budget submission.
                                     ______

                          Deparment of Defense--Civil

                             Department of the Army

                              Cemeterial Expenses

     Prepared Statement Dr. Joseph W. Westphal, Assistant Secretary of the
                              Army for Civil Works

                                  introduction
        Mr. Chairman and distinguished members of the subcommittee: I
    appreciate the opportunity to provide testimony to the subcommittee in
    support of the fiscal year 2000 appropriation request for Cemeterial
    Expenses, Department of the Army. I am providing this testimony on
    behalf of the Secretary of the Army, who is responsible for the
    operation and maintenance of Arlington and Soldiers' and Airmen's Home
    National Cemeteries.
        Arlington National Cemetery is the Nation's premier military
    cemetery and it is an honor to represent the cemetery. This committee
    has historically been very supportive of the cemetery, and we
    appreciate your support.
                        fiscal year 2000 budget overview
        The request for fiscal year 2000 is $12,473,000, an increase of
    $807,000 over the fiscal year 1999 appropriation. This increase will
    permit Arlington National Cemetery to improve its infrastructure and
    work toward implementation of the cemetery's Master Plan. The funds
    requested are sufficient to support the work force, to assure adequate
    maintenance of the buildings, to acquire necessary supplies and
    equipment, and to provide maintenance standards expected at Arlington
    and Soldier's and Airmen's Home National Cemeteries.
    Priority investments
        I would like to summarize some of the Administration's priority
    investments we are proposing this year.
        The Army has recently completed a Master Plan for Arlington
    National Cemetery, which is designed to ensure that Arlington will
    remain active as the Nation's premier military cemetery. This plan
    identifies fourteen parcels of land that are located in close proximity
    to the cemetery and that could be used for future burials. We intend to
    examine those parcels that could be made available so that the future
    needs of the cemetery are met. These parcels include contiguous land
    sites that would be vacated by the Army, Navy, and Marine Corps,
    including the Navy Annex and a portion of Fort Myer. We solicit your
    support for this initiative. Funds are included in the President's
    Budget for fiscal years 1999-2003 to prepare concept plans to develop
    those parcels of land owned by the Federal government when they become
    excess to other government needs. Acquisition of this property would
    allow for continued operation of the cemetery through the 21st century.
    The President's Budget for fiscal year 2000 includes $60,000 for this
    activity.
        Second, $200,000 is included to develop a comprehensive automation
    plan for the cemetery. Improved automation will not only help improve
    internal communications and operations, but we also envision improved
    services to visitors such as automated gravesite locators.
        Third, $150,000 is budgeted to develop a ten-year capital
    investment plan for financing construction projects and full funding of
    capital investments in the most technically and financially efficient
    manner.
        Fourth, $300,000 continues an initiative started in fiscal year
    1996 to expand contracts for enhancing the appearance of the cemetery,
    while reducing the overall cost and number of government employees as
    part of government-wide streamlining.
                                 budget details
        The funds requested are divided into three programs, Operation and
    Maintenance, Administration, and Construction. The principal items in
    each program are as follows:
    Operation and maintenance
        The Operation and Maintenance Program, $10,133,000, will provide
    for the cost of daily operations necessary to support an average of 20
    interments and inurnments daily and for maintenance of approximately
    630 acres. This program supports 96 of the cemeteries' total 102 FTE's.
        Contractual services as part of Operation and Maintenance total
    $4,267,000, including:
      --$1.755 million for grounds maintenance,
      --$840,000 for information guide services,
      --$698,000 for tree and shrub maintenance,
      --$110,000 for custodial services (Custodial services used to cost
            about $210,000, however, competition resulted in a much lower
            bidder receiving this contract, leading to significant savings
            in fiscal year 1998 and 1999. This contractor has now worked
            during the busiest season at Arlington, and performed
            adequately.) and,
      --$864,000 for regular recurring maintenance items, such as headstone
            cleaning and realignment, maintenance of the eternal flame and
            many other minor contracts.
    Administrative program
        The Administration Program, $928,000, provides for essential
    management and administrative functions, including staff supervision of
    Arlington and Soldiers' and Airmen's Home National Cemeteries. Budgeted
    funds will provide for personnel compensation, benefits, and the
    reimbursable administrative support costs of the cemeteries.
    Construction program
        The Construction Program includes $1,412,000, of which $792,000 is
    for new construction projects and $620,000 is for ongoing construction
    projects. The new construction projects include:
        Service Complex.--There is $420,000 included in the fiscal year
    2000 budget submission to correct building code problems at the Service
    Complex, bringing operations there into environmental compliance and
    improving the ability to service equipment at the complex.
        Vehicle Storage Building.--There is $222,000 included in the fiscal
    year 2000 budget submission to provide for design of a vehicle storage
    building at the Facility Maintenance Complex to protect the equipment
    used in cemetery operations and extend the life of the equipment by
    keeping it out of inclement weather.
        Capital investment plan.--The 1997 proposed Master Plan for
    Arlington National Cemetery has identified projects to repair and
    replace aging facilities and utilities, preserve and protect historic
    resources, enhance visitor access and circulation, and provide
    sufficient capacity to ensure interment and inurnment of eligible
    veterans to the extent possible within the cemetery's boundaries. There
    is $150,000 included in the fiscal year 2000 budget submission to
    develop a multi-year plan for financing such projects, consistent with
    full funding of capital investments in the most technically and
    financially efficient manner.
        Ongoing construction projects include:
      --$60,000 to continue preparation of concept utilization plans for
            developing contiguous lands,
      --$165,000 to perform minor road repairs throughout the cemetery,
      --$60,000 to install a heating and air-conditioning system in a bay
            at the new facility maintenance complex, and
      --$335,000 to continue the graveliner program.
                                    funerals
        In fiscal year 1998, there were 3,604 interments and 2,034
    inurnments. In fiscal year 1999, we estimate there will be 3,600
    interments and 2,100 inurnments, and in fiscal year 2000, we estimate
    there will be 3,700 interments and 2,150 inurnments.
                                   ceremonies
        Thousands of visitors, both foreign and American, visit Arlington
    to participate in events. During fiscal year 1998, about 2,700
    ceremonies were conducted and the President of the United States
    attended the ceremonies on Veterans Day and Memorial Day.
        During fiscal year 1998, Arlington National Cemetery accommodated
    approximately 4 million visitors, making Arlington one of the most
    visited historic sites in the National Capital Region. This budget
    includes $25,000 to continue a study, begun in fiscal year 1998, to
    develop more reliable estimating procedures and meaningful estimates of
    the kinds of visitors that Arlington National Cemetery serves. This
    increased orientation to our ``customers'' is consistent with the
    Government Performance and Results Act and the National Partnership for
    Reinventing Government.
                                   donations
        A donation of $250,000 was recently accepted by the Secretary of
    the Army for replacing trees on Arlington National Cemetery grounds,
    above that of normal maintenance.
                                   conclusion
        The funds included in the fiscal year 2000 budget are necessary to
    permit the Department of the Army to continue the high standards of
    maintenance Arlington National Cemetery deserves. I urge the
    Subcommittee to accept this budget.
        Mr. Chairman, this concludes my remarks. We will be pleased to
    respond to questions from the Subcommittee.
                                     ______

                     Federal Deposit Insurance Corporation

                          Office of Inspector General

         Prepared Statement of Gaston L. Gianni, Jr., Inspector General

        Mr. Chairman and Members of the Subcommittee: I appreciate the
    opportunity to appear before this Subcommittee to discuss the fiscal
    year 2000 budget request for the Office of Inspector General (OIG) of
    the Federal Deposit Insurance Corporation (FDIC). This is our third
    year as an appropriated office, and it is my second appearance before
    the Subcommittee to request an appropriation.
                            fdic oig funding history
        The FDIC OIG has had an appropriated budget since fiscal year 1998
    in accordance with Section 1105(a) of Title 31, United States Code, and
    is the only appropriated entity in the Corporation.\1\ Our proposed
    fiscal year 2000 budget for $33,666,000 represents a decrease of $1
    million, or approximately 2.9 percent under the fiscal year 1999 budget
    and a decrease of 10 full-time equivalent positions. This reduction is
    consistent with the OIG's downsizing plans developed in 1996 and the
    overall downsizing plan of the Corporation. The appropriation to fund
    OIG expenses is derived from the Bank Insurance Fund (BIF), the Saving
    Association Insurance Fund (SAIF), and the Federal Savings and Loan
    Insurance Corporation (FSLIC) Resolution Fund.
    ---------------------------------------------------------------------------
        \1\ Prior to fiscal year 1998, the OIG budget was part of the FDIC
    annual operating budget approved by the Board of Directors from deposit
    insurance funds and other funds under the Board's stewardship.
    ---------------------------------------------------------------------------
        The proposed appropriation will fund 231 full-time equivalent
    staff, less than half the 370 employees and approximately 150
    independent public accountant contractor equivalent staff that the OIG
    employed in January 1996. The proposed fiscal year 2000 budget is 44
    percent less than the FDIC OIG's 1996 corporate budget of approximately
    $60 million, adjusted for inflation. The budget and staffing reductions
    have been possible due to the shrinking size of FDIC, completion of
    much of the carryover work that came from the Resolution Trust
    Corporation OIG in 1996, and prospects for continuing strength of the
    banking industry.
                      the fdic--a long history of success
        The FDIC was created by Congress through the Banking Act of 1933 to
    provide protection for bank depositors and to foster sound banking
    practices. During the period from 1980 through 1994, the FDIC managed
    the failures of 1,617 depository institutions. From 1988 through 1992,
    the Bank Insurance Fund reported net income losses totaling $25.3
    billion, the first losses since the Great Depression. However, in every
    year since that period, the insurance fund income has been positive.
    The FDIC successfully liquidated billions of dollars in assets from
    failed banks in the 1990s and assets of failed thrifts transferred from
    the former Resolution Trust Corporation in 1996. Banks and thrifts in
    recent years have had strong earnings, and FDIC experienced no
    significant bank failures for 2 years until July 1998. Consequently,
    the BIF and SAIF accumulated the largest reserves in FDIC history,
    totaling $38.8 billion in November 1998.
        Given the overall stability of the banking system in more recent
    years, the FDIC has been able to shift its focus quite significantly.
    Rather than managing and resolving failed institutions as it did during
    the 1980s and into the 90s, the FDIC's focus now is on monitoring and
    assessing various existing and emerging risks to insured depository
    institutions. As of September 30, 1998, the FDIC insured deposits
    totaling $2.8 trillion at 10,649 banks and savings associations and is
    the primary regulator for almost 6,000 state-chartered nonmember banks
    whose deposits are covered by FDIC insurance funds.
        Ms. Donna Tanoue, Chairman of the FDIC, has identified the
    potential computer glitches in Year 2000 as ``the number one safety and
    soundness priority'' facing the FDIC and the banking industry. The
    Chairman has pointed out in recent speeches that there are also other
    risks to the insurance funds, such as stressed economies in Asia, Latin
    America, and Eastern Europe; rapidly growing banks with high
    concentrations of commercial real estate lending; sub-prime rate
    lending practices; insuring and supervising large, complex institutions
    formed through merger activities; and banking activities related to
    cyberbanking, electronic cash, and other highly technical financial
    delivery systems.
          oig focus on existing and emerging risks to the corporation
        During fiscal year 1998, the OIG's work resulted in approximately
    $50.7 million in total actual and potential monetary recoveries and
    benefits. Additionally, our 103 audit and evaluation reports contained
    165 non-monetary recommendations to FDIC management to improve internal
    controls and operational effectiveness in diverse aspects of the
    Corporation's operations, including automated systems, contracting,
    bank supervision, financial management, and asset disposition.
        Our investigations during the year resulted in 26 indictments, 21
    convictions, 53 referrals to the Department of Justice, 9 employee
    disciplinary actions, and 3 contractor actions. Our office also
    completed a 2-year joint effort with FDIC management to close out 414
    contracts and resolve over 1,000 open recommendations issued by an RTC
    contracting oversight group. This effort resulted in $94.6 million in
    disallowed costs and agreement to seek recovery of an additional $28.8
    million.
                       oig works in partnership with fdic
        Notwithstanding our hallmark of independence, the OIG must work
    with many others as we pursue our mission of promoting economy,
    efficiency, and effectiveness in FDIC programs and operations and
    protecting the Corporation from fraud, waste, and abuse. As I discuss
    the major issues that face the Corporation and the nature of the OIG's
    work to address those issues, it will be evident that we have many
    successful cooperative efforts in place and at work. I will briefly
    elaborate on each area.
    FDIC year 2000 readiness
        The most immediate risks to the banking industry and the FDIC are
    those brought about by the coming of Year 2000. The FDIC Chairman, in
    testimony before the House Committee on Banking and Financial Services,
    outlined the Corporation's three roles in addressing the Year 2000 date
    change. First, in its capacity as regulatory supervisor, the FDIC must
    oversee institutions' management of their Y2K projects, identify
    potential shortcomings in advance, and, if necessary, take aggressive
    actions to induce institutions to take timely steps to prevent
    disruptions caused by the date change. Second, given its deposit
    insurance role, the FDIC must maintain public confidence in the
    financial system. Finally, if institutions do experience disruptions or
    failure, the FDIC must be ready to resolve failing and failed
    institutions.
        The FDIC established a five-phased approach to ready its internal
    systems and monitor the institutions it oversees: awareness,
    assessment, renovation, validation, and implementation. In monitoring
    each of the five phases, the OIG has adopted a proactive approach--
    briefing responsible officials and then issuing advisory memorandums
    when issues of concern arise. Our approach has been successful, and
    prompt action has been taken to improve internal and external Y2K
    efforts. The proactive approach has allowed us to assist the
    Corporation in avoiding unnecessary costs that result from incomplete
    requirements, not considering alternatives, inaccurate or overly
    optimistic feasibility and cost-benefit studies, and inadequate
    testing. In addition, my office is quickly raising issues for
    management consideration and closely coordinating with the Offices of
    Inspector General of the member agencies of the Federal Financial
    Institutions Examination Council to address Y2K issues. Thus far, the
    FDIC has made positive Y2K progress in both readying its internal
    systems and operations and in monitoring the efforts of the
    institutions it oversees. According to the FDIC Chairman, as of
    February 1999, 97 percent of the industry is on schedule in making sure
    their computer systems are ready for the Year 2000 date change and
    there is no safer place to keep your money than in a federally insured
    account at a bank or savings institution.
    Supervising insured institutions
        Another challenge to the Corporation is to ensure that its system
    of supervisory controls will identify and effectively address financial
    institution activities that are unsafe. To help the FDIC more
    effectively fulfill its bank supervision responsibilities, the OIG has
    targeted a number of key areas, including: safety and soundness
    examinations; coordination with other federal and state banking
    regulators; problem bank identification, supervision, and monitoring;
    specialty areas in supervision, including capital markets instruments,
    international banking, and on-line banking activities; the compliance
    examination program, including the frequency, priority, and scope of
    these examinations, and the Community Reinvestment Act examinations and
    related programs.
        Here are some recent results of audits:
      --We completed a material loss review on the failure of BestBank,
            Boulder, Colorado. This review is mandated by section 38(k) of
            the Federal Deposit Insurance Act, and in accordance with that
            statute addressed the FDIC's supervision of the institution and
            causes of the bank's failure. BestBank was closed in July 1998
            and is the most significant bank failure in the last 2 years,
            with losses to the insurance fund estimated by the FDIC to be
            at least $171.6 million. We reported that FDIC's regulatory
            oversight of BestBank could have been more effective in
            controlling the bank's rapid asset growth and curbing the
            subsequent insurance fund losses.
          Obstacles created by BestBank management impeded the regulators'
            access to the bank and questions regarding existing regulatory
            authority restricted access to a third-party entity that
            directly controlled a majority of the bank's assets. The
            examiners continued to rate BestBank although they did not have
            sufficient or reliable information to support the ratings,
            particularly asset quality. Moreover, the supervisory tools
            that were available to the regulators were not aggressively
            pursued in a timely or effective manner. The audit recommends
            that examiners have full access to all pertinent bank records
            when conducting safety and soundness examinations.
      --The OIG completed an audit of the Corporation's policy for
            determining the frequency, scope, and priority of compliance
            and the effectiveness of CRA exams. The FDIC revised its policy
            on examination frequency, scope, and priority to allow for a
            period of up to 5 years between full-scope examinations for an
            estimated 90 percent of FDIC-supervised banks. Our audit report
            focussed on the risks associated with the new policy as it
            related to extended examination frequencies and methods used to
            identify compliance risk in FDIC-insured institutions. As a
            result of our audit, FDIC management has agreed to rescind its
            policy and to conduct all compliance reviews on a maximum 3-
            year cycle.
        Additionally we have initiated the following audit:
      --We initiated an audit of FDIC's Community Reinvestment Act
            examination process in Washington headquarters and selected
            regional offices. The objectives will be (1) to determine
            whether CRA criteria and benchmarks are well defined, (2)
            determine whether CRA examination guidelines are consistently
            applied within and among regional offices, (3) determine
            whether CRA examination procedures are applied in a manner that
            ensures that the resulting ratings provide an accurate measure
            of the banks' performance, and (4) evaluate the consistency of
            the application of procedures on an interagency basis based on
            the results of the 1998 FFIEC CRA Examination Consistency
            Project.
    Maximizing returns from failed institutions
        The FDIC's challenge in its receivership management program is to
    reduce the negative financial effects of failing and failed insured
    depository institutions. The Corporation focuses its efforts on four
    areas: resolving institutions in the least costly manner, managing and
    marketing failed-institution assets to maximize return, pursuing monies
    due to the failed institution, and resolving debts to the institution
    fairly. As of March 31, 1999, the FDIC managed receivership assets
    totaling $2.134 billion in book value. The FDIC held $3.3 billion in
    its reserve fund balance for securitizations and as of February 28,
    1999, held $786 million in book value of assets for equity
    partnerships. In addition, of the $1.2 billion in court-ordered
    restitution owed to the FDIC from several hundred individuals and
    entities, about $139 million has been collected as of March 31, 1999.
        As the amount of retained assets decreases, the FDIC's asset
    management and disposition responsibilities will be reduced, and the
    overall risk associated with this area will decline. Similarly,
    receivership and resolution activities will lessen. However, two of the
    most current significant risk areas for FDIC assets are securitizations
    and equity partnerships. These areas are critical because of the large
    dollar amounts involved and the structure of the transactions. During
    the last 3 years, the OIG has issued 19 audit reports and 1 survey
    memorandum related to securitizations and equity partnerships. Our work
    in this area has resulted in almost $8 million in questioned costs and
    recommendations to improve FDIC's oversight. We currently have 6 audits
    ongoing in the securitization and equity partnership areas and will
    focus on calculations of realized losses, unallowable expenses, the
    adequacy of oversight, and affiliate transactions.
        Our Office of Investigations has been active in investigating cases
    in the area of contractor fraud and concealment of assets by FDIC
    debtors. Some recent results of OIG investigations include:
      --The Ryland Mortgage Corporation pled guilty to two counts of
            impeding the functions of the Resolution Trust Corporation
            (RTC). Ryland Mortgage was ordered to pay $8.7 million in
            restitution and fines, the largest monetary recovery ever to
            result from an FDIC OIG investigation. Our 3-year investigation
            uncovered a complex scheme in which the contractor defrauded
            the RTC of $3.5 million by misrepresenting the amount of funds
            it collected in connection with the servicing of loans on RTC's
            behalf. Two former officials of the corporation who pled guilty
            to similar charges received sentences comprised of monetary
            fines, home detention and probation.
      --In partnership with the Corporation's Division of Resolutions and
            Receiverships, the U.S. Attorney's Offices, and other federal
            agencies, we have begun to see significant results from a
            series of investigative initiatives involving FDIC debtors who
            have concealed assets or committed other fraud in attempting to
            avoid repayment of their obligations to FDIC. One of our
            initial efforts in this area resulted in a $1.1 million
            recovery from two felons who concealed assets and lied to the
            court to avoid paying their court-ordered restitution. In
            another joint investigation with the FBI and IRS, an FDIC
            debtor was criminally convicted, sentenced to serve 37 months
            in prison, and was ordered to pay $2.9 million in restitution.
            Our investigation found that the debtor, who defaulted on a
            $4.9 million loan from a failed financial institution,
            concealed his financial interests during a bankruptcy
            proceeding.
        Our investigators will continue to seek to uncover similar
    situations in order to help the Corporation receive the restitution it
    is due.
    Oversight of contracting activities
        The FDIC and the former RTC relied heavily on the private sector to
    accomplish the mission of managing and selling assets of failed banks
    and saving institutions. Over the past 9 years, the FDIC and RTC spent
    billions of dollars in contractor fees to assist the Corporation in
    fulfilling the many urgent assignments mandated by legislation and the
    banking and thrift industry crises. Although 3 years have passed since
    the RTC's sunset and RTC-related contracting has lessened, the FDIC
    continues to rely on private-sector contractors in conducting its work.
    Contractors assist the FDIC in many areas, including legal matters,
    property management, information technology, and financial services.
        The OIG has continued to focus its resources on auditing contracts
    and agreements and during fiscal year 1998 we identified a total of
    $19.3 million in questioned costs for the strategic area of contract
    award and oversight. Overall, during the period April 1996 to September
    1998, our work in the contracting award and agreement area has resulted
    in about $75 million in questioned costs.
        One of the most significant areas of contract audits has been our
    joint effort with the Corporation's Legal Division to review legal fee
    bills submitted by firms doing business for both the former RTC and
    FDIC. In fiscal year 1998, we issued 62 legal fee bill audits in which
    we questioned over $13 million. Management agreed to disallow slightly
    more than $4 million of that amount. In total, the former RTC and FDIC
    OIGs have issued nearly 300 legal fee bill audit reports with
    questioned costs of more than $37 million.
        Our partnership with FDIC management to close out over 414 RTC
    contracts since 1996, previously discussed, is another example of the
    OIG's efforts to contain the costs of FDIC and the former RTC's use of
    contractors.
    Other OIG reviews
        My office continues to work with the U.S. General Accounting Office
    (GAO) toward the goal of the OIG assuming full responsibility for the
    annual audits of the FDIC's financial statements that the Chief
    Financial Officers Act requires of all government corporations. The
    OIG's increased involvement with the annual audit began in 1995, and
    the OIG continually assumes additional duties. For the 1998 financial
    statement audit, the OIG has assigned 65 percent of the staff, as the
    OIG has assumed full responsibility for several key areas of the audit
    including cash management, investments, and asset valuation. My office
    is committed to this project and OIG and GAO management have agreed
    that there are mutual benefits of the OIG assuming responsibility for
    the annual financial statement audit. We expect to streamline the audit
    process and provide cost savings to the Corporation through our work on
    this audit.
        During this fiscal year we have provided advisory assistance to
    FDIC management on its revised Strategic Plan for 1998-2003 and its
    Annual Plan for 1999 to assure that these plans comply with the Results
    Act. The OIG will continue to monitor and review proposed legislation
    in the Congress to amend the Results Act and will actively participate
    through the President's Council on Integrity and Efficiency and
    interagency groups it sponsors to define an appropriate OIG role in the
    Results Act arena. In the interim, we have initiated evaluations to
    verify and validate the data and systems supporting information
    reported by the Corporation in its GPRA reports. We also plan to
    address GPRA objectives and goals, when appropriate, in the course of
    doing audits and evaluations.
        We issued 5 evaluation reports to FDIC management that covered a
    wide range of issues, including the Corporation's Office of Diversity
    and Economic Opportunity's discrimination complaint program. As a
    result of our recommendations on the discrimination complaint program,
    the Corporation has completed and issued agency decisions on a number
    of older cases; agreed to develop office-wide performance goals and
    performance expectations for individual staff, and to carry out EEO-
    required tasks more timely; implemented a new case tracking system, and
    taken positive steps toward developing an alternative dispute
    resolution program. Another evaluation report on the corporate lease
    acquisition process resulted in the following actions: (1) better and
    more timely information being provided to FDIC's Board of Directors on
    proposed leases for its use in making decisions; (2) justification for
    lease terms in excess of the Corporation's staffing projections; and
    (3) improved tracking and reporting of renovation costs.
        We referred 65 substantive Hotline allegations for review or
    investigation during fiscal year 1998. During its most recent 3-year
    period, the Hotline has referred almost 200 allegations for further
    review or investigation, targeting a wide variety of alleged
    wrongdoing, including employee misconduct, contract abuse, and asset
    management issues. Almost 40 percent of these cases were referred to
    the OIG Offices of Investigations, Audits, or Evaluations, and the
    other 60 percent were referred to FDIC management for review and
    action.
        We reviewed 61 proposed corporate policies and reviewed 25 draft
    regulations and proposed legislation, and provided comments when
    warranted. In addition, we responded to 51 Freedom of Information Act
    and Privacy Act requests and appeals during fiscal year 1998. We have
    also provided oversight of FDIC's internal control activities under the
    Chief Financial Officers' Act and the Federal Managers' Financial
    Integrity Act.
        We participated with 3 other OIGs--Department of the Treasury,
    Federal Reserve and the National Credit Union Administration--on an
    interagency task force, which reviewed the Federal Financial
    Institutions Examination Council (FFIEC) training program. The FFIEC
    was created in 1979 as an interagency body to prescribe uniform
    principles, standards, and report forms for the federal examination of
    financial institutions and promote uniformity in the supervision of
    these institutions. The task force reported to the FFIEC Chairman that
    the Council is reasonably successful in fostering coordination of
    training activities among the 5 federal financial institution
    regulatory agencies. The report detailed two recommendations for the
    Council to consider immediately, one related to the FFIEC's
    appropriation and another dealing with a supervisory issue. The report
    also outlined plans for future joint audits of the FFIEC.
                           oig management initiatives
        Since I became Inspector General in April 1996, we have continually
    sought to enhance the OIG's effectiveness. During fiscal year 1998, we
    began an effort at self-evaluation of our work processes, including
    having a peer review of our audit operations by another OIG. The peer
    review concluded that the system of quality control used by the FDIC
    OIG was designed in accordance with standards established by the
    President's Council on Integrity and Efficiency and provided reasonable
    assurance that our office was in conformance with professional
    standards in the conduct of its audits. We also updated our own
    strategic plan and annual performance plan to be consistent with the
    Corporation's plans and to comply fully with Results Act requirements.
    Our 1999 annual performance plan is included in the fiscal year 2000
    budget we previously sent to the Subcommittee. Our strategic goals,
    objectives, and operating principle are intended to provide a value-
    added focus to the Corporation and are directly related to the FDIC's
    mission, strategic goals and objectives, and corporate operating
    principle. Also, consistent with our strategic and annual plans, we
    recently initiated client and employee surveys to identify
    opportunities to improve our effectiveness as an organization.
        In addition, we are moving forward in assuming the personnel and
    contracting authority afforded the OIG under the Inspector General Act.
    The FDIC Chairman agreed in July 1998, that, in line with the
    independence of the OIG, my office should have the authority to make
    its own personnel and contracting decisions--authority that had
    previously resided with other corporate officials. We are in the
    process of hiring staff and anticipate that we will fully take over
    this responsibility in fiscal year 1999. I view the Chairman's decision
    as a major step in enhancing the OIG's independence.
        Another significant initiative is our effort to review workplace
    diversity issues. The Corporation and the OIG strive to ensure that our
    workforce draws more broadly from the diverse population found in
    various American professions. By including individuals with diverse
    backgrounds in every aspect of our operations, we strengthen our
    ability to serve OIG employees as well as our clientele. The
    Corporation is developing a plan with several diversity initiatives
    designed to maintain and enhance the quality and diversity of its
    workforce. Likewise, my office is conducting its own study, in
    accordance with the House Subcommittee on VA, HUD, and Independent
    Agencies; Committee on Appropriations' report on the fiscal year 1998
    appropriation, that will address the diversity of our staff and issues
    that staff believe are important to successfully have a diverse
    workplace.
                            fiscal year 2000 budget
        Our reduced budget will result in a slightly lower level of audit
    and investigation activity for fiscal year 2000 than planned for fiscal
    year 1999, but this reduction is consistent with planned corporate
    downsizing. The fiscal year 2000 budget reflects decreases in salaries
    and benefits consistent with the reduced staffing funded by the budget.
    The budget also includes money to (1) fund higher travel expenses, (2)
    pay outside printing expenses required by the OIG, and (3) replace
    computer equipment in accordance with the Corporation guidance on
    equipment replacement cycles.
        In fiscal year 2000, the OIG will continue to focus on areas of
    highest risk to the Corporation and deposit insurance funds. A key goal
    is to assess the manner and extent to which FDIC programs and
    activities achieve their intended objectives, as outlined in the
    Corporation's Strategic Plan. Among specific audit work planned, we
    will continue to review FDIC's efforts to ensure that banking
    institutions and the Corporation itself have automated systems capable
    of recognizing dates properly in Year 2000. Also, we plan to closely
    oversee the Corporation's large investment in information technology
    initiatives, including automated systems development and security over
    access to information. We will continue to review the strategic area of
    contract award administration and oversight; the supervision of insured
    institutions; and play a greater role in our cooperative effort with
    the General Accounting Office to audit FDIC's financial statements.
    Investigative work will focus on fraudulent bankruptcies where FDIC is
    a creditor, hiding assets to avoid paying court-ordered restitution to
    FDIC, and making false statements to FDIC to secure favorable loan
    compromises and settlements. Also, we anticipate continuing our active
    role in providing advisory assistance to management in its strategic
    and annual performance plan initiatives.
        Mr. Chairman, throughout my testimony I have addressed existing and
    emerging risks to the Corporation and its insurance funds. Also, I have
    discussed how my office is working with the Corporation in a
    partnership to address these risks and to help make FDIC programs work
    better. FDIC Chairman Tanoue has been supportive of the OIG since she
    took office last spring. She has recognized the need for an independent
    OIG and has been receptive to my advice--making this a true
    partnership.
        In closing, I believe very strongly that the OIG continues to be a
    valued asset to FDIC. As the FDIC OIG marked its 10th anniversary and
    we celebrated over 20 years since passage of the Inspector General Act,
    I want to thank the Subcommittee for its commitment and urge your
    continued support for our work.
        Additional details supporting our budget request are in documents
    that have been provided to the Subcommittee staff.
                                     ______

                        General Services Administration

                          Consumer Information Center

                                 Justification

        Mr. Chairman and Members of the Subcommittee, thank you for the
    opportunity to present the fiscal year 2000 budget request of the
    Consumer Information Center (CIC).
        The Consumer Information Center was established by an Executive
    Order in 1970, and for 30 years CIC has served consumers through
    partnerships with more than 40 Federal departments and agencies. CIC
    provides an effective vehicle to inform the public about vital topics
    such as health and safety issues, developments in Federal programs, and
    the impact and effects of Federal research and regulatory actions. CIC
    fulfills its mission mandate by ensuring public awareness of and access
    to this information and by making it available to the public through a
    variety of new and time-proven programs.
        In recent years, we have been experiencing a revolution in the ways
    that Americans obtain and use information. During much of CIC's
    history, the public got Federal consumer information primarily by
    writing for printed publications from CIC's distribution facility in
    Pueblo, Colorado. But with the dominance of computers and their
    emphasis on instant access to information, Americans are now relying
    less on printed materials for information, especially those ordered by
    mail.
        To meet this challenge, CIC has reinvented the way it serves the
    public. Moving from a concentration on the printed word to a larger
    vision of a central reservoir of information that can be accessed in a
    variety of ways, CIC continues to make it easy for citizens to use and
    benefit from Federal information. Specifically, last year CIC
    significantly improved its toll-free telephone ordering service and, at
    the same time, added a publication ordering system to an expanded and
    improved web site.
        Consumers can now place publication orders by calling the toll-free
    number, 1 (888) 8 PUEBLO, while customers with Internet access can
    visit the CIC web site (www.pueblo.gsa.gov). They can then view the
    information online, copy it to their home computers, or use CIC's
    secure online ordering system to place credit card orders for printed
    copies of the information. CIC has the full text of approximately 500
    consumer publications available on the Internet along with Federal
    agency recalls and special notices, consumer news, and links to
    consumer sites in the Federal and the private sector.
        Reflecting the nation's new information environment, CIC saw
    printed publication distribution decrease from 8.3 million in fiscal
    year 1997 to 7.6 million in fiscal year 1998. During the same time,
    page accesses to CIC's web site increased from 4 million to 6.5 million
    and CIC's toll-free telephone system received nearly 300,000 requests.
    These program successes and accomplishments reinforce CIC's commitment
    to its mission mandate. Throughout any program transition that CIC
    undergoes, our goals and objectives remain focused on delivering to the
    public useful and reliable information that is a by-product of ongoing
    Government activities.
        In keeping with the goal of delivering the best government consumer
    information, in fiscal year 1998 CIC updated and released the 1998-99
    Consumer's Resource Handbook (CRH). The CRH is a prime example of
    Government empowering individuals to solve their own problems and
    answer their own questions by providing them with the best and most
    direct sources of assistance. Published continuously since 1979, the
    CRH is one of the most popular consumer documents ever issued by the
    Government. The requested appropriation of $2,622,000 includes an
    amount of $300,000 for producing and distributing the CRH. During
    fiscal year 1998, CIC distributed 340,000 copies and will distribute a
    comparable amount in fiscal years 1999 and 2000.
        CIC also produces the Consumer Information Catalog which lists the
    CRH and hundreds of other popular titles on subjects such as money
    management, health, and Federal programs and benefits. I'm pleased to
    present our newly redesigned Catalog featuring four colors, bright
    graphics, a photographic cover, livelier copy, and simplified ordering
    instructions. The new version makes it easier than ever to order
    Federal consumer publications, and offers the options of mailing in the
    order form, or faxing it, or calling in to our toll-free number, or
    reading the publications and ordering them online. In fiscal year 2000,
    CIC will distribute approximately 12 million Catalogs primarily through
    educators, nonprofit associations, large and small businesses,
    libraries, and Members of Congress.
        During fiscal year 2000, CIC will also continue to build the
    cooperative publishing program, where private sector entities share the
    costs of making publications available for listing in the Catalog. In
    fiscal year 1998, 19 private sector partners worked with Federal
    agencies to develop and fund publications on topics of mutual interest,
    bringing the total number of cooperative publications to date to 162.
        In conclusion, CIC will continue to meet the information challenges
    offered by the new century. Its accomplishments will be measured by its
    successful research and identification of valuable Federal information;
    its media and marketing programs; its centralized publication
    distribution system in Pueblo, Colorado; and its widely acclaimed web
    site. I am confident that the services CIC delivers to the public will
    continue to play an important role in maintaining a healthy consumer
    economy and in providing a vital communications bridge between citizens
    and their Government.
        Mr. Chairman, again I thank you for the privilege on behalf of the
    Consumer Information Center to present its budget request for fiscal
    year 2000. We trust that the Committee will agree that CIC is a
    valuable Federal program and that it will look favorably upon our
    request.
                                     ______

                      National Credit Union Administration

               Prepared Statement of Norman E. D'Amours, Chairman

        Thank you for allowing me to present the National Credit Union
    Administration's request for the NCUA Central Liquidity Facility (CLF)
    and report on the condition of federally-insured credit unions.
        The CLF, established in 1979, serves as a liquidity source for
    credit unions. It is funded by its credit union members and may borrow
    from any source; it currently has a borrowing arrangement with the
    Federal Financing Bank. The CLF borrowing authority is not used to
    build up loan volumes because the Federal Credit Union Act prohibits
    using proceeds from CLF loans to expand credit union portfolios.
    Rather, the funds are advanced strictly to meet credit union liquidity
    needs, in response to circumstances dictated by market events. NCUA is
    not requesting an appropriation for the CLF, merely removal of the
    appropriations cap on the CLF's borrowing authority. Removal of this
    cap would have no budgetary or scoring impact.
        The limit on CLF borrowing for new loans to credit unions has
    remained at $600 million for the last 18 years. The budget submitted by
    the Office of Management and Budget requests a $600 million limit on
    borrowing and a $257,000 limit on administrative expenditures for
    fiscal year 2000. Although the statutory language submitted in our
    justification tracks the OMB's request, we are requesting the removal
    of this borrowing cap in anticipation of possible liquidity demands
    credit unions may face due to the approach of the Year 2000.
        Removing the appropriations cap on CLF borrowing does not mean that
    there is no cap on CLF borrowing, but rather that the cap contained in
    Section 307 of the Federal Credit Union Act (12 U.S.C. 1795f) applies.
    Under the provisions of the Federal Credit Union Act which established
    the CLF, the CLF is permitted to borrow up to 12 times its subscribed
    stock and surplus, or currently about $18.5 billion. While the $600
    million appropriations limit has, in the past, been adequate to address
    isolated liquidity needs in credit unions, this amount represents less
    than 3.25 percent of the $18.5 billion which the CLF would be permitted
    to borrow under its enabling legislation. When the $600 million limit
    was first inserted into the Appropriations measures, in 1980, $600
    million exceeded 12 times the subscribed stock and surplus of the CLF.
    Clearly, Congress did not intend to restrict the borrowing ability of
    the CLF to an amount less than the cap contained in the Federal Credit
    Union Act.
        Despite general inflation, dramatic growth in credit union assets,
    and the increase in the CLF's subscribed stock since 1980, the
    appropriations limit has never been adjusted. The approach of the Year
    2000 may trigger a system-wide increased demand for liquidity, and the
    $600 million CLF borrowing cap could frustrate NCUA's ability to
    address short-term liquidity needs of credit unions at the end of this
    year.
        Before I go any further, I want to emphasize that credit unions are
    quite prepared for the Year 2000 transition. As of December 31, 1998,
    97 percent of all federally insured credit unions were Y2K ready or on
    schedule to become so. The few credit unions which have not met NCUA's
    deadlines are subject to intense supervision and we will ensure that
    they are also ready. Although NCUA sees no need for credit union
    members to withdraw larger than usual amounts of cash before the year
    2000, it is possible that excessive media focus on the date change will
    cause an increased demand for cash at the end of 1999. I repeat--there
    is absolutely no substantive reason to withdraw large amounts of cash.
    But we all know that sometimes human actions are not based on logic,
    and NCUA has a responsibility to ensure that credit unions are able to
    deal with the threat of increased liquidity demands at the end of 1999.
    The $600 million limit on CLF borrowing could impede our efforts in
    that regard.
        While it is difficult to gauge the potential demand on the credit
    union system due to the Year 2000 date change, estimates range from $2
    billion to $20 billion. For example, if each of the estimated 15
    million households which use a credit union as their primary financial
    institution withdraws an extra $500 at the end of 1999, the credit
    union system will be faced with an extra liquidity demand of $7.5
    billion. While the credit union system, through its network of
    wholesale credit unions known as corporate credit unions, has some
    capacity to supply liquidity and may have the capacity to meet this
    level of demand, it would need to rely on the CLF in order to meet
    liquidity needs above this level. While some have suggested that credit
    unions access the Federal Reserve's discount windows, 42 percent of
    credit unions do not offer the types of accounts which would allow them
    to qualify for discount window access. Further, the number of credit
    unions with actual access is extremely low--only 20 of more than 11,000
    credit unions currently have discount window access, with an additional
    300 in the application process. Moreover, eligibility to apply to the
    discount window does not guarantee approval.
        NCUA is committed to achieving a workable solution to the potential
    Y2K liquidity demand. Removal of the CLF's borrowing cap is by far the
    best solution because it eliminates the need to create new, untested
    systems and structures to distribute liquidity. Nonetheless, we have
    been examining other alternatives with the assistance of the Federal
    Reserve. Such alternatives should accomplish the goal of providing the
    credit union system with adequate liquidity, but they have not been
    tested, they are not yet in place, and they lack the economy and
    simplicity of lifting the cap.
        I am pleased to report to the Subcommittee that we continue to
    streamline the CLF, resulting in cost savings for credit unions. Our
    fiscal year 1998 operating expenses were $154,000--significantly below
    our budget limitation of $203,000. In 1998, all of CLF's net income was
    returned to member credit unions in the form of capital stock
    dividends. While next year's operating expense request of $257,000 is
    slightly higher because of the addition of one staff member, this still
    represents a substantial decline over the past few years, as CLF
    expenses in fiscal year 1993 were $767,000.
        Mr. Chairman, we respectfully request that you support our
    authorization request in order to continue the NCUA's and CLF's ability
    to respond to adverse liquidity situations.
        Turning to another subject, I would like to thank the Subcommittee
    for providing an additional $2 million for NCUA's Community Development
    Revolving Loan Fund in fiscal year 1999 for loans to low-income credit
    unions. Since 1987, when the NCUA began administering the Fund, we have
    revolved our $10 million appropriation ($6 million initially, $1
    million in both fiscal years 1997 and 1998, and $2 million in fiscal
    year 1999) into 141 loans totaling $19.3 million. In 1998 alone, we
    approved 17 loans to 17 credit unions for a total of $3 million. As of
    January 31, 1998, our pending applications total $1.4 million. We
    appreciate the Subcommittee's support of our efforts to provide
    assistance to low-income credit unions.
        Finally, I would like to briefly summarize the current condition of
    credit unions and the National Credit Union Share Insurance Fund
    (NCUSIF). Once again, credit unions had a banner year in 1998--assets
    are at a record level, while the number of problem credit unions
    remains low. During 1998, total assets of federally-insured credit
    unions increased by 7.4 percent, from $351.2 billion to $388.7 billion.
    Despite the increase in assets, credit unions' overall capital to asset
    ratio remained strong at 11.5 percent, on average. The number of
    problem credit unions (those rated code 4 or 5) is also down, to 297
    from 330 at year-end 1997; these problem credit unions represent less
    than 1 percent of total shares. These figures demonstrate the continued
    overall safety and soundness of the credit union system.
        The credit union insurance fund also remains strong. For the fourth
    consecutive year, and the fifth time in its history, the National
    Credit Union Share Insurance Fund returned a dividend to credit unions
    on their deposits in the fund. The dividend this year--$118 million--
    was the largest dividend ever returned to credit unions. In October,
    before the dividend payout, the equity level of the Share Insurance
    fund reached 1.32 percent. Even after the largest dividend in its
    history, the Insurance Fund returned to the 1.30 level by December 31,
    1998.
        In summary, the credit union industry remains in excellent
    condition, with a strong insurance fund. While demand still outstrips
    supply, low-income credit unions are receiving more assistance than
    ever before, thanks to this Subcommittee's efforts. With the removal of
    the CLF's borrowing cap, we will be able to address any possible Y2K
    credit union liquidity needs. NCUA's justification and budget tables
    follow below.
                                     ______

                     Neighborhood Reinvestment Corporation

            Prepared Statement of George Knight, Executive Director

        Thank you, Mr. Chairman and Members of the Committee, for the
    opportunity to submit a written statement supporting our fiscal year
    2000 budget request and especially for your long-time support of the
    NeighborWorks network and the Neighborhood Reinvestment
    Corporation. I am honored to update you on the exciting results of
    fiscal year 1998 and present the Corporation's fiscal year 2000 budget
    request for level-funding of $90 million.
                            fiscal year 1998 results
        FY 1998 was an amazing year! Building on the opportunities in this
    unprecedented era of economic growth, over the last year the 184
    organizations in the NeighborWorks network:
      --Assisted 13,769 families by creating new homeowners, sustaining
            existing owners through major rehabilitation, and creating
            affordable mutual and rental housing units- a 20 percent
            increase;
      --Repaired an additional 12,702 homes, enabling better living
            conditions and more attractive neighborhood blocks--an 18
            percent increase
      --Owned 19,296 units of affordable mutual and rental housing (at
            year's end)--a 28 percent increase; and
      --Secured public/private investments of more than $819 million--a 48
            percent increase over fiscal year 1997.
        In addition, through this NeighborWorks system which
    includes the national NeighborWorks network, Neighborhood
    Reinvestment and Neighborhood Housing Services of America (NHSA), we:
      --Purchased (through NHSA) $42.8 million in loans made from
            NeighborWorks organizations' revolving loan funds;
      --Expanded by 9 organizations the number of NeighborWorks
            organizations that now serve 825 communities nationwide; and
      --Provided over 7,297 community development practitioners 149,106
            contact hours of nuts-and-bolts training.
                         fiscal year 1999 year to date
        None of these exciting achievements would be possible without this
    Committee's steadfast commitment and confidence in the
    NeighborWorks system. Last year's fiscal year 1999
    appropriation allowed for a significant expansion of the
    NeighborWorks Campaign for Home Ownership 2002 by dedicating
    $25 million to a Homeownership Pilot. The pilot allowed for expansion
    from 25,000 to 35,000 homeowners and requires securing an additional
    $700 million in lending capital. The two-year pilot requires a
    significant increase in productivity at the local levels, strengthened
    systems (including financial controls), and increased conventional
    capital available for first mortgage lending and property casualty
    insurance. I am pleased to report that the Campaign's major partners,
    as exemplified by our national partners: Allstate; BankAmerica/
    NationsBank; Fannie Mae and the Fannie Mae Foundation; Fleet Bank;
    Freddie Mac; State Farm; USAA; and World Savings; as well as 12
    regional partners and more than 100 other local partners are stepping
    up to the plate with enthusiasm.
        In order to meet the ambitious two-year goal of creating 10,000
    additional homeowners, Neighborhood Reinvestment had to play its part
    in expeditiously committing the funds in the most effective and
    efficient manner. Our plan was to commit 92 percent ($23 million) of
    the Homeownership Pilot's $25 million in grants to
    NeighborWorks organizations' revolving loan funds, systems
    development and financial/rehab counseling needs. By targeting these
    grants to removing the bottlenecks to greater productivity, our
    anticipation is that 10,000 additional homeowners may be secured
    without experiencing unacceptable delinquency and default rates.
    Perhaps most importantly, these activities institutionalized an
    increased capacity for the future.
        I'm pleased to report that all but $1 million is committed:
      --We issued the Request for Proposals on October 30, within one week
            of the fiscal year 1999 VA, HUD and Independent Agencies
            enacted Appropriations bill;
      --97 Responses were received by the deadline, December 9; and
      --Neighborhood Reinvestment's board committee met on January 12 and
            finalized 74 awards totaling $22 million.
        Most of the additional $1 million was awarded to participating
    NeighborWorks organizations based on applications received on
    April 15, 1999; the remainder will be disbursed by the end of the
    fiscal year.
        Needless to say, the local NeighborWorks partnerships are
    grateful for the opportunity and are hard at work. The Neighborhood
    Housing Services (NHS) in Ithaca, New York, for example, has been able
    to commit counseling and financing assistance to customers of a local
    credit union who have been saving for their home purchase. These lower-
    income potential homebuyers have saved carefully but, in many
    instances, will be purchasing homes in need of repair. The Ithaca NHS
    will be able to provide second mortgages for rehabilitation through its
    revolving loan fund, thus ensuring the viability and safety of the
    property, the first mortgage holder, the property-and-casualty insurer,
    the city tax base, and the health of the neighborhood. In a host of
    other cities such as Ithaca, these funds are providing
    NeighborWorks organizations with an extraordinary opportunity
    to assist potential homebuyers who have consistently fallen through the
    cracks--families with incomes that are marginally too high to qualify
    for most available public assistance and decidedly too low to go it on
    their own. The flexible resources available through this pilot will
    make both existing subsidy programs and conventional resources work in
    our neighborhoods as never before.
        Highlights of the first 12 months of the five-year (1998-2002)
    NeighborWorks Campaign for Home Ownership 2002 follow. As of
    December 31, 1998, the participating 107 NeighborWorks
    organizations: Created 6,874 new homeowners, of which: 91 percent are
    low- or moderate-income households; 55 percent are ethnic or minority
    households; 63 percent are single heads of households; 44 percent are
    women; 95 percent are first-time buyers; and for 31 percent of these,
    owning is less costly or only marginally more costly than renting.
      --Secured $585.6 million in private/public investment from outside
            partners.
        I'm concerned that I may be leaving the impression that the only
    activity of NeighborWorks organizations is to increase home
    ownership. Far from it! Consistent with the basic philosophy of the
    network that home ownership and healthy neighborhoods are inextricably
    bound together and mutually reinforcing, during fiscal year 1999
    NeighborWorks organizations will add 2,850 units of
    additional mutual and rental affordable housing, conduct hundreds of
    volunteer projects ranging from new home construction, clean-up/fix up,
    community gardens, alley sweeps, and similar efforts.
    NeighborWorks organizations will also use their revolving
    loan funds to assist business owners to establish and/or expand
    businesses, work with local governments to create neighborhood parks,
    conduct after-school programs, and initiate numerous other community-
    building activities.
        Part of the NeighborWorks system's success over the years
    is due to Neighborhood Reinvestment's ability to monitor local
    financial controls and provide technical assistance, training and
    limited grants to support the wide variety of locally generated
    strategies and approaches. In preparing for fiscal year 2000's
    submission, I felt it was important to emphasize that our intent is to
    support locally designed strategies rather than to create a series of
    ``programs'' which then force local organizations to contort their
    efforts to ``fit'' the eligibility requirements for financial or
    technical assistance.
                       looking ahead to fiscal year 2000
        Thus, you'll see that our objectives for fiscal year 2000 seek to
    balance our resources to meet the highly varied and diverse needs of
    the communities served by the 184 NeighborWorks
    organizations. We hope to slightly expand the number of communities
    served and the number of charter members as well as continue to provide
    high-quality training to the entire community development field. We
    also hope to provide grants to augment local revolving loan funds,
    which have been one of the most critical engines for community
    revitalization.
        Housing rehabilitation for existing homeowners has long been the
    cornerstone of NeighborWorks revitalization efforts, and
    remains key. Only when each responsible owner can borrow the necessary
    capital to meet his or her needs will communities return to stability
    and attractiveness to new homeowners.
        A recent empirical study in Cleveland, by Cleveland State
    University, shows that every $1 investment in home rehabilitation adds
    13 cents to the value of homes located within 150 feet of the rehab
    project. Thus, the average investment (in the Cleveland study) of
    $31,000 in substantial rehab added $4,000 to the sale price of every
    home located within 150 feet. The study also shows that above-average
    rehab investment, or multiple rehabs in a block, have even a larger
    effect on the value of nearby homes.
        Our technical assistance will focus on specific local needs as well
    as on strategic initiatives inspired by members of our network that
    promise to benefit the network as a whole.
          the neighborworks campaign for home ownership 2002
        The NeighborWorks Campaign for Home Ownership 2002
    focuses on expanding its impact in terms of the number of new
    homeowners served and strengthening the capacity of local systems to
    manage expanded productivity.
        In order to meet this mission, over the next five years the
    NeighborWorks Campaign for Home Ownership 2002 intends to:
      --Create 35,000 new low- to moderate-income homeowners;
      --Counsel an additional 270,000 potential owners; and
      --Generate $2.5 billion of public/private investment in underserved
            communities.
        With the fiscal year 2000 appropriation of $90 million, we would
    further expand the NeighborWorks Campaign for Home Ownership
    2002. Grants would enable NeighborWorks organizations to
    provide prepurchase as well as postpurchase counseling, first and
    second mortgages, home-repair loans, and foreclosure-intervention
    assistance. Neighborhood Reinvestment estimates that this assistance
    will:
      --Yield 7,000 additional new homeowners;
      --Enable the NeighborWorks organizations to assist
            thousands of families to maintain home ownership (through
            rehabilitation, property repairs, postpurchase counseling and
            foreclosure intervention);
      --Leverage a total of $390 million in additional outside investment;
            and
      --Prevent millions in foreclosure losses.
        The NeighborWorks Campaign for Home Ownership 2002, with
    the proposed fiscal year 2000 appropriation, will create more than
    42,000 new homeowners! This is nearly three times the number created in
    the first five-year campaign from 1993 to 1997.
                             multifamily initiative
        Affordable, quality multifamily housing is also essential to
    helping distressed communities. Many NeighborWorks
    organizations have approached community revitalization through
    ownership and management of multifamily units within the mutual or
    rental tenure mode. Several now own more than 1,000 units and provide--
    in addition to affordable quality units for families--after-school
    programs and day care and summer activities. In an effort to better
    meet the requests for technical assistance a group of
    NeighborWorks organizations launched in February of this year
    a five-year initiative to:
      --Strengthen asset management practices throughout the
            NeighborWorks etwork to ensure that properties owned
            and managed by NeighborWorks members are financially,
            physically and socially secure and thus able to serve their
            communities for the very long run;
      --Develop strong resident leaders and services such as after-school
            learning centers, tutoring, and adult learning opportunities so
            that families can enjoy successful long-term tenure, thus
            leaving energy and dollars to pursue other family goals;
      --Attract $600 million in public- and private-sector investments; and
      --Add 10,000 multifamily units to the 19,000 currently owned by
            NeighborWorks organizations.
                     meeting the needs of rural communities
        The work of the Rural NeighborWorks Alliance (a group of
    25 NeighborWorks organizations which banded together in 1991)
    is to find creative, proactive ways to address rural housing concerns
    and increase the focus on organizational resources for rural
    development. Rural NeighborWorks Alliance operates a
    revolving loan fund and, with investments from Fannie Mae, the
    MacArthur Foundation and Neighborhood Reinvestment, the total
    capitalization has grown to more than $1 million in just four years.
    The fund is used primarily for low-interest rate, short-term, deferred
    construction loans, which provide needed gap financing for affordable
    housing development in rural areas.
        Recently, RNA joined with the Department of Agriculture's Rural
    Housing Services' Rural Home Loan Partnership (RHLP) to partner with
    financial institutions to leverage and maximize USDA's Section 502
    programs and access the community facilities fund in order to provide
    opportunities for very low-income households to become homeowners in
    America's poorest rural communities. Twelve NeighborWorks
    organizations were awarded over $4.2 million in Section 502 monies to
    assist the building and renovation of 113 housing units.
        At present, Neighborhood Reinvestment Corporation is also involved
    with the Rural Housing Services to develop the first of a series of
    training sessions to educate and connect interested community-based
    organizations with financial institutions about the Section 502
    programs. During the training sessions, there will also be opportunity
    to learn about successful case studies of how these programs have made
    a difference in rural communities. The first training session is
    scheduled for April 28, 1999, in Memphis.
                 overview of the neighborworks system
        In order to comprehend how we plan to meet the ambitious goals we
    have set for fiscal year 2000, it is important that you understand how
    the NeighborWorks system operates and what makes it
    successful.
    The NeighborWorks Network
        At the heart of this system is the NeighborWorks network,
    consisting of 184 locally directed partnerships composed of community
    residents and the business and public sectors, serving more than 825
    communities nationwide. Often known as Neighborhood Housing Services,
    each NeighborWorks organization's local board of directors
    establishes strategies for revitalization of their neighborhoods and
    community. NeighborWorks organizations share common
    characteristics:
      --Led by a board of directors composed of local residents, financial
            and business sector leaders, and public officials;
      --Are state-chartered, not-for-profit organizations with 501(c)(3)
            status;
      --Operate a flexible revolving loan fund;
      --Work with conventional lenders to develop flexible loan products;
      --Promote physical, economic and social revitalization of designated
            target areas;
      --Create and sustain affordable housing;
      --Meet Neighborhood Reinvestment chartering and ongoing performance
            guidelines; and
      --Develop and support strong resident leaders who work to enhance the
            viability of their communities.
        Our belief is that home ownership in strong, healthy neighborhoods
    gives residents an equity stake in the economic mainstream of America,
    building long-term assets for their families as well as their
    communities. Home ownership also improves city tax bases, creates an
    environment for reputable lending and insurance firms, stabilizes
    school attendance and builds a positive social environment. However,
    the full benefit of home ownership accrues to communities only when
    these homes become secure investments that have at least a strong
    potential for asset accumulation for the buyer. When they do, the
    buyer, their neighbors on the block, and the overall neighborhood all
    benefit. To make sure that revitalizing communities receive the full
    benefits of home ownership, it is important to create a strong nucleus
    of buyers as well as default-resistant owners.
    Neighborhood Reinvestment Corporation
        Created by Congress in 1978, Neighborhood Reinvestment's mission is
    to encourage, support and facilitate these organizations' efforts to
    revitalize distressed communities through the local public/private
    partnerships. We do this through:
      --Technical assistance--delivered by specialized practitioner experts
            geographically placed around the country in nine district
            offices;
      --Flexible grants--to capitalize and operate revolving loan funds;
      --Training--``how-to,'' nuts-and-bolts coursework for community-based
            practitioners; and
      --Our secondary market, Neighborhood Housing Services of America
            (NHSA)--a unique secondary market backed by national investors.
            This ensures the local liquidity of revolving loan funds.
        We also manage the risks inherent in the NeighborWorks
    system through a multifaceted risk management system. In essence the
    risk assessment system backs up strong local board leadership that
    monitors local financial controls, programmatic activities and program
    changes.
    Neighborhood Housing Services of America
        The NeighborWorks system's unique secondary market,
    Neighborhood Housing Services of America (NHSA), serves as a financial
    backstop to local NeighborWorks organizations' loan funds.
    Each NeighborWorks organization may sell loans to NHSA at
    whatever rate and term is locally affordable. This kind of secondary
    market outlet ensures a continuous source of capital through the local
    revolving loan fund, which, in turn, enables local organizations to
    utilize the plentiful private sources of capital that are available for
    conventional lending. Last year $80 million in lending from revolving
    loan funds sparked an additional $740 million in coordinated private
    and public lending. NHSA enables us to continuously meet the capital
    liquidity needs of the NeighborWorks network.
        Together, Neighborhood Reinvestment and NHSA assist in the growth
    and capacity development of local NeighborWorks organizations
    to meet the capital, technical and organizational needs of their
    communities.
                              revolving loan funds
        The engines that drive this system are the flexible local revolving
    loan funds. Neighborhood Reinvestment provides seed capital to attract
    additional capital that may come from local banks, insurance companies,
    local government, foundations and other investors. Each
    NeighborWorks organization sets its own underwriting terms
    and policies. The loans made from the revolving loan funds fill the
    gaps in an otherwise-fragmented set of resources available to lower-
    income borrowers. Local determination of best use and the flexibility
    of these funds together comprise the critical resource for broader
    community revitalization. For example, the revolving loan funds are
    used for:
      --Gap financing--used in conjunction with conventional loans to
            assist families rehabilitate and purchase their homes ;
      --Equity capital--to secure blighted properties for rehabilitation
            and sale, secure mutual or rental units as well as purchase
            property for future rehab or development.
      --Major rehabilitation, minor repair and emergency loans--used to
            help existing very low-income and frequently elderly homeowners
            maintain their homes and avoid the predatory lending scams that
            often target this population;
      --First- and second-mortgage loans--for those buyers who cannot fully
            qualify conventionally; these loans are tailored to the buyers'
            ability to repay;
      --Down-payment and closing costs for first-time homebuyers; and
      --Economic development--for small business start-up or expansions.
        The revolving loan funds serve both as a capital resource for the
    community and as a way of attracting and securing private investment.
    In fiscal year 1998, investment from NeighborWorks revolving
    loan funds rose by 23 percent, from over $65 million in fiscal year
    1997 to over $80 million in fiscal year 1998.
                                   conclusion
        The NeighborWorks system has proven to be an effective
    mechanism over time to revitalize distressed communities nationwide. It
    has improved its efficiency and effectiveness over its 20-year history
    in leveraging limited public funds with private capital. In 1994, total
    public- and private-sector investments totaled $268.4 million; in 1998,
    total investments in distressed communities amounted to more than $820
    million.
        In fiscal year 2000 and beyond, Neighborhood Reinvestment and
    Neighborhood Housing Services of America look forward to continuing our
    mission to support NeighborWorks partnerships of residents
    and private-sector and public-sector leaders as they work to revitalize
    distressed neighborhoods and communities in rural, small town, suburban
    and urban settings.
        We are extremely grateful for the Committee's support and look
    forward to a successful year and continued opportunities in fiscal year
    2000.
                                     ______

                            Selective Service System

                  Prepared Statement of Gil Coronado, Director

                                  introduction
        As we approach the millennium, I am enthusiastic about the future
    of the Selective Service System. Fiscal years 1998 and 1999 so far have
    been banner years. The Agency's accomplishments reflect the
    professionalism of our modest number of full-time and part-time
    employees and the dedication of nearly 11,000 part-time civilian
    volunteers. I am proud to say that the Selective Service System stands
    ready to mobilize national manpower should the President and the
    Congress decide a draft is needed for a crisis that may exceed the
    capabilities of America's standing Armed Forces.
        Although Selective Service is a compact Agency with a modest annual
    budget, it continues to furnish America's only time-proven defense
    insurance policy. Since World War II, every President, every Secretary
    of Defense, all the Armed Services chiefs, key Members of Congress from
    both sides of the aisle, national veterans and patriotic organizations,
    and more importantly, the American people, have all agreed that the
    Selective Service System must remain in place to underpin America's
    role as a beacon of freedom and strength in a turbulent world.
        But the Selective Service System is far more than just a defense
    manpower insurance mechanism. For present and future generations of
    America's young men, it represents a very critical link between
    society-at-large and today's volunteer military. It is a reminder that,
    as Americans, every young man is personally responsible for ``providing
    for the common defense.'' Each and every day, Selective Service is a
    reminder to the world that, if necessary, we will defend our Nation as
    our fathers, grandfathers, and great grandfathers have so gallantly
    done in the past.
        The President's budget request for fiscal year 2000 proposes
    funding the Selective Service System at $25,250,000. This is the third
    increase since fiscal year 1995. Numerous tradeoffs and adjusted
    priorities were implemented to accommodate constrained resources since
    fiscal year 1995. Notwithstanding, at the current level the Agency
    continues to perform its statutory missions.
                                 agency purpose
        The Selective Service System remains ready to furnish its primary
    customer, the Department of Defense, with personnel for military
    service in a national crisis. It also remains ready to implement an
    Alternative Service Program for conscientious objectors. Consequently,
    Selective Service is a vital component of national defense preparedness
    for our Nation. Its missions, organizational structure, and programs
    have been thoroughly and repeatedly reviewed since 1990. Each review
    also embodied the principles and objectives of the ongoing National
    Partnership for Reinventing Government. Most recently, the Agency's
    missions and structure were analyzed and evaluated, leading to a
    September 1997 General Accounting Office report which provided two
    alternatives: suspending active registration and placing the Agency
    into ``deep standby.'' Ultimately, any decision to change Selective
    Service would require policy judgments that involve other
    considerations, some of which cannot be quantified, in addition to cost
    and time required to respond to a national emergency.
        I am proud of the workforce's uninterrupted professional response
    and its sustained national security contributions. The employees of the
    Selective Service System continue to do the public's business with
    demonstrated enthusiasm and focused commitment. And for my part, I
    continue to manage the Agency austerely, looking for cost savings and
    greater programmatic efficiencies through information technology and
    staffing levels.
                      recent progress in customer service
        Since I last testified before this committee, there have been a few
    dramatic and dynamic changes with regard to serving our customers. Four
    are most noteworthy because they provide the public with effective
    service and satisfy the Congressional charge to Federal agencies to
    evolve into performance-based organizations.
      --Young men are able to register on-line, and anyone can verify a
            registration at our web site. http://www.sss.gov. These new
            options are major accomplishments in customer convenience,
            speedy operations, and greater accuracy of data.
      --We continue to streamline our authorized full-time and part-time
            workforce, achieving a net reduction of over 19 percent in
            civilians and over 13 percent in part time military staffing.
            This continues in concert with the Government Performance and
            Results Act objectives and mandated strategic and performance
            measurement planning.
      --Extensive registration improvement campaigns were conducted in 21
            geographic areas across the Nation experiencing low
            registration rates. Focused chiefly in America's inner cities,
            efforts not only garnered registrations which add to the
            fairness of any future draft, but they also protect Federal and
            state benefits for young men, many of whom are minorities or
            disadvantaged.
      --Twenty-seven states now have laws which reinforce the Federal
            requirement to register with Selective Service. In these
            states, the laws vary, but they generally condition student
            financial aid, public college enrollment, and government
            employment upon a young man's compliance with the national
            registration obligation. The new state laws and several similar
            municipal ordinances increase a young man's awareness of the
            registration requirement.
                            agency areas of emphasis
        Program and Performance Measures.--In concert with the requirements
    of the Government Performance and Results Act, as coordinated by OMB,
    the Agency has identified numerous measurable performance goals that
    define and qualify many expected program accomplishments for fiscal
    year 2000. The goals reflect programmed levels of accomplishment which
    are consistent with the funding and resource levels contained in the
    President's Budget. Additionally, measures identified in the Selective
    Service System's fiscal year 2000 Performance Measurement Plan, define
    annual progress toward the achievement of particular goals and
    objectives also delineated in the Agency's fiscal year 1997-2002
    Strategic Plan. Measures of performance effectiveness are: qualitative
    improvements over specific time frames; more accurate and faster
    turnaround of data; lower levels of personnel staffing; improved
    customer services; and the completion of all Y2K requirements.
    Recently, the White House commended Selective Service on its excellent
    progress in addressing Y2K issues. With the application of ever
    evolving communications, software and hardware technologies, the Agency
    continues its mandate to accomplish its missions smarter, better, and
    more cost-effectively.
        Registration Improvement & Public Awareness.--For some time we were
    aware that our registration rate has been declining over the past
    several years, but it is only in 1999 that we saw the first big drop.
    For calendar year 1998, it appears that we are about 2 percent under
    1997. Consequently, we are about 89 percent for ages 18 thru 25. This
    concerns us because we believe that once you fall below 90 percent
    compliance, the public would perceive our system as unfair. The public
    would believe, rightly, that not everyone who should be in the pool is
    there; and therefore those who are there, are disadvantaged because
    they are more vulnerable to be called. This is why I have placed such a
    priority on raising the registration rate.
        Recognizing this trend, we implemented aggressive steps to correct
    the situation, such as focused blitzes in low registration areas.
    Naturally, the resources are traded off among other programs. However,
    if additional resources became available, we would expand mass mailings
    to targeted zip codes with low registrations. Further, we would develop
    and distribute more public service broadcast messages to specific
    markets, together with new focused printed materials. And finally we
    would expand our efforts to maximize tape matching programs and
    partnerships to identify potential nonregistrants. I estimate that the
    cost would be about $1.00 additional per registration, or a total of
    about $2 million. And any registration does triple duty: it documents
    that a man complied with the law, it preserves a young man's
    eligibility for Federal/State benefits, and it provides men with
    information about military service. It would take SSS about $5.00 to
    contact the same young man that DOD does for $13,000.
        The Agency is strengthening its programs aimed at improving
    registration rates. Already underway are advanced registration
    improvement efforts. Again this year, Selective Service is making a
    strong attempt to reach young men in selected states where
    registrations appear to be low. Registration improvement ``blitzes''
    are being scheduled to publicize the peacetime registration
    requirement. We strive to reach the unregistered, not only to assure
    fairness and equity if there needs to be a future draft, but because
    the law requires a man to register with Selective Service to remain
    eligible for student loans and grants, most Federal jobs, and training
    under the Department of Labor's Job Training Partnership Act. No man
    should unwittingly deny himself these opportunities. To support this
    effort, additional radio and television public service announcements
    (at no cost for airtime) in English and Spanish are being distributed
    nationally to relevant communities. These high-quality products have
    received laudatory comments from viewers around the country and are
    receiving no cost annual air play commercially valued at over $2
    million.
        Selective Service maintains a home page on the World Wide Web
    (http://www.sss.gov) where registration and other Agency information is
    now available to anyone with access to the Internet. A convenient and
    highly efficient method of registration is the recent provision for the
    public to register through the Internet. Our fiscal year 1999 goal of
    providing an on-line capability for a man to register and immediately
    receive his Selective Service number was achieved on December 2, 1998.
    This efficient method is averaging about 15,000 registrations per
    month. That average will increase as more men become aware of the
    capability to ``Save a stamp. Save time. Register on -line.'' Selective
    Service continues to expand its Web Page with other Federal agencies to
    enhance public education and customer responsiveness. Site content is
    constantly being improved. On- line now is the capability to verify a
    man's registration status. It can be used by anyone or any
    organization, such as colleges, universities, state and Federal
    agencies. The purpose of all these changes is to provide outstanding
    service to our customers: service which is responsive, convenient, and
    more timely.
        Information Technology (IT).--We are also investing in IT as the
    vehicle to improve customer services. Modernization of the Agency's
    technology infrastructure began in fiscal year 1997 and is planned to
    continue through fiscal year 2003. In accordance with the requirements
    of the Information Technology Management Reform Act of 1996 (Clinger-
    Cohen Act), the Agency is developing an IT architecture that describes
    the work of the Selective Service System, the information it uses, and
    the IT needed to carry out its missions. Aligned with these efforts is
    the Agency's capital planning initiative which is also being developed
    to satisfy the Act. Further, our Information Management Modernization
    Plan focuses on adding new information technologies and Y2K mandates to
    the Agency's infrastructure. This is mainly driven by changing customer
    needs and revised government requirements. The goal of upgrading the
    Agency's IT platforms is based on reengineering critical mainframe
    computer systems while targeting other systems for use on small
    computer platforms. Integrating the Selective Service mainframe
    computer systems into more user-friendly client/server applications is
    our strategy over the next several years with the potential to move off
    of a large mainframe. Selective Service has modified its computer
    application programs to be Y2K compliant. These programs have been
    tested and validated by in-house staff. Independent validation and
    verification is underway by a contractor. These are the type of
    proactive efforts which the White House recently characterized as
    ``excellent progress.''
        By embracing change and applying technology, Agency activities are
    leading toward a paperless work environment and a more economic means
    of doing business. We are exploring and implementing new methods of
    sharing information with other government agencies to verify Selective
    Service registrant data. This is necessary to verify that men are
    eligible to participate in state and Federal benefits in accordance
    with the Solomon Amendment to the Military Selective Service Act and
    the Thurmond Amendment (5 U.S.C. 3328). As the Agency moves forward
    with its IT improvements, updated and appropriate performance measures
    are being employed to monitor progress toward the attainment of
    objectives and milestones.
        Revamping these systems will pay important dividends in end-user
    productivity and better service to customers. The Selective Service
    System is confident that its IT initiatives will improve customer
    service and increase the productivity of the Agency's workforce.
                                    summary
        Today, Mr. Chairman, the Selective Service System stands prepared
    to perform its crucial, time-tested responsibilities if directed to do
    so. The missions of this small Agency are even more fundamental to our
    National Military Strategy as the United States deploys its Armed
    Forces in ever more scattered world trouble spots and as recruiting and
    retention for our volunteer military become more challenging. The
    Selective Service System remains resolute in its rightsizing and
    streamlining of operations. The fiscal year 2000 appropriation request
    of $25,250,000 will be invested very prudently in one of the Nation's
    greatest security assets. Its rationale for existence and its
    credentials are the same: a compact structure with the means to provide
    manpower to our Armed Forces as required in a national emergency, and
    to do it timely, fairly, and equitably.
        I am especially proud to lead a dynamic and productive Selective
    Service System. I can assure you, Mr. Chairman, that with the ambitious
    efforts underway, America is maintaining a low-cost insurance policy
    against underestimating the nature and size of future threats our Armed
    Forces may face. Selective Service has accomplished much since I last
    appeared before this committee. My pledge to you is that our
    achievements this year and next shall be even greater.
        Thank you, Mr. Chairman.

                  Community Development Financial Institutions

    Prepared Statement of the Coalition of Community Development Financial
                                  Institutions

        Chairman Bond, Senator Mikulski, and distinguished members of the
    Subcommittee, thank you for the opportunity to submit testimony on the
    President's budget request for the Community Development Financial
    Institutions (CDFI) Fund. The President has requested $125 million for
    the CDFI Fund in fiscal year 2000. The CDFI Coalition, representing
    more than 465 CDFIs working in all 50 states, urges you to support the
    President's full request.
        The CDFI Coalition formed in 1992 to respond to initiatives by the
    Administration and Congress to support CDFIs. We served as a primary
    resource in drafting the legislation that created the CDFI Fund. Since
    that time we have devoted our efforts to building public and financial
    support for the CDFI industry through advocacy, public education,
    knowledge building, and outreach. The CDFI Coalition represents
    community development loan funds, community development banks,
    community development credit unions, microenterprise lenders, and
    community development venture capital funds. Together our members have
    loaned and invested some $4 billion in our nation's most distressed
    communities.
                                what are cdfis?
        CDFIs bring private sector capital to bear on problems that have
    historically required public sector solutions. CDFIs emerged in
    response to the credit and capital-related assistance needs of our
    nation's most economically and socially distressed and disinvested
    rural, urban, and tribal communities. Their purpose is to create
    permanent solutions in these communities. They are bridge institutions
    that link unconventional borrowers and conventional financial
    institutions. They all have community development as their primary
    mission and carry out that mission by financing businesses and
    community facilities, job creation and development, and affordable
    housing in low and moderate-income communities.
        The government did not create CDFIs. Some CDFIs have histories
    stretching back five decades. These organizations are the responses of
    hundreds of local communities to fill market niches that banks and
    other conventional financial institutions do not. They are based on
    bipartisan principles of building private markets, creating
    partnerships, and providing the tools to enable poor individuals and
    communities to become self-sufficient and stakeholders in their own
    future.
                        why is the cdfi fund important?
        The CDFI Fund is a unique government effort created to capitalize
    financial institutions committed to serving and improving low-income
    and low-wealth communities. The Fund bolsters economic development by
    investing in and assisting CDFIs. By investing in institutions, not
    just projects, the Fund helps CDFIs better respond to their markets by
    increasing their ability to manage risk, to enhance capacity, and to be
    flexible in their financing. With capital from primarily private sector
    sources, CDFIs excel in using sound business practices to leverage
    conventional, private financing into poor communities.
        Support of these organizations through the CDFI Fund makes the most
    effective use of limited federal resources. It uses relatively small
    amounts of federal money to leverage significant amounts of private and
    non-federal dollars, promotes private entrepreneurship and encourages
    self-help and self-sufficiency.
                      what has the cdfi fund accomplished?
        The CDFI Fund has been innovative, investment-oriented, and
    business-like in approaching its funding. Through its rigorous review
    process, the Fund has made awards that have provided opportunity and
    insisted on institutional viability. Recognizing that there are diverse
    organizational levels, the Fund has established different windows for
    participants. In addition to the ``Core CDFI Program,'' the Fund has
    implemented an ``Intermediary Program'' through which organizations in
    need of assistance can participate through CDFI intermediaries, and a
    ``Technical Assistance Program'' which offers financial support to
    CDFIs working to build their organizational capacity.
        The CDFI Fund has been productive and successful in issuing its
    first three rounds of awards. Thus far, the Fund has awarded $122
    million to 117 CDFIs through its Core Program Component, $3 million to
    70 CDFIs with its Technical Assistance Program, and has reached more
    than 200 CDFIs through its $7 million invested in CDFI Intermediaries.
    The Fund has also awarded $58 million to more than 170 banks and
    thrifts through the Bank Enterprise Awards Program resulting in more
    than $700 million in direct financing services in distressed
    communities as well as $271 million invested in CDFIs. Through these
    awards the Fund has built a balanced national portfolio of urban and
    rural and large and small CDFIs with geographic diversity.
                     why continue to support the cdfi fund?
        CDFIs, their borrowers, and the communities in which they work need
    the capital that the CDFI Fund offers. Support for the CDFI Fund is
    essential to their vital work. Increased support will enable CDFIs to
    continue to rebuild and revitalize our nation's communities. From its
    survey of its First Round Core Program awardees, the Fund's initial
    findings illustrate the significant impact of the Fund's assistance on
    CDFIs. Collectively, this group of 30 CDFIs has taken a $34 million
    investment and turned it into $565 million in loans and investments to
    help create or expand 1,148 businesses and 1,895 microenterprises;
    create or retain more than 12,000 jobs; and develop more than 8,600
    affordable housing units and 285 community facilities.
        The CDFI Fund offers the combination of increased access to capital
    and the institutional capacity building that is vital to CDFIs and,
    through them, to our nation's distressed communities. CDFI Fund's
    programs are consistently oversubscribed. In the midst of its growth
    the CDFI industry is experiencing substantial demand. In the first
    three rounds of Core Component awards, over 560 CDFIs have requested
    more than $662 million. The Fund has awarded a total of $119.5 million,
    barely eighteen percent of the funds requested.
        An increased appropriation to the CDFI Fund generates substantial
    private dollars to distressed communities. In an analysis of its 1996
    Core Program awardees, the Fund found that its First Round investment
    resulted in CDFI asset growth of 122 percent, increasing from $473
    million to $1.05 billion by 1998. CDFIs are very successful at
    leveraging private dollars. They build bridges between conventional
    financial services and unconventional borrowers and often work where
    banks do not. The dollar for dollar match required by the CDFI Fund
    represents only a fraction of the long term leveraging potential of
    this program. Every dollar of CDFI equity investment can leverage up to
    $50-$100 into low-income communities.
        CDFIs will continue to benefit from the CDFI Fund's Training and
    Technical Assistance Initiatives. A key part of the Fund's institution-
    building mandate is its training and technical assistance initiative.
    No issue is more critical to the viability of this much-needed industry
    than building its human capacity. The CDFI Coalition, with a Ford
    Foundation grant, conducted an extensive study of the human capacity
    needs of the CDFI industry. Our findings stressed the need for training
    and proposed efficient and economical approaches to enhance the
    industry's performance.
        With increased support the CDFI Fund can broaden its reach and
    impact, enabling CDFIs to better reach poor communities. The CDFI Fund
    can and should maintain a blend of emerging and mature CDFIs by
    creating a Small and Emerging CDFI Access Program (SECAP) as part of
    its core CDFI Program Component. SECAP would fill a gap between the
    Core Program and the Technical Assistance Program. By providing access
    to limited capital assistance with a streamlined business plan,
    flexible matching requirements and training and technical assistance
    funding, SECAP will greatly expand the Fund's potential customer base.
        Given the demand and success we have described above it is
    appropriate for the Congress to continue to invest in this program. We
    are strongly urging you to provide increased support by appropriating
    the full $125 million requested by the President. In this era of scarce
    resources it is incumbent upon the government to use those resources
    strategically and effectively and to maximize their impact. The CDFI
    Fund can use its support to enable organizations with proven track
    records to expand and diversify their services, grow responsibly, and
    sustain themselves over time.

                           NONDEPARTMENTAL WITNESSES

        [Clerk's note.--The following testimonies were received by
    the Subcommittee on VA, HUD, and Independent Agencies for
    inclusion in the record. The submitted materials relate to the
    fiscal year 2000 budget request.
        The subcommittee requested that public witnesses provide
    written testimony because, given the Senate schedule and the
    number of subcommittee hearings with Department witnesses,
    there was not enough time to schedule hearings for
    nondepartmental witnesses.
                         DEPARTMENT OF VETERANS AFFAIRS
                Prepared Statement of the Joslin Diabetes Center
        Mr. Chairman, thank you for this opportunity to submit a statement
    for the hearing record for the VA concerning fiscal year 2000 funding.
    The purposes of this statement are for Joslin Diabetes Center (1) to
    provide the Committee a status report on the VA's participation in the
    joint Joslin/DOD/VA Diabetes project funded through DOD appropriations
    for the past two years; and (2) to request direct funding through this
    bill of $2 million for fiscal year 2000 for the VA to expand the pilot
    program into new VA regions and facilities.
    Background
        Attached are background fact sheets on Diabetes, Joslin Diabetes
    Center, and the Joslin Vision Network (JVN).
        By the end of fiscal year 1999, the Joslin/DOD/VA Diabetes
    Detection, Prevention and Care Project will have accomplished the
    following at selected VA sites:
        In Hawaii, we have set up the Joslin Vision Network (JVN) at the
    Honolulu VA Clinic and the Tripler Army Medical Center.
        The Joslin Diabetes Outpatient Intensive Treatment (DO IT) program
    has been deployed in Hawaii where the first DO IT implementation
    practice program with patients was completed in December.
        At New England VA (VISN-1), we have the JVN located at the West
    Roxbury/Boston and Brockton VA Hospitals with Togus, Maine scheduled
    for mid-summer deployment.
        The JVN has been deployed at the West Roxbury/Boston VA Hospital.
        Research protocols for the JVN and DO IT programs have been
    cooperatively developed and are in the early stages of implementation.
    From these pilot models, we will develop evidence based practice models
    that can be implemented effectively in current and future additional
    sites.
        The clinical studies and trials that validate this treatment and
    detection protocol for VA and DOD implementation for the JVN and DO IT
    programs will commence in New England in May and in Hawaii in July.
    Fiscal year 2000
                DOD Funding
        For the fiscal year 2000 project phase through requested DOD
    funding, we have planned the following tasks, targets and activities:
      --The three fully operational JVN sites in Hawaii will utilize
            Tripler Army Medical Center as the Reading Center.
      --Tripler will provide the DO IT program on a monthly basis for
            military personnel, families and veterans.
      --The three Image Acquisition Sites for the New England VA will
            utilize Joslin as the Reading Center component.
      --The VA Hospital in West Roxbury/Boston will provide one DO IT
            program on a monthly basis for veterans and family members.
      --All research protocol trials will be completed while new phases
            will be developed for the program evaluation component.
                VA Funding
        With the support of VA policy and program officials, we propose to
    enhance the VA component of the program. The VA and Joslin have
    developed a plan to expand the research and clinical trial protocols
    and to establish and implement Joslin Diabetes Detection, Prevention
    and Treatment programs in an additional region to serve a new veterans
    population group.
    Fiscal Year 2000 Program Summary
        Under current plans, and the pending request for a DOD funded
    program, use of the JVN equipment and the expansion of screening
    opportunities in three VA regions will be the focus for fiscal year
    2000 activities. The advancements in VA and DOD capabilities to detect
    and treat diabetes will result in health care benefits and cost savings
    to patients. This also results in cost savings to the health care
    systems of VA and DOD. The real thrust of the program's importance is
    not the introduction of the new equipment and techniques--the real
    importance is the use of the detection equipment and education in
    treatment protocol that minimize the incidence and severity of the
    impact of diabetes.
        Following the expansion of the JVN and the incorporation of the DO
    IT protocol within the three regions planned for fiscal year 2000,
    Joslin will provide technical assistance in file management, patient
    follow up and monitoring, and the design of long term studies to
    measure the impact of the introduction of these two new elements (JVN
    and DO IT) into the VA and DOD medical networks and infrastructure.
        Joslin will also work with VA and DOD medical personnel on
    developing documentation for use in other VA/DOD locations and with
    their respective geographically adjacent civilian populations. The
    promise of the pilot programs lies in their ability to reach the
    civilian population outside the traditional medical systems and in
    their expanding use within both the VA and DOD.
        The VA enhancement funds we are seeking--$2 million through the VA-
    HUD Appropriations Act--will permit the VA to treat more patients with
    the improved methods, techniques and technology derived from the base
    DOD funded pilot program. This enhancement will enable the VA to better
    accomplish its health care mission, and result in reduced agency and
    patient costs and improved patient treatment.
    Fiscal Year 2000 Joslin Diabetes Center Funding Request--$2 Million

    Joslin Funding Summary

    VA Program Participation Costs (expanded).....................$1,000,000
    Joslin Diabetes Center Program Technology Development.........   500,000
    Joslin Diabetes Center Program Participation Expenses.........   500,000
                        --------------------------------------------------------------
                        ____________________________________________________

          Total, Joslin/VA Project Cost........................... 2,000,000
    Summary
        The proposed expansion of the Joslin/DOD/VA project with the VA
    will provide for the continuing improvement of health and costs related
    to diabetes for the Department of Veterans Affairs for a wider
    population group. We are grateful that we have the policy and
    programmatic support of the VA in our efforts. We understand that the
    VA supports this request for an additional $2 million.
    Conclusion
        Mr. Chairman, expansion of this cooperative effort in fiscal year
    2000 will cost $2 million for the expenses of both Veterans Affairs and
    Joslin Diabetes Center. We respectfully request that you carefully
    consider the potential program benefits and cost savings associated
    with this modest investment for fiscal year 2000 funding. We are
    pleased to be a part of this project with the Department of Veterans
    Affairs and appreciate your Committee's support.
        Thank you again for this opportunity to submit this statement for
    the hearing record.
                                     ______

                 Statement of The Retired Enlisted Association
        On behalf of The Retired Enlisted Association's (TREA) National
    President Fred Athans and National Auxiliary President Ethel Hale as
    well as over 100,000 members and auxiliary, we appreciate the
    opportunity to testify before this subcommittee concerning fiscal year
    2000 Department of Veterans Affairs Appropriations. TREA is a federally
    chartered Veterans Service Organization (VSO) representing retired,
    active, guard, reserve and family members who are serving or have
    served in every component of the Armed Forces of the United States:
    Army; Marine Corps, Navy, Air Force, and Coast Guard. There are several
    issues which affect the members of this organization, and all veterans,
    that will be impacted by the actions of this subcommittee. These issues
    include:
                                 va subvention
        Increased access to health care for military retirees is TREA's
    greatest concern. The majority (sixty-one percent) of our members are
    over the age of 65 and have been disenfranchised from their ``earned''
    military retiree health care benefit. That is why TREA supports
    legislation authorizing the Department of Veterans Affairs to receive
    payments from Medicare to serve Medicare-eligible veterans (including
    military retirees). The Senate has already included a demonstration
    program in S. 4, the Soldiers', Sailors', Airmen's, and Marines' Bill
    of Rights. The VA Subvention program would be a good step in the
    direction of improving retirees access to health care. Further, the VA
    Subvention program would help all those veterans who are on Medicare,
    not only military retirees. As we work with the Ways and Means
    Committee on this issue, we are hopeful that the members of this
    committee, the advocates for veterans in Congress, will support VA
    Subvention when it is addressed in the House of Representatives.
        Due to the fact that Medicare Part ``B'' would be a requirement of
    VA Subvention, TREA supports legislation which would eliminate the
    penalty for military retirees that did not elect Medicare Part ``B''
    and now wish to enroll. Unfortunately, many military retirees were
    counseled by active duty hospital representatives not to enroll in
    Medicare Part ``B'' stating that their care at military health care
    facilities would continue for the rest of their lives. Today, however,
    we have seen several rounds of base closures which have left hundreds
    of thousands of military retirees without quality health care. Waiver
    of the Medicare Part ``B'' penalty and opening VA Hospitals to
    Medicare-eligible retirees will help correct this situation. Again,
    TREA recognizes that this issue falls under the jurisdiction of your
    colleagues on another Committee but we need your support, as advocates
    for veterans on this important issue.
                             long term health care
        H.R. 1432, recently introduced in the House by Representative Kelly
    of New York calls for public funding of long term health care for
    veterans with a service connected disability rating of 50 percent or
    higher. While the Department of Veterans Affairs has been providing
    long-term care for veterans for many years out of its annual health
    care appropriation, the increasing cost of health care makes it
    imperative that Congress provide the funding to carry out this mission.
    Congress can not allow this benefit to cease due to a lack of funding.
                               concurrent receipt
        Presently, military retirees pay is being off-set based on the
    percentage of VA disability they receive. As such, military retirees
    are the only class of American citizen required to waive their earned
    retired pay, dollar-for-dollar, to receive VA compensation for service
    connected disability. There are numerous bills pending in the House of
    Representatives to eliminate this off-set. TREA supports any
    legislation which would address this disparity which exists. We support
    the same treatment of military retirees as U.S. citizens with service
    connected disabilities. The support of the members of this subcommittee
    would be appreciated when your colleagues on the Defense Appropriations
    Subcommittee address this issue.
                        veterans benefit administration
        Following along with the issue of Concurrent Receipt is the
    existing backlog in the processing of claims for a VA disability. The
    current wait is, in a word, shameful. It is an understood fact among
    veterans that if you do not have a Veterans Service Officer working for
    you, your claim will not be acted upon by adjudicators for a
    considerable period of time which may last for years. Veterans with
    service connected disabilities should not be discouraged from applying
    for their earned entitlement to disability compensation because they
    know that the system will be working against them. TREA was pleased to
    hear the Department of Veterans Affairs plans to hire more claims
    processors in fiscal year 2000. However, we remain skeptical that these
    additions will have enough of an impact to truly correct this problem.
    The most recent figures on claims processing show that the existing
    backlog makes the stated goal of 74 days for a rating-related action
    unlikely. Further, the increasing complexity, both medically and
    legally, will continue to have a significant impact on timeliness. The
    Board of Veterans Appeals currently renders a decision within 120 days
    of receiving an appeal. However, the total elapsed processing time for
    an appeal in the first quarter of fiscal year 1999 was 968 days, and
    this is an improvement from fiscal year 1998! A time-frame of nearly
    two and one-half years is not satisfactory. TREA is pleased the VA is
    working to correct this delay but the fact remains that it still
    exists.
        Outside the Department of Veterans Affairs Headquarters is a quote
    from President Lincoln which reads, ``To care for him who shall have
    borne the battle and his widow and his orphan.'' In reality, many who
    have borne the battle do not receive what they earned for fighting in
    that battle. The process of filing a claim needs to be reviewed to
    ensure that veterans who deserve compensation receive it in a timely
    and efficient manner. Please appropriate the necessary funding to
    improve the claims process and the lives of deserving veterans.
        commission on servicemembers and veterans transition assistance
        Along with many other Veterans Service Organizations, and members
    of Congress, TREA anxiously awaited the report of the Dole Commission.
    There were numerous points made by the Commission which greatly affects
    TREA's members. One point of particular concern is the following
    statement:
        ``Although healthcare coverage for Medicare-eligible Service
    retirees would be expensive, the central issue is fairness and equity,
    not affordability. In 1997, the Federal Government spent $2.9 billion
    to provide FEHBP coverage to 1.67 million federal civilian
    beneficiaries aged 65 or older, and budgeted for immigrant healthcare.
    Thus, in the interest of fairness and equity for those who have endured
    the hardships and dangers of a service career, the cost of FEHBP-65
    would be a small price to pay.''
        Military retirees cannot understand why immigrants have more health
    care options then themselves and their families. We believe that
    eligibility reform at the Department of Veterans Affairs, an issue we
    address later, and the previously addressed VA Subvention program would
    help improve this situation.
        One particular area of concern for those of us who spent twenty or
    more years in the military is the recommendation concerning the
    limiting of the VA Home Loan guarantee to one use. Certainly,
    individuals who make the military a career may choose, at some point in
    time, to buy a home that meets their needs. Perhaps this may come with
    the arrival of a child or at a location where base housing may not be
    available. These servicemembers should not be forced into having to
    determine whether or not to buy a home while still on active duty or
    wait until retirement. The VA Home Loan program has been a successful
    program for decades. I do not doubt that a program created following
    World War II can use some readjustment, but to limit the program to one
    use will force career servicemembers into difficult decisions that
    their predecessors did not have to make. Instead of being a transition
    benefit, this could cause a difficulty veterans should not have to deal
    with when separating from the Armed Forces. TREA urges Congress to
    continue to provide full funding for the current VA Home Loan program.
        The Commission has also recommended significant changes to the
    Montgomery GI Bill. The GI Bill is certainly one of the best recruiting
    tools the armed forces have today. Further, the impact it has had on
    society has been profound as more and more Americans have had the
    opportunity to earn college degrees. However, the education system in
    this country has changed greatly over the years. College tuition
    increases have nearly always doubled inflation over the past few years.
    That has made the pursuing of a college degree much more difficult for
    separating servicemembers as the value of the GI Bill has, therefore,
    steadily decreased. Further, education itself has changed. No longer is
    a four year degree the only form of higher education. Often, separating
    servicemembers may take a course over six months which costs thousands
    of dollars. The Commission's recommendation concerning the increase in
    the amount payable for tuition and fees along with the speeding up of
    payment for the GI Bill recognizes the fact that education has changed
    over the years.
        The Subcommittee's support of these improvements to the veterans
    benefits package would be appreciated, not only by TREA's members, but
    by current and future veterans nation-wide. Further, we recognize there
    are numerous other proposals in the Commission's report such as merging
    of DOD and VA purchasing programs as well as facilities. We understand
    that Congress will need to study these recommendations and determine if
    they work in the best interest of veterans and the country. However,
    the recommendations we have addressed here, we believe, are those which
    can be addressed immediately and will have a significant impact on
    those who have served our nation.
                                 va enrollment
        TREA is very pleased with the current VA policy of enrolling all
    veterans for health care. This is a positive step towards showing all
    veterans that their nation is thankful for their service. We urge that
    full funding be granted to ensure that the Department of Veterans
    Affairs will be able to continue to enroll veterans in future years. We
    do not want veterans who have enrolled in the VA to be told in one or
    two years time that the health care they are being guaranteed today has
    come to an end. We are concerned, however, that disabled veterans are
    not receiving their guaranteed health care. TREA has been working on a
    particular case where one of our members, who is rated at 70 percent
    disabled, was told there was no space available to treat his service-
    connected disability. This veteran, in fact, is a priority 1 veteran,
    those rated 50 percent or higher. He should not have been told there is
    no space available due to the large number of new enrollees into the VA
    system. Just as it is important that all eligible veterans have access
    to the VA, it is more important that veterans with service connected
    disabilities can receive treatment and are not told there is no space
    available. Promising veterans care is wonderful, but not at the expense
    of the current patient priority system.
                               eligibility reform
        The Retired Enlisted Association supports the efforts of Chairman
    Stump to provide for eligibility reform concerning the enrollment
    categories in the Department of Veterans Affairs. Presently, many
    military retirees fall under Category 7, the lowest enrollment category
    which means military retirees, who have often lost their access to
    military treatment facilities, cannot access VA facilities either.
    Chairman Stump's proposal to create a separate enrollment category for
    retirees is greatly appreciated by the members of this organization and
    will certainly go a long way towards increasing the health care options
    for military retirees. Further, we believe it is a justifiable benefit
    for those who have dedicated twenty or more years of service to this
    nation. We urge members of this committee to provide adequate funding
    to create this special category.
                            fiscal year 2000 budget
        ``Pay Go'' is an expression which TREA and the other military
    associations have heard for years. If one program was going to be
    funded, its cost would have to be offset by taking money away from
    another program. Now, we have come to find that this is not always the
    case. Last year, the infamous ``Highway Bill'' was offset by taking $10
    billion from, among other agencies, the VA. Our members ask, why does
    ``Pay Go'' not apply to the Transportation Bill like it does to the VA
    and DOD Appropriations Bills? In an effort to increase funding for the
    Department of Veterans Affairs, TREA has supported VA Committee
    Chairman Bob Stump in his efforts to add additional funding for
    Veterans health care and other issues. The grossly under-funded budget
    submitted by the Department of Veterans Affairs to Congress was
    shameful. As the budget surplus was diced up into new programs and
    securing old ones, the VA saw an increase in its budget that barely
    kept up with inflation. That is why we must come before you today, to
    fight for our earned benefits that have, over the years, been gradually
    reduced due to a lack of sufficient funding. However, we recognize the
    budget agreement of 1997 limits the increase in spending which is
    possible. Further, as an association which represents military
    retirees, we fear an off-set which takes funding from the Department of
    Defense would have a severe impact not only to retirees and their
    families but our active duty troops and their dependents as well. The
    Budget Resolution passed by the Senate included an amendment which
    increased VA funding without off-sets from other Defense and Veterans
    programs. TREA urges this Committee to include funding levels equal to,
    and with the protections guaranteed, in the Senate Budget Resolution.
                                gulf war illness
        Health care and disability compensation for veterans of Operations
    Desert Shield and Desert Storm are another area of concern for TREA.
    The concept of service connected disability is relatively simple. If
    you leave the military with an illness you did not have when you
    entered, you are no longer a ``whole person'' as defined by the VA and
    are, therefore, entitled to a disability rating and proportionate
    compensation. Many veterans of the Persian Gulf returned with symptoms
    of no particular illnesses or injury. In response, Congress passed
    legislation allowing the VA to compensate these veterans with
    undiagnosed illnesses.
        Currently, the VA has extended the eligibility period to December
    31, 2001 for compensation for undiagnosed illnesses in Gulf War
    veterans. We are certainly pleased that the VA has done this. We are
    also pleased that the GAO reported in 1998 that the VA has taken a
    number of steps to improve its processing of Persian Gulf claims
    (General Accounting Office, Veterans' Benefits, Improvements Made to
    Persian Gulf Claims Processing). However, the work is not finished. Let
    us not repeat the mistakes that were made over the issue of Agent
    Orange twenty years ago, where many died while studies were trying to
    determine the cause of their illness. We may never know what happened
    to our men and women who served in the Gulf. But we do know that they
    are sick and in need of our help. TREA would like to thank the many
    members of Congress, from both sides of the aisle, who have introduced
    legislation calling for increased research, expansion of the list of
    illnesses which are service connected and other issues relating to
    Persian Gulf illness. We sincerely hope these veterans will not be
    forgotten as time goes by and memories of our nation's efforts in 1990-
    1991 become part of history.
                                   conclusion
        Mr. Chairman, distinguished Subcommittee members, we are at an
    interesting time in history. Through a balanced budget we have the
    opportunity to correct nearly three decades worth of injustice on our
    nation's veterans. We have been told in the past that once the budget
    situation is resolved, our issues would be addressed. Today, the budget
    issue is resolved and we are here asking that our needs be met.
    Veterans realize there is a budget surplus which does not have a penny
    directed to their programs. Why have those who put the nation before
    themselves been put last by the nation? Now you, Congress, have the
    opportunity to correct this by providing enough funding so veterans can
    receive their earned benefits. The Department of Veterans Affairs must
    receive full funding, be authorized to begin the VA Subvention program,
    improve veterans educational benefits and continue to treat veterans
    fairly and justly. By doing this, Congress can help ensure that
    veterans once again become prophets of patriotism and service to the
    nation as well as the best recruiters the Armed Forces had.
        Mr. Chairman, I would like to thank you for giving The Retired
    Enlisted Association the opportunity to present its views on these
    important issues.
                                     ______

              Prepared Statement of the American Heart Association
                                you are a target
        Chances are heart attack or stroke will be the death or disabler of
    you or someone you love. Heart attack, stroke and other cardiovascular
    diseases are America's No. 1 killer and a main cause of disability.
    Cardiovascular diseases account for nearly 1 of every 2 American
    deaths.
        The American Heart Association is pleased to provide
    recommendations on fiscal year 2000 appropriations for the Department
    of Veterans Affairs' Medical and Prosthetic Research program. This
    program consists of four components: Cooperative Studies Program,
    Health Services Research and Development Service, Medical Research
    Service; and Rehabilitation Research and Development Service.
                           you can make a difference
        The AHA, dedicated to reducing death and disability from heart
    attack, stroke and other cardiovascular diseases commends this
    Committee's support of the VA Medical and Prosthetic Research program.
    The AHA is alarmed that the President's budget flat funds this vital
    program. Enactment of this budget would severely jeopardize ongoing
    studies and adversely impact planned innovative research. If a no-
    growth budget is enacted, the VA would be negatively impacted by about
    $10 million in out-year costs for previously approved research programs
    and $10 million in expected biomedical research inflation. At a
    minimum, VA research needs $336 million just to maintain its current
    level of effort. The AHA is concerned that insufficient money is being
    devoted to America's No. 1 cause of death--heart disease--and our No. 3
    cause of death and a leading cause of permanent disability--stroke.
                         how you can make a difference
        The AHA recommends an fiscal year 2000 appropriation of at least
    $360 million for the VA Medical and Prosthetic Research program. Our
    recommendation, consistent with that of the Friends of VA Medical Care
    and Health Research, will allow maintenance of fiscal year 1999
    initiatives and implementation of new initiatives for fiscal year 2000.
    The AHA challenges our government to significantly increase funds for
    heart and stroke research through the VA Medical and Prosthetic
    Research program. We strongly urge the VA to establish heart and stroke
    research centers to advance the battle against heart attack, stroke and
    other cardiovascular diseases--America's No. 1 killer and a leading
    cause of disability. Our government's response to this challenge will
    help define the health and well-being of citizens in the next century.
                                still number one
        Heart attack, stroke and other cardiovascular diseases have been
    the leading cause of death since 1919. Nearly 60 million Americans--1
    in 5--suffer from one or more of these diseases. Millions of Americans
    have major risk factors for cardiovascular diseases--about 50 million
    have high blood pressure, 39 million have high blood cholesterol (240
    mg/dL) and 48 million smoke.
        While heart disease and stroke occur at all ages, they are most
    common in Americans over age 65--an age group that is now about 13
    percent of the U.S. population and will be 20 percent by year 2020. By
    the year 2020, the percentage of veterans over 65 years of age will be
    about three times that of the general population or 51 percent of the
    veteran population. The VA's planning models recognize that its aging
    patient population demands more care. More than 4.49 million or 16.4
    percent of the veteran population reported suffering from ``heart
    trouble'' in the 1993 National Survey of Veterans. More than 990,000 or
    3.6 percent of the veteran population are stroke survivors. As the
    veteran population ages, the number of veterans afflicted by heart
    disease and stroke will increase substantially.
        Cardiovascular diseases put an enormous burden on our economy.
    Americans will pay an estimated $287 billion for cardiovascular-related
    medical costs and lost productivity in 1999. No other disease costs
    this nation so much money and that amount is expected to increase
    dramatically with the growth of the senior citizen population.
         insufficient va resources devoted to heart and stroke research
        The Department of Veterans Affairs Medical and Prosthetic Research
    program plays an important role in heart and stroke research and
    deserves the strong support of Congress. In fiscal year 1998, VA
    support for research on heart disease was $20 million (a 24 percent
    increase from fiscal year 1997), accounting for 7.4 percent of the
    fiscal year 1998 VA's Medical and Prosthetic Research budget. In fiscal
    year 1998, VA-supported stroke research represented $4.6 million or 1.7
    percent of the VA's Medical and Prosthetic fiscal year 1998 budget. In
    addition to its own program, the VA investigators spent an additional
    $33.2 million on heart research and $6.9 million on stroke research
    from outside sources.
              va heart and stroke research benefits all americans
        The mission of the VA Medical and Prosthetic Research program is to
    ``discover knowledge and create innovations to advance the health and
    care of veterans and the nation.'' While the primary purpose of the VA
    health care system is the provision of quality health care to eligible
    veterans, VA-supported research contributes to the quality of care by
    bringing talented and dedicated physicians into the VA system.
    Discoveries from VA-supported research benefit veterans, science and
    the world's health.
        VA cardiovascular research represents an integral part of the
    overall scientific effort in this field. VA researchers include many
    nationally recognized, distinguished scientists and several Nobel
    Laureates. Most recently, 1998 Nobel Prize winner Ferid Murad, M.D. for
    research demonstrating the role of nitric oxide in regulating blood
    pressure, had been supported by the VA. Several VA investigators have
    been acknowledged for their work in cardiovascular research. For
    example, American Heart Association volunteer Gerald F. DiBona, M.D.
    was awarded the prestigious VA Middleton Award in 1995 for
    internationally recognized research on kidney and cardiovascular
    diseases. Also, VA investigators provide core faculty support at major
    medical schools affiliated with VA institutions.
        The Medical Research component of the VA Medical and Prosthetic
    Research program supports both basic and clinical research, primarily
    investigator-initiated peer reviewed studies. This component provides
    funds for support of VA-based faculty members (M.D.s or Ph.D.s) at
    various stages in their careers, multicenter cooperative studies--a
    large portion of which are cardiovascular studies--and research
    equipment. The presence of a VA research program aids the VA. This
    small, but internationally recognized, highly competitive research
    program in fiscal year 1999 supports 2,165 investigators at 107 VA
    facilities nationwide.
        VA cardiovascular research is largely clinical in nature. The VA is
    a major contributor to this nation's clinical research, playing a
    unique role in the research community because of its ability to
    immediately translate research findings into clinical practice.
        VA-supported research has produced landmark results and
    revolutionized treatment in the cardiovascular area. You and your
    family have benefited directly for VA heart and stroke research.
    Several cutting-edge examples follow.
        Inflamed Arteries.--Many heart attacks and strokes are the end
    result of atherosclerosis, the disease process that causes obstructed
    blood vessels. VA-supported research has shown a major way inflammation
    causes atherosclerosis or hardening of the arteries. Scientists have
    identified large numbers of a certain receptor on inflammatory cells in
    heart blood vessels. If researchers can create a way to block that
    receptor, progression of atherosclerosis might be prevented.
        Heart Bypass Surgery.--In 1996, an estimated 598,000 heart bypass
    surgery procedures were performed on 367,000 patients in the United
    States at an average cost of $44,820 per procedure in 1995. Generally,
    one year after surgery, 10 to 15 percent of the vein grafts used in
    these procedures become blocked. VA research has found that reducing
    the temperature of the solution used to harvest the vein grafts may
    stop heart arteries from becoming clogged with atherosclerosis. The
    study also discovered that while a daily aspirin stops artery vein
    blockage for a year after surgery, long-term survival depends on the
    extent of underlying disease before the procedure and the length of
    time of the procedure. In a landmark study, VA researchers found that
    heart medication works just as effectively as coronary artery bypass
    surgery for certain groups of patients with blocked arteries.
        Gene Therapy May Help Heart Failure.--About 4.6 million people in
    the United States suffer from congestive heart failure, the leading
    cause of hospitalization for Americans age 65 and older. VA researchers
    have found in animal studies that inserting a gene in heart cells
    affected by heart failure started an active increase in the chemical
    that triggers the cells to beat more strongly. Additional research in
    this area could provide a new lease on life for millions of Americans.
    Also, VA scientists, using gene therapy in animals, increased the
    number of blood vessels that transport oxygen to the heart.
        Stroke Risk Reduction.--About 9 percent of older Americans suffer
    from the most common type of an irregular heartbeat, atrial
    fibrillation, a risk factor for stroke. Research has shown that low
    doses of the blood thinner warfarin can lower the risk of stroke by
    about 80 percent in patients suffering from atrial fibrillation.
        Stroke Survivor Improvements.--Stroke is a leading cause of
    permanent disability in the United States and the No. 3 killer. VA
    studies have produced therapies to enhance quality of life for
    survivors. VA researchers have created a software program to assess and
    treat the stroke-related speech disorder aphasia, have shown that
    strenuous exercise can benefit stroke survivors who are paralyzed on
    one side of their body, and have developed a rehabilitation procedure
    to restore arm movement. Researchers have identified seven pathways
    associated with motor recovery from stroke, allowing more precise
    predictions about functional recovery of stroke survivors.
        Aspirin and Angina.--About 6.2 million Americans suffer from angina
    (chest pain) due to insufficient blood supply to the heart. In another
    landmark study, VA research found that aspirin cuts deaths and heart
    attacks by 50 percent in patients suffering from unstable angina.
        Angioplasty Benefits.--In 1996, an estimated 666,000 angioplasty
    procedures were performed in the United States to restore blood flow to
    the heart by widening narrowed arteries. VA research was the first to
    evaluate this procedure. Results showed that after undergoing
    angioplasty, patients suffered less pain and can exercise longer than
    those taking only medication. Another study showed that clot-busting
    drugs produced comparable results to those of angioplasty at cost
    savings of $3,000 per patient. Each year more than 150,000 people are
    candidates for clot-busting drugs, according to the VA.
        Heart Failure Drugs.--About 4.6 million Americans suffer from
    congestive heart failure, the often disabling inability of the heart to
    pump sufficient blood throughout the body. A VA study showed that heart
    medications can enhance the heart's pumping ability and keep sufferers
    of congestive heart failure alive. These study results have
    revolutionized heart failure treatment.
        Non-Q-Wave Heart Attack.--Of the estimated 1.1 million Americans
    who will suffer a heart attack this year, an estimated 750,000 will
    experience the non-Q-wave--EKG classification--version. VA research
    showed that noninvasive treatment of certain non-Q-wave heart attack
    survivors saves money and is just as effective or in some cases better
    than invasive procedures such as coronary angiography. Higher death
    rates for victims were associated with invasive procedures.
        High Blood Pressure.--An estimated 50 million Americans have high
    blood pressure, the leading risk factor for stroke and a major cause of
    heart attack. VA research showed that consistent with private sector
    statistics, physicians increase antihypertensive medicine in only 25
    percent of patients and that even those patients who had their blood
    pressure monitored were poorly controlled. Better management of these
    patients will reduce the number of heart attacks and strokes, America's
    No. 1 and No. 3 killers, respectively. An inexpensive computerized
    reminder system helps doctors manage patients and cut costs.
        Cholesterol.--About 39 million Americans adults have elevated blood
    cholesterol levels (240 mg/dL), a major risk factor for heart attack
    and stroke. An estimated 11 million veterans are at increased risk of
    heart disease due to high cholesterol levels, according to the VA. A
    clinical trial showed that daily use drug gemfibrozil reduces coronary
    heart disease risk by 22 percent with major reductions in coronary
    heart disease, heart attack and stroke for individuals with low levels
    of ``good'' cholesterol and normal levels of ``bad'' cholesterol.
    Results could mean cost savings because gemfibrozil is more economical
    than statin drugs. Also, VA research showed the effectiveness of
    cholesterol screening, when broken down into HDL, the ``good''
    cholesterol and LDL, the ``bad'' cholesterol, for adults--even those
    over age 65. Another study found that the addition of soy protein to a
    low-fat diet substantially lowers cholesterol with moderately high
    cholesterol levels.
        Wheelchair Aerobic Fitness Trainer.--This VA-developed trainer has
    become an alternative to drug-induced stress testing for
    cardiorespiratory fitness and coronary artery disease in people with
    lower limb disabilities.
    Heart and Stroke Research Challenges and Opportunities for VA
        The research advances highlighted above and other progress have
    been made possible by congressional support of the VA Medical and
    Prosthetic Research program. Thanks to research, no longer does a heart
    attack or a stroke necessarily mean immediate death. Now that more
    people are surviving, heart attack and stroke can mean permanent
    disability, costly medical attention, and loss of productivity and
    quality of life.
        Challenges and research opportunities to advance the battle against
    heart disease and stroke abound. Examples of on-going VA research are
    highlighted below.
        Heart Failure Studies.--The growing number of sufferers from
    congestive heart failure has earned this disease the title of ``the new
    epidemic.'' VA research is examining whether the addition of beta-
    blockers to standard treatment reduces deaths and enhances health and
    quality of life of patients. If beta blockers prove to be effective
    against heart failure, the drug could save the VA $9.4 million a year.
    Another study is creating a large DNA bank of sufferers to examine the
    genetic basis of heart failure. A third study, the first large scale,
    international, randomized clinical trial is assessing the role of
    digitalis in the treatment of congestive heart failure. It is
    evaluating the effects of this 200-year old treatment in preventing
    deaths from heart failure, the leading cause of hospitalization of
    Americans age 65 and older. Heart failure represented more than 22,000
    VA hospitalizations in 1990 at a cost of about $100 million. Results
    will improve treatment of heart failure.
        Heart Attack Research.--An estimated 1.1 million Americans will
    suffer a heart attack this year. VA research is assessing the most
    cost-effective way to diagnose and treat suspected heart attack victims
    without the use of costly invasive procedures. One such procedure being
    examined is a computer analysis of the heart's electrical signals
    during exercise. Findings from this study could save money, improve
    health care and reduce the number of surgical procedures.
        Warfarin and Aspirin Study.--Heart attack remains America's single
    largest killer. A VA-sponsored study is analyzing the effects of
    warfarin, a blood thinner, plus aspirin versus aspirin alone in
    reducing deaths from heart attacks. Results could save 20,000 lives
    each year, according to the VA.
        Atherosclerosis and Iron Research.--Atherosclerosis or hardening of
    the arteries is a major risk factor for heart attack and stroke. VA
    research is evaluating the concept that too much iron in the blood
    stream contributes to atherosclerosis. Results of this research could
    revolutionize the treatment of heart attack and stroke.
        Irregular Heart Beat and Stroke Drug.--An estimated 1 million
    Americans suffer from atrial fibrillation, the most common irregular
    heart beat, which causes more than 75,000 strokes a year. A VA study is
    evaluating the efficacy of two promising drugs in maintaining normal
    heart beat. Research results will enhance treatment for atrial
    fibrillation and reduce stroke risk.
        Stroke Rehabilitation.--Stroke will strike about 600,000 Americans
    this year; most survivors will remain permanently disabled. Studies to
    enhance functional capacity and capabilities of stroke survivors are
    underway.
        The number of VA research applications has grown slightly over the
    last five years, but funding cuts and/or inflationary increases
    severely restrict support for approved applications. For the programs,
    which were reviewed for fiscal year 1998 funding, more than 30 percent
    of approved applications were funded. Ten years ago, 50 percent of the
    approved applications were funded.
        Through fiscal year 1999, total dollars appropriated for the
    Department of Veterans Affairs Medical and Prosthetic Research program
    have increased $123 million since 1985 at an average annual rate of
    about 3 percent. However, there has been a decrease in terms of
    constant ``1985 dollars'' of $7 million. The Medical Research programs
    highlighted below are of interest to the AHA.
        Investigator-Initiated Studies.--During fiscal year 1999 this
    program will constitute 65 percent of the Medical and Prosthetic
    Research appropriated budget. Under the President's 2000 budget, this
    program would be level funded from the fiscal year 1999 appropriated
    level. These investigators comprise the core of all VA research and
    provide the preceptorship for career development awardees.
        Cooperative Studies.--In fiscal year 1999 this program supports 41
    clinical trials. The VA offers a unique opportunity for cooperative
    studies due to close linkage among hospitals. These studies provide a
    mechanism by which research on the effectiveness of diagnostic or
    therapeutic techniques can achieve statistically significant results by
    pooling data on patients from a number of VA hospitals. The Cooperative
    Studies Evaluation Committee evaluates proposals developed by teams of
    VA clinicians and biostatisticians. The VA under this mechanism has
    supported many landmark clinical trials in the cardiovascular field
    (e.g., studies in high blood pressure treatment and coronary artery
    bypass surgery). Under the President's fiscal year 2000 budget, this
    program would be level funded.
        Career Development Awards.--Applications for these awards are
    reviewed both locally and by the VA Central Office. This program
    experienced a decrease in the number of awards by 58 percent from a
    high in 1991 of 212 awards to a low of 88 awards in fiscal year 1997.
    In response to the Research Realignment Advisory Committee suggested
    rejuvenation of this program, a review began in fiscal year 1997 for
    the VA's Medical Research Service, Health Services Research and
    Development Service and, for the first time, Rehabilitation Research
    and Development Service. This will result in an anticipated 187 Career
    Development Awards in fiscal year 1999.
                                 action needed
        Today's investment in biomedical research will lead to future
    returns. These returns include continued decreases in death rates from
    heart attack, stroke and other cardiovascular diseases, reduced federal
    outlays for hospital and long-term care expenses, a well-trained cadre
    of biomedical researchers and a more healthy and productive society.
        The American Heart Association recommends an fiscal year 2000
    appropriation of at least $360 million for the VA Medical and
    Prosthetic Research program. Our recommendation is consistent with that
    of the Friends of VA Medical Care and Health Research. An appropriation
    of this amount will allow maintenance of fiscal year 1999 initiatives
    and implementation of new initiatives for fiscal year 2000. An fiscal
    year 2000 appropriation of at least $360 million for this program would
    continue current research momentum in cardiovascular diseases within
    the VA and help to maintain the VA's vital role in the overall
    scientific effort in this field. We strongly urge the VA to establish
    heart and stroke centers to advance the battle against heart attack,
    stroke and other cardiovascular diseases--America's No. 1 killer and a
    leading cause of disability.
                                     ______

     Prepared Statement of the National Association for Uniformed Services
                                  introduction
        The National Association for Uniformed Services (NAUS) appreciates
    the opportunity to submit this statement concerning the association's
    legislative agenda.
                                   background
        The National Association for Uniformed Services represents all
    ranks, branches and components of uniformed services personnel, their
    spouses and survivors. Our nationwide association includes all
    personnel of the active, retired, reserve and National Guard, disabled
    and other veterans of the seven uniformed services: Army, Marines,
    Navy, Air Force, Coast Guard, Public Health Service, and the National
    Oceanic and Atmospheric Administration.
                  naus veterans affairs goals--106th congress
        The purpose of this association is to ensure a strong national
    defense as provided by a highly trained volunteer force. To ensure that
    high quality young people will be attracted to service in the armed
    forces the nation must ensure that adequate recruitment and retention
    incentives are available and that any promise of benefits to be earned
    by military services are honored. Unfortunately, over the past years
    many of the promises have been broken because of inadequate funding for
    veteran programs. The ``breach of faith'' by the government and the
    subsequent impact on retirees and veterans has been noticed and is
    affecting the numbers and quality of those considering military
    service--as shown by services missing their new member recruitment
    goals.
    Health care
        NAUS recommends enactment and adequate funding for legislation to
    authorize VA/Medicare subvention legislation on a fee-for-service
    basis. NAUS also supports subvention on a managed care basis as well.
    Both fee-for-service and a managed care component would provide for the
    most efficient and cost-effective delivery care.
        We also recommend that Congress eliminate all co-payments for
    military retirees and TRICARE/CHAMPUS beneficiaries for care received
    in VA medical facilities and return to system whereby VA would be
    reimbursed by the military services for care provided to their
    beneficiaries. This would be a major step towards honoring the lifetime
    medical care promise and restore much of the faith lost in the
    government to fulfill its promises.
        With an aging veterans population it is important that we improve
    the VA's ability to provide long-term care needs for disabled and poor
    veterans through a combination of VA facilities for veterans requiring
    specialized care and expansion of long-term care contracting.
    Survivor's benefits
        NAUS Strongly Urges the Principle of Replacement Income for
    Survivor's Benefits Payable to Widows of Catastrophically Disabled
    Veterans.
        The DIC payable to widows of catastrophically disabled veteran's
    needs to be restructured to more closely parallel the percentage of
    replacement income provided by other Federal survivor's benefit plans
    such as the Military's Survivor's Benefit Plan, or the Federal
    Survivor's Annuity.
        Catastrophically disabled veterans receive additional allowances
    because of their service-connected multiple disabilities and the family
    income may be $36,000 or more a year. While living, their wives are
    their primary care givers and often provide skilled nursing care.
    However, in performing this full-time duty they are not able to work
    and earn retirement or Social Security benefits in their own right. In
    these cases both the veteran and his family are dependent totally upon
    income from the Department of Veterans Affairs (VA).
        Consequently, after their husband's death, the income of these
    widows drops to about $10,000 to $12,500 per year--depending upon the
    number of years of their husband's total disability, and the over
    lapping years of marriage. In the cited examples the percentages of
    income replacement are 28 percent and 35 percent.
        As an issue of fairness we believe the replacement income for these
    widow's should parallel that of federal survivors, which is a about 50-
    55 percent. This change would affect about 32,000 widows of
    catastrophically disabled veterans.
        NAUS also recommends that legislation be enacted to continue DIC
    payments for widows who remarry after age 55.
    Education
        There is now near universal agreement that the veteran education
    benefit is in need of sweeping reform. That statement in no way
    diminishes the Association's appreciation for the improvements made to
    the education benefit in the last two years, improvements that are a
    credit to all members of this Committee. NAUS is sincerely grateful for
    the enhancements enacted last year, particularly for the increase of 20
    percent in the basic entitlement. We would like to see the following
    improvements enacted in the current Congress:
      --Pay eligible veterans full tuition, fees, books and supplies + $400
            per month for up to 36 months. Provide indexes for inflation
            and include non-institutional training.
      --Eliminate the $1200 payroll reduction.
      --Allow the services discretionary authority to transfer the benefit
            to a family member.
      --Allow service members 10-years from first enrollment to use the
            benefit, not to exceed 15 years from separation.
      --Exempt subsistence from counting as income for purposes of loan
            eligibility.
      --Allow accelerated lump sum payments
      --Allow VEAP participants to elect MGIB if they were on active duty
            on October 9, 1996 and pay $1200.
    Employment and Reemployment
        NAUS seeks the following improvements in veterans' employment
    benefits and programs:
      --Congressional oversight in efforts to determine the military
            occupations for which it is feasible to meet civilian
            licensure, certification, and apprenticeship requirements.
      --Equity for military retired veterans regarding military service
            creditable for civil service leave accrual and service
            creditable during reduction's-in-force.
      --Improvement in the programs and services of the Small Business
            Administration that require special consideration for veterans.
      --Establishment of programs to assist reserve and retiree
            entrepreneurs to sustain their business or self-employment
            during and to aid recovery following involuntary military
            service in the Armed Forces for war and contingency operations.
            This is especially needed in view of the immanent call up of
            the reserve forces to support what will be the long term
            operations and commitment required for peace in Kosovo.
      --Repeal of the current law that inequitably imposes age restrictions
            on the ``original appointment'' to certain occupations (i.e.,
            law enforcement, fire fighters, air traffic controllers) or
            amend current law to authorize a ``computed age'' for veterans
            and military retirees that credits prior military training and
            experience
      --Repeal of the current law that prohibits civil service appointments
            in the Department of Defense only after 180 days immediately
            following military retirement.
    Memorial affairs
        NAUS seeks the following improvements in these final benefits
    received by most veterans:
      --Codification of the eligibility requirements for burial in
            Arlington National Cemetery that includes elimination of all
            waivers (HR-70)
      --Legislation authorizing conveyance of government land adjacent to
            Arlington National Cemetery for expansion of burial space
      --Construction of a National Military Museum with sections for each
            armed service.
    Concurrent receipt
        NAUS seek enactment of legislation authorizing the concurrent
    receipt of VA disability compensation and military retired pay without
    an offset of either.
                                    closing
        The National Association For Uniformed Services (NAUS) appreciates
    the opportunity to submit this statement concerning our Legislative
    Agenda for the 106th Congress.
                                     ______

              Prepared Statement of the Fleet Reserve Association
                                  introduction
        Mr. Chairman. The membership is pleased that the Fleet Reserve
    Association (FRA) has been invited by this distinguished Subcommittee
    to present its request for funding the Department of Veterans Affairs
    for fiscal year 2000. On behalf of nearly 155,000 shipmates, I extend
    gratitude and a salute for the concern and active interest generated by
    you, Mr. Chairman, and the Members of the Subcommittee in providing
    funds for the protection, improvement, and enhancement of programs that
    are made available to the Nation's veterans.
        Mr. Chairman, there seems to be some confusion with the name of the
    Fleet Reserve Association (FRA). Many believe that FRA is an
    organization of Reservists. Although FRA does proudly lay claim to
    Reservists among its membership, the majority are active duty and
    retired members of the Navy, Marine Corps, and Coast Guard--
    collectively known as the Sea Services. Its name is derived from the
    Navy's program of transferring to the Fleet Reserve (Fleet Marine
    Reserve for Marine Corps personnel) persons who leave the service after
    20 years of active duty but do not have 30 years to fully retire.
    During the required period of service in the Fleet Reserve, personnel
    assigned earn ``Retainer Pay'' and are subject to recall by the
    Secretary of the Navy.
        This year FRA is commemorating its 75th Anniversary. It is the
    oldest and largest professional military organization exclusively
    serving and representing enlisted men and women of the Sea Services. It
    continues to seek protection and equity for those who serve or have
    served in the Sea Services, and those veterans requesting assistance.
    Since 1924, FRA has been active in pursuing Congressional and the
    Administration's support for enlisted quality of life and veterans'
    programs. FRA is proud of its service to the Nation and its veterans.
                          dva fiscal year 2000 budget
        FRA's major goal for fiscal year 2000 is to seek increased funding
    for the Department of Veterans Affairs (DVA). Without additional funds,
    the Nation's veterans will be short-changed if the Administration's
    inadequate budget request is approved.
        FRA's anxiety over the VA budget is well founded. In the chart
    below, the Association has selected a Federal Cabinet level department
    and several agencies whose programs may be compared somewhat to those
    provided the Nation's veterans. It is noted that for comparability, VA
    isn't getting its fair share of the Federal budget. From fiscal year
    1995 through fiscal year 1998, for example, the Financial Management
    Service, Department of the Treasury, reports that of the five federal
    entities listed below, the lowest percentage increase following that of
    DVA is 3.6 percent greater. If a 14.2 percent increase in funds would
    have been provided DVA, an additional $1.3 billion could have been used
    for sorely needed improvements in veterans' programs.

                              [Dollars in millions]
    ------------------------------------------------------------------------
                                              Fiscal year
               Dept./agency           --------------------------  Percent of
                                           1995         1998       increase
    ------------------------------------------------------------------------
    DVA..............................      $37,769      $41,776         10.6
    PHS..............................       20,725       23,670         14.2
    NIH..............................       10,883       12,501         14.8
    HCFA.............................      310,657      379,950         22.3
    H&HS.............................      303,075      350,563         15.6
    ------------------------------------------------------------------------

        Further testament to the inadequacy of DVA budgets can be found in
    The Economic and Budget Outlook: fiscal years 2000-2009. It cited the
    VA for having one of the smallest percentages in discretionary spending
    in fiscal year 1999. Of the nine (9) categories (not including
    ``Other'') listed under ``Non-defense Discretionary Spending,''
    veterans' benefits was seventh, 1.2 percent less than the sixth place
    ``Natural Resources and Environment.''
        Additionally, the Administration on February 1, 1999 announced that
    DVA's fiscal year 2000 budget is $200 million above last year's
    funding. $124,141,000 of that ``increase'' is to be obtained through
    the Medical Care Collection Fund (MCCF) from third party payers. To
    show further disregard, the Administration included a total of $749
    million in its proposal that the DVA must collect from third party
    payers in order to fund improvements in veterans' health care.
        In its belief that the VA budget continues to be grossly
    underfunded, FRA lists below the programs that should be authorized or
    expanded in the Department of Veterans Affairs (DVA) for fiscal year
    2000. The Association urges the adoption of its recommendations and
    their eventual funding to assure full recognition of America's veterans
    and, if applicable, that they're compensated for the sacrifices made in
    service to the Nation and its citizens.
                          fra recommendations in brief
        The following recommendations are submitted for consideration from
    the perspective of FRA's members whose average age is 67 years. Some
    are veterans of as many as three wars and most are retired from the Sea
    Services yet they are very concerned with the state of readiness of the
    Nation's Armed Forces and the dwindling VA budgets.
        1. Appropriate funds to expand health care for all veterans to
    include the construction and leasing of additional nursing and long-
    term care facilities.
        2. Provide additional funds to improve educational programs and
    provide voluntary open enrollment in MGIB for all current and past VEAP
    participants.
        3. Appropriate sufficient funds to maintain and modernize cemetery
    facilities and equipment (including Arlington National Cemetery) and
    expand the number of cemeteries and burial spaces.
        4. Provide support for the adoption of concurrent receipt of
    military retired pay with veterans' compensation without loss to
    either.
        5. Deny funding to DVA for the enforcement of civil court orders
    directing the division of veterans' service-connected disability
    compensation and encourage the adoption of laws that will repeal the
    practice. And, further, to support amendments to the Uniformed Services
    Former Spouses Protection Act (USFSP) as outlined in H.R. 72.
        6. Support the repeal of the statute requiring the repayment of
    separation pays or bonuses if the recipient enlists in the Reserve
    components or becomes entitled to reserve retirement pay.
                              veterans health care
        Expand Access to Veterans Health Care.--FRA seeks adequate funds
    for the Department of Veterans' medical treatment and care centers. The
    Association believes that VA health care should be open to all
    veterans' regardless of their ability to pay. The Association quite
    agrees that there must be a system granting priority access for certain
    veterans; i.e.--service-connected disabled at 30 percent or more;
    however, all veterans rated 20 percent or less, or non-rated, should be
    granted access on an equal basis--first come, first served.
        The latter group would include non-disabled military retired
    veterans who were promised free medical care for life but do not now
    have access to military treatment facilities (MTFs). These military
    retirees are forced to seek treatment from other than MTF sources.
    Congress, through the Base Closure and Realignment Acts (BRAC), voted
    to close more than 50 percent of MTFs near which the retirees resided
    for the purpose of obtaining the benefits promised to them and their
    families. It is only fair that Congress allow them a higher priority
    access to VA health care and direct the Department of Defense to
    reimburse the VA for care tendered. Frankly, FRA further believes that
    extending equal access to veterans as suggested above will improve
    quality and the administration of care in veterans' health care
    programs.
        In making its recommendation, FRA is aware of the comments
    attributed to Senate Report 105-216, page 14, that the ``VA has
    underutilized capacity that will allow treatment of additional veterans
    . . .'' For those requiring hospitalization, page 15 notes that there
    are an ``increasing number of unused inpatient hospital beds since
    outpatient care is on the rise.'' FRA knows that a major part of the
    problem is the scarcity of employees. This, coupled with complaints
    that the VA is either reducing, consolidating or eliminating health
    care services, points directly to the need to increase funding for the
    Veterans Health Administration (VHA).
        Congress should shame President Clinton into standing by his
    remarks of March 6, 1995 (when he stated that his Administration
    ``fought to fully fund [veterans] benefit programs'') and provide full
    funding to strengthen and enhance the VA's health care system.
        Subvention and MCCF.--Addressing the latter first, FRA recommends
    that to aid in providing additional funding for the VA health care
    system, DVA should continue to collect monetary receipts through the
    Medical Care Collections Fund (MCCF). However, receipts or estimated
    receipts from this program should not be included in the VA budget.
        With an estimated 66 percent of the over-65 male population in the
    year 2000 expected to be veterans, it should be cost-effective for the
    VA and the Health Care Financing Administration (HCFA) to allow
    Medicare-eligible veterans to voluntarily utilize VA facilities for
    their health care. HCFA would reimburse the VA for care provided
    Medicare-eligible veterans and at the same time collect from third
    party insurers providing veterans Medigap or other commercial
    healthcare policies. Instead of Medicare dollars going to a commercial
    entity, authorizing Medicare subvention for the VA would then become
    one of the major building blocks to encourage DVA to continue and
    expand modernization of its health care program. Further, subvention
    will help in the quest to ``fully utilize (the system's) capacity'' and
    ``increase the use of inpatient hospital beds.''
        FRA recommends that a demonstration project for the VA be
    authorized and funded to test the feasibility of establishing Medicare
    subvention programs within its health care facilities.
        Tobacco-related Illnesses.--FRA recommends that the DVA be
    authorized and appropriated funds for the pursuit of monetary
    retribution from the tobacco industry. The funds obtained, if any,
    would be used for the purpose of establishing care and treatment for
    tobacco-related illnesses attributed to smoking while veterans were
    active members of the Nation's Uniformed Services.
        The idea that tobacco-related illnesses for many veterans are not
    service-connected is ludicrous, especially if it pertains to those who
    served in combat environments. Cigarettes were once distributed free by
    tobacco companies and the military services and made available
    practically at cost in military stores. And, too, military seniors may
    have encouraged the use of tobacco by simply announcing, ``The smoking
    lamp is lit.''
        Many service members may recall that cigarettes were a refreshing
    respite from the ordeal of combat, they soothed the nerves, calmed
    fears, comforted the wounded, eased distress in body and mind, and even
    aided in the subsiding of hunger pangs. The VA has been treating
    veterans for alcoholic and drug-related illnesses for years. Since the
    use of drugs is illegal, and alcohol is a craving (as is tobacco use)
    it's hypocritical not to treat tobacco-related illnesses and consider
    tobacco-related claims. FRA believes DVA need not hesitate any longer
    in initiating or joining negotiations against the tobacco industry for
    payments to support its VHA in providing the required care and
    treatment of affected veterans.
        Nursing Homes, Long Term Care, and other Health Care Programs.--Our
    veterans are aging. World War II and Korean veterans are in their 60s
    and above. As noted above, by the year 2000 sixty-six percent of the
    male population in the United States will be veterans. More and more of
    them will become dependent upon the VA to provide the necessary care in
    nursing homes, domicilaries, state home facilities, and its underused
    hospital beds. The Nation can ill afford to wait for out-year
    appropriations before it expands nursing or long-term care.
        The Federal Advisory Committee on the Future of VA Long-Term Care
    recently suggested that VA discontinue funding for the construction of
    nursing homes and, instead, expand contracts with home health agencies
    and nursing homes. FRA, however, has a problem with this approach.
        In recent years there's been a rush of recommendations for Federal
    entities to turn over many of their operations and programs to the
    private sector. Some have merit, others do not. For our veterans, FRA
    believes that only the VA should be responsible. By placing veterans in
    private facilities, DVA could pass the blame to others. Still, the
    Association is acutely aware that some contracting is necessary.
    Consequently, FRA recommends the adoption of increased appropriations
    in fiscal year 2000 for the construction and leasing of facilities.
    Also included is an increase in grants to States for the purpose of
    constructing and operating such facilities for the benefit of its
    veterans.
        Health Care Costs.--Recent reports by benefits consultant Towers
    Perrin and Hewitt Associates estimate health care costs will increase 7
    to 10 percent in 1999. On average, HMO costs are rising 8 percent for
    enrollees without dependents. Medigap insurance premiums have soared to
    greater costs beginning January 1 of this year. These facts and more
    support the need for greater funds for the VA's health care system in
    fiscal year 2000. If increased funding is not appropriated, less care
    will be provided and quality will decline further.
        Medical and Prosthetic Research.--FRA continues to support adequate
    funding for medical research and for the needs of the disabled veteran.
    The value of both programs within the veterans' community cannot be
    overstated. The need is there.
                                   education
        Montgomery GI Bill (MGIB).--The MGIB is one of the major incentives
    for enlisting in the United States Armed Forces. It is with gratitude
    that FRA witnessed the fiscal year 1999 actions of the 105th Congress
    in increasing educational benefits for veterans eligible to participate
    in the program. But there are many others who should be authorized to
    enroll in MGIB and, for those currently in receipt of benefits, to
    receive increased funds that are commensurate with today's economy.
        Since 1991 military operations and personnel tempo levels have
    increased dramatically. For example, optempo soared 143 percent since
    the Cold War ended. The Navy alone responded to orders to deploy 77
    times during the past six years of the Clinton Administration but only
    40 times during the eight years President Reagan was in office. All
    this with less manpower following Congress' authorizations to cut
    military personnel levels by more than 25 percent.
        For these veterans and those who participated in the Veterans
    Education Assistance Program (VEAP), whether they withdrew voluntarily
    because it failed to offer satisfactory benefits or as a result of bad
    advise from senior officials, FRA believes they should be provided an
    opportunity to enroll in the MGIB. Further, benefits under the MGIB
    should be revamped to offer benefits comparable to earlier GI Bills.
        FRA continues to subscribe to (a)--the belief once offered by the
    Treasury Department that veterans who take advantage of their GI bill
    will return more money to the U.S. Treasury for every dollar spent by
    the Federal government for their education, and (b)--as stated by the
    Commission on Servicemembers and Veterans Transition Assistance
    (CSVTA), ``a more financially attractive MGIB would enable our Nation
    to fully capitalize on the unique national resource of veterans'
    skills, training, experience, and character.''
        In relation to the MGIB and VEAP, FRA concurs with the CSVTA
    recommendation to improve and adequately fund the Military's Transition
    Assistance Program. (See below.)
        Education Benefits for Active Duty Personnel.--FRA proposes an
    amendment to the current practice of not providing stipends to active
    duty personnel pursuing education under the MGIB. If the service member
    has two (2) or more years of honorable active service and the
    inclination to enroll in a course of education after regular duty
    hours, he or she should be authorized a partial stipend dependent on
    the number of hours completed each month. Today, many Service members
    find that they must seek employment after duty hours in order to
    provide additional--sometimes every day--comforts for the family. If
    the member receives a stipend for enhancing his or her level of
    education instead of ``moonlighting,'' then additional strength is
    added to the CSVTA statement that: ``America's leadership will include
    veterans, only if veterans can obtain the best education for which they
    quality.'' FRA recommends appropriations to fund such a program.
                                cemetery systems
        National Cemetery System.--There's no question regarding the need
    for expanding the VA's cemetery system. The new National Cemetery
    Administration (NCA) and its predecessor have and are doing much to
    meet the demand for burial spaces for aging veterans who are passing
    away in greater numbers than ever. It could do more, but without the
    necessary funds, the system will never meet the demand. Further, the
    practice of not providing adequate funds for the system is placing many
    of its facilities in jeopardy. The Nation cannot afford to allow these
    cemeteries to deteriorate in the maintenance of its facilities and
    grounds and the operation of burial services for the Nation's veterans.
        FRA urges increased funding, fenced so that the NCA has exclusive
    use for the purchase of land, preparation, construction and operation
    of new cemeteries, the maintenance of existing cemeteries, and the
    expansion of grants to States to construct and operate their own
    cemeteries.
        Additionally, to deter vandalism, FRA suggests funding
    appropriations to hire local police or security companies to patrol
    cemeteries during hours of closure.
        Arlington National Cemetery.--FRA endorses the bill, H.R. 70,
    recently passed by the House, that establishes new eligibility
    requirements for burial in the Arlington National Cemetery. The
    Association requests that funds provided for the operation and
    maintenance of the cemetery be prohibited in their use for interments
    of any person or persons not meeting the requirements of H.R. 70.
        Additionally, FRA supports the appropriation of funds for the
    future expansion of the cemetery to include portions of the property
    now housing the Arlington Navy Annex and any available property
    adjacent to the cemetery grounds.
                               concurrent receipt
        FRA continues to advocate concurrent receipt of military retired
    pay and veterans' service-connected disability payments without loss to
    either.
        Oft time actions proposed for military personnel are ignored by
    Congress because Federal civilian employees aren't to be recipients of
    like considerations. An example of this is currently being touted in
    Congress following the Department of Defense's recommendation to
    increase military pay in fiscal year 2000 above that for civil service
    employees. Yet, when the shoe is on the other foot, it is rare when
    military personnel are granted identical benefits proposed or provided
    for Federal employees. These are many, but most retired military
    veterans cite the law that authorizes their Federal civilian
    counterparts to receive their government pension concurrently with
    veterans' compensation for service-connected disability. Even more
    difficult to comprehend is the statute permitting retired military
    personnel, unauthorized to draw military retired pay concurrently with
    veterans' compensation, may gain employment in the Federal
    establishment, switch his or her military retired pay to a Federal
    employee pension, and then be eligible for concurrent receipt of both
    the pension and the veterans' compensation.
        Some people argue that the reason concurrent receipt cannot be
    authorized is the same period of service to the Nation cannot be
    compensated twice. But, if this were true, why is a federal employee,
    who is also a member of the National Guard or Reserve, paid by the
    military for the annual 14 day training period and, at the same time,
    be a recipient of payment for his or her federal employment--plus a
    credit for both civilian and military retirement purposes? This is,
    without a doubt, dual payment for the same period of service.
        (Note: This is in no way to be construed as advocating a change to
    the procedure of rewarding Guard and Reserve personnel who also are
    Federal employees.)
        Another argument favoring concurrent receipt is the military's way
    of offering the military member little opportunity to choose non-
    disability or service-connected disability retirement. For example, a
    member of FRA had no choice but to retire under the military's non-
    disability provisions; his disability was rated as zero. Subsequently,
    within the year VA rated his disability at 60 percent. Others have
    retired from the military services with zero to ten percent
    disabilities only to have the VA grant them higher ratings. Since the
    military failed to offer many service members an appropriate service-
    connected disability rating, and the VA later gave them a much higher
    one, concurrent receipt in the form of H.R. 44, H.R. 65 or H.R. 303
    should be given strong consideration for passage.
        FRA recommends that the distinguished members of this Subcommittee
    actively support and encourage the repeal of 5304.(a)(1), 38 USC, and
    the enactment of H.R. 44.
         court-ordered divisions of veterans' compensation/retired pay
        State Courts have been overly generous in awarding spouses and/or
    former spouses a portion of veterans' service-connected disability
    payments and military retirement pay. The former should be outlawed by
    Congress. Service-connected disability payments are made for the
    express purpose of compensating the veteran for physical sacrifices
    made in the Nation's military service, not by the veteran's spouse.
    Service-connected disability payments are to financially assist a
    veteran whose disability may restrict his or her physical or mental
    capacity to earn a greater income from employment.
        FRA believes that this payment is exclusively that of the veteran
    and should not be a concern of the States' civil courts. If a civil
    court finds the veteran must contribute financially to the support of
    his or her family, let the court set the amount allowing the veteran to
    choose the method of contribution. If the veteran chooses to make
    payments from the VA compensation award, then so be it. The Federal
    government should not play the roll of the States' collector. FRA
    recommends the adoption of stronger language offsetting the provisions
    in 42 USC, now permitting Federal enforcement of State court-ordered
    divisions of veterans' compensation payments. Otherwise, to recommend
    that the appropriations process deny funds for the purpose of
    processing state court orders that direct the division of payments from
    the account of veterans who are authorized service-connected benefits.
        FRA is truly grateful to the Chairman, House Committee on Veterans
    Affairs, and 15 other Members of this Body who are concerned that a
    Federal law allows the States to unjustly treat veterans with impunity.
    Not only does this affect the veterans described immediately above, but
    those entitled to military retired pay for their long and faithful
    service to the Nation in the uniformed services. Last year, and again
    early in the 106th Congress, Mr. Stump and his colleague, Mr. Norwood,
    had the courage to sponsor legislation that provides sorely needed
    equality in the treatment of military retired pay by State Civil Courts
    but, most importantly, by the very government to which the veteran has
    devoted years of honorable service.
        Late last year, Chairman Stump held hearings on the Uniformed
    Services Former Spouses Protection Act (USFSPA). It was clear that the
    original law made its way through Congress under suspicious
    circumstances and has become a one-way weapon used by many former
    spouses and their attorneys to financially bleed their military spouses
    of outrageous sums.
        A significant number in Congress speak of returning the money and
    power to the States, the very States that cry for more State-rights,
    but continue to look the other way so that Federal statutes will void
    the right and responsibility to enforce their own laws. FRA says;
    ``Give back to the States not only the right to decide who is what, but
    the authority to enforce its own laws without using the Federal
    government as their `bill collector'.''
        FRA strongly endorses Messrs. Stump and Norwood's proposal, H.R.
    72, and urges all members of this Subcommittee to support its proposed
    amendments to the USFSPA which should be as fair to the military
    retiree veteran as it is for his or her spouse.
                                separation pays
        The dismissal from honorable service in the uniformed services as a
    result of Congressionally-approved ``downsizing'' caused many mid-
    career young men and women to seek opportunities in the civilian
    sector. To ease their transition, Congress--at the urging of the FRA
    and The Military Coalition--agreed to provide certain separation
    payments for service members with six or more years of active service,
    but less than 20. On departure from their uniformed service, they were
    encouraged to join the Reserve or National Guard. However, few knew or
    were aware that if they eventually retired and received retirement pay,
    their separation pay, special separation benefit (SSB), or voluntary
    separation incentive (VSI) payment would have to be repaid to the
    Federal government. The same applies to those who later are awarded
    service-connected disability payments from the VA.
        FRA is totally opposed to the repayments. The Association believes
    its shoddy treatment of the men and women who wanted a career in the
    uniformed services but were unable to complete that career because
    incumbent Administrations and Congresses did not authorize their
    retention.
        Under current law the service member who is released from active
    duty and qualifies for certain pays or benefits never has to repay any
    portion of that stipend if he or she doesn't qualify for veterans'
    disability payments or is not accepted by the National Guard or Reserve
    Forces. If qualified for either, however, it's time for pay-back. It is
    difficult for FRA to understand why the individual willing to further
    serve the Nation in uniform or is awarded service-connected disability
    compensation should have to repay the Federal government for that
    privilege. The Association recommends the repeal or the necessary
    technical language to amend the applicable provisions in Chapters 51
    and 53, 38 USC, to terminate the requirement to repay the subject
    benefits. (Also requires an amendment to 1704(h)(2), 10 U.S.C.)
                             other recommendations
        In the event some of the recommendations of the Commission on
    Service Members and Veterans Transition Assistance (CSVTA) are adopted
    in the authorization process, FRA submits the following comments for
    the Subcommittee's consideration.
        Veterans Health Care.--FRA has reviewed the recommendations of the
    Commission on health care and believes that some have merit. It is
    certainly agreeable that neither the VA nor DOD can meet the demand for
    health care, but this is a matter of funding. FRA does not agree with
    either the expansion of TRICARE or that VA beneficiaries should have
    access to Military Treatment Facilities (MTFs). This thinking also
    extends to the recommendation to provide transitional health care for
    recently separated service members and their families.
        FRA does not support HMO-style health care for military personnel.
    However, TRICARE is all that is now available, but even it needs much
    work to improve its system of delivery. Active duty personnel and their
    families, for the most part, are not pleased with TRICARE. Neither are
    retirees and their families. Further, there is little if any space
    available for the latter group of beneficiaries in MTFs. Otherwise, FRA
    would not have recommended authorizing non-disabled military retirees
    to utilize VA facilities for their health care.
        The current dissatisfaction with DOD's TRICARE system is adequate
    reason to oppose the CSVTA recommendation to expand the program within
    the VA Medical Services.
        Transition Assistance Program (TAP).--FRA concurs with the
    Commission's recommendation to improve and adequately fund TAP. In the
    past few years FRA has opposed attempts by the Department of Defense to
    reduce this critical program that offers assistance to service members
    returning to civilian life when their periods of active service in the
    Armed Forces are concluding.
        FRA believes that if the Armed Forces had an effective program it
    would encourage members enrolled in the MGIB to pursue their education
    benefits upon separation. In this respect, the Association is pleased
    that H.R. 4110 (Public Law 105-368) requires the VA and, in another
    section, military service secretaries, to ``ensure separating service
    members are well informed of the eligibility requirements for education
    benefits.'' However, FRA is concerned that the law is limited to
    service members released from active or reserve commitments at the
    ``convenience of the government.'' And, also, restricted to those
    enrolled only in VEAP. FRA has recommended that the language be amended
    to cover all departing service members whether enrolled in VEAP or
    MGIB.
        Transfer of Education Benefits to Spouses and Children.--FRA
    advised the House and Senate Committees on Veterans Affairs that it was
    opposed to this recommendation by the Commission. The Association
    believes that the cost of providing education benefits to veterans'
    family members will soar to new heights. It's difficult not to remember
    the years 1975 and 1976 when the high cost of funding the Vietnam GI
    bill caused the major veterans organizations and the Ford
    Administration to call for its demise. Many Vietnam veterans lost out
    on education benefits.
        The MGIB, whose title: ``All Volunteer Force Educational Assistance
    Program,'' was primarily adopted as a recruiting and retention
    incentive and is not so much a rehabilitation program as the GI bills
    designed for veterans of WW II, Korea, and Vietnam, most of whom were
    draftees.
        The very language of 3001(4), 38 U.S.C., which FRA fully endorses,
    firmly establishes the MGIB exclusively for those who serve on active
    or reserve duty in the All Volunteer Force (AVF).
        However, in discussing the issue with the senior enlisted Master
    Chiefs of the Navy and Coast Guard, their recommendation is to offer
    the transfer proposal only to those service members who reenlist and
    complete a minimum 20 years in the active components of the Armed
    Forces. The provision could very well be an excellent re-enlistment
    incentive.
        Termination of the $1,200 contribution (Payroll Deduction) to the
    MGIB.--In view of the probability that the MGIB will undergo further
    improvement, FRA is on record as opposed to the CSVTA recommendation to
    terminate the $1,200 contributions of service members electing to
    receive MGIB benefits upon attaining eligibility. It believes the
    contribution adds an incentive for the service member to further his or
    her educational pursuits because of the investment made. However, in
    lieu of $100 per month for 12 months, the Association recommends $50
    monthly deductions over a 24 month period. At the end of the two-year
    period, he or she is now eligible to begin receipt of MGIB benefits.
    Also recommended is the reimbursement of contributions if, at the end
    of the enlistment or period of honorable service, the member chooses
    not to participate in the MGIB. Further, if the member fails to
    complete the term of enlistment or service, or is in receipt of less
    than an honorable separation, no refund of contributions would be
    authorized.
        Thrift Savings Plan.--FRA is also opposed to this recommendation
    unless it provides Federal matching funds as offered civilian employees
    for their participation in a similar program. Otherwise, the
    Association is concerned that a Thrift Savings Plan for uniformed
    personnel is not beneficial to most junior grades. Many have financial
    problems or barely manage to live within their budgets. Others work a
    second job after their regular duty requirements to provide day-by-day
    needs or additional comforts for their families. Since there is no
    incentive (matching funds) for junior personnel to participate, FRA
    believes the program will be perceived as ``an officer benefit,'' not
    conducive to enhancing the morale of the troops. Again, FRA will
    subscribe to the program only if it has matching funds.
        Refocus VA's Housing Program Toward Veterans in Transition.--FRA
    disagrees with limiting the VA home loan guaranty to one use. This
    restriction would place an undue hardship on the active duty service
    member and family who may wish to possess their own residence wherever
    assigned under military orders. To be able to do so, frees a housing
    unit on the military installation for a service member unable to afford
    a down payment to purchase a home or afford to rent a residence on the
    civilian market. Further, the Association believes that the veteran who
    becomes sufficiently affluent to upgrade his or her choice of residence
    should have the opportunity to do so.
        Deliver Cost-Effective Services to Homeless Veterans.--FRA has
    concern that an inordinate amount of VA funds have been targeted to
    serving homeless veterans. In many cases the same veterans are in
    receipt of more than a fair share of existing benefits. FRA believes
    that the availability of rehabilitation, education and vocation
    programs, and the housing program established in H.R. 4110 (Public Law
    105-368), are more than adequate to assist in turning homeless veterans
    into responsible citizens, although admittedly so, there are those who
    cannot be rehabilitated. Any further needs of affected veterans should
    be made available in the same manner as prescribed for beneficiaries of
    other veterans' programs.
        Consolidate DOD and VA Disability Compensation Systems.--FRA isn't
    certain that the two systems are or could be compatible. The
    Association would support a study but withholds any recommendations
    until FRA reviews the final report. At this time, the Commission's
    recommendation to include ``necessary changes in legislation'' with the
    proposed report should not be granted.
                                   conclusion
        Mr. Chairman. In closing allow me to again express the appreciation
    of the Association's membership for all that the Subcommittee has done
    for our Nation's veterans over these many years. FRA also is grateful
    for the opportunity to address the distinguished members of this panel
    on the issues so important to its members and the millions of other
    veterans concerned that the DVA budget is inadequate. They look to this
    Subcommittee for a satisfactory resolution.
                                     ______

          Prepared Statement of the Vietnam Veterans of America, Inc.
        Mr. Chairman, Vietnam Veterans of America (VVA) thanks you and your
    distinguished colleagues for this opportunity to comment on the
    appropriations process for the VA fiscal year 2000 budget. VVA strongly
    believes that the Administration's budget request of $44 billion for
    operation of the Department of Veterans Affairs (DVA) is woefully
    inadequate, especially the $17.3 billion in actual appropriated dollars
    suggested for the Veterans Health Administration (VHA). VVA
    respectfully seeks your assistance in correcting a reckless budget
    request, that if passed, will inflict damage on an already troubled
    VHA.
        VVA asks that you and your colleagues appropriate an additional
    $3.2 billion to ensure that the VHA will deliver quality health care
    and provide other needed services to our nation's ill and disabled
    veterans. While reasonable people can and do disagree on exactly how
    much is necessary to keep the current system operating at a reasonable
    level, VVA believes that the bare minimum needed under any scenario is
    the $1.7 billion recommended by your distinguished colleague, the
    Honorable Arlen Specter, Chairman of the Senate Committee on Veterans
    Affairs. Our analysis leads us to conclude that a more appropriate sum
    to maintain basic VA operations without further damage to
    organizational capacity to serve veterans properly is much closer to
    the $3.2 billion recommended by the ``Independent Budget of the
    Veterans Service Organizations'' (IBVSO). In any case, VVA believes
    that we all agree that additional resources are needed.
        The VHA is a large and complex health care system. It includes a
    number of ``Specialized Services Programs'' that are at the core of the
    VA's mission of ``Caring for he/she who hath borne the battle''. These
    programs include such areas as Seriously Mentally Ill, neuro-
    psychiatric wounds of war such as Post-Traumatic Stress Disorder
    (PTSD), treatment for the Blind and Visually Impaired, Spinal Cord
    Injury, and Prosthetics. Indeed, such a comprehensive and large system
    is hard to manage. Unfortunately, a truncated budget will serve to only
    exacerbate existing managerial problems-at the cost to the veteran-
    patient.
        VVA believes that if adequate resources are made available, VHA can
    further develop its capability to do a much-improved job as long as the
    Congress continues close oversight on outcomes. Such improvements to
    reduce repeated preventable use of resources include, but are not
    limited to such actions as taking a full and complete military/medical
    history on every veteran who enters the system, testing for ALL
    conditions that may be relevant to the branch./time/place/MOS/actual
    experience of the individual's military service. Such a comprehensive
    work up will lead to a more proper and complete diagnosis and a more
    effective treatment plan that will actually lead to helping restore the
    Veteran to the highest state of ``wellness'' and the greatest degree of
    self-sufficiency possible. VVA believes that much of the ``churning''
    of veterans back and forth through the system can be prevented. This is
    better for the veterans who becomes well, and for the VA in that
    precious resources are not spent in dealing with preventable visits.
        VVA believes that the fiscal year 2000 budget request is a recipe
    for implosion within VHA. The VA medical structure is set up to
    allocate resources utilizing a prospective payment model. This
    prospective payment model, however, is within a closed system where
    there are too few resources. Increased competition for these resources
    has already started to block needed resources to the smaller, more
    specialized parts of the VHA system. We have observed this happening
    for the last few years, and it is most evident right now in fiscal year
    1999.
        It is now commonly known that VHA does not have the finances to
    maintain the current VHA system. Due to a significant shortfall in
    operating resources in the current year, VHA has asked for authority to
    proceed with cutbacks that include closing of facilities and a
    reduction of staff, to begin immediately. It is now public knowledge
    that VHA is seeking authority to implement planning to contend with
    additional reductions due to a shortfall of at least $1.4 billion. This
    is coming from a system that was already preparing for reduction before
    the request. The announcement of an initial cut of 926 personnel at
    eleven sites is only the first wave of such reductions in capacity. It
    is VVA's understanding that at least another twenty-five sites have
    been approved for significant reductions.
        The most troubling aspect of the budget request is that the VA is
    currently undertaking a series of ``new'' initiatives that will clearly
    involve additional cost. The VA has committed to move swiftly to test,
    treat, and compensate for the widespread problem of Hepatitis C among
    veterans, especially Vietnam veterans, which was likely acquired as a
    result of military service. VVA believes that this is a vital and
    proper expenditure, desperately needed by affected veterans. Resources
    are necessary in order to pay for this treatment, however.
        The VA is planning to commit an additional $40 million toward
    assisting homeless veterans and to increase long-term care by at least
    $105 million. While we certainly applaud these long-overdue steps, we
    are at a loss as to how the Office of Management and Budget (OMB) and
    the White House thought that the VA will be able to afford these
    vitally needed services without either providing additional funds or
    significantly diluting other existing, already underfunded services.
    VA's budget submittal simply does not ``add up.'' Again, we
    respectfully request your committee to appropriate a VA budget that
    does ``add up.''
        There is ever the need for a VHA system to serve as the primary
    means of delivering the highest possible quality of care to veterans.
    The fiscal year 2000 budget request is an affront to the veteran
    community, especially as millions of veterans are now of the age where
    health care is most needed. The normal problems of aging are often
    greatly exacerbated by injuries incurred in military service. Veterans
    health care is not just important to the veterans community, it is
    important to the future of this nation.
        VVA is aware that an additional $2 billion for the VHA will not be
    acquired through the ordinary process of creating a budget. We know
    that the money must come from somewhere else. Mr. Chairman, a $20
    billion budget for the VHA will be enough to simply preserve the
    organizational capacity of VHA to deliver its current state of medical
    care. If the Administration's budget request is approved, many veterans
    will find the chances of obtaining medical care even more scarce.
    Funding VHA at $20 billion would still constitute less of a percentage
    increase than that which was provided to Medicare over the last decade,
    and significantly less than medical inflation. We strongly urge you to
    do the right thing and preserve the VA health care system at a time
    when more and more veterans are counting on it. The offsets can be
    found, given the creativity, experience, and intelligence of you and
    your distinguished colleagues.
        It is no secret that the Veterans' Benefits Administration (VBA) is
    in dire need of reform. The recent ``Report of the Congressional
    Commission on Service Members and Veterans Transition Assistance''
    strongly recommends a modernization of VBA's benefits delivery and
    infrastructure. The article in The Washington Post of April 10, 1999,
    regarding the deplorable conditions of the Washington, D.C., Regional
    Office is illustrative of the worst of the problems that veterans face
    in attempting to get timely, fair, and accurate adjudication of claims.
        The disability claims process is beset with an adjudication system
    that is inconsistent in quality and accuracy, and extremely poor in
    timeliness. Currently, according to VA officials, there are over
    390,000 claims pending and another 100,000 claims on appeal. According
    to VA Under Secretary for Benefits Joseph Thompson, VA data shows that
    errors in the claims-adjudication process occur at a 36 percent rate
    and that 42 percent of claimants are dissatisfied with compensation and
    pension services. Vietnam Veterans of America believes that one of the
    reasons the system is so clogged is that veterans have lost faith that
    they will get a fair and accurate adjudication the first time around,
    and they are all too often correct in this assumption. If VBA would
    ``get it right the first time'' then the incessant stream of appeals
    would begin to diminish. However, at this point , VVA believes that we
    just have too few people trying to accomplish too much work at the same
    time that they are trying to modernize the system by which claims are
    adjudicated. Simply put, VBA needs more funding in order to hire more
    people to get the job done.
        While VVA believes that the Veterans Benefits Administration (VBA)
    needs more staff, we also believe that VBA is plagued with an
    adjudication and appeals process that lacks a focus. There are no
    precise, definitive rules that can be effectively and fairly applied to
    the processing of most cases. To compound this legal problem, the VBA
    has failed to properly update its information management system. While
    trying to implement a more efficient system, VETSNET, the effort
    resulted in a disparate system of information management that holds no
    one clearly accountable for project performance and operational system
    capability.
        It is common criticism that VBA is not all that accessible to
    veterans with many regional offices in areas of small population and a
    telephone system that is cumbersome and buttressed with layers of
    electronic ``shields.'' Other stations, as in the extreme case of the
    Washington, D.C., VA Regional Office have virtually ceased to function.
    In sum, the VBA is an organization that is not accessible enough to
    veterans and is run on less-than-efficient databases. VBA is in real
    need of an organizational overhaul. While it is not just money that is
    needed, proper resources are certainly part of the solution.
        In order for the jaded claims adjudication and processing system to
    become truly efficient, new information-management systems and
    technology must be acquired. A redesigning of both human and physical
    resources must also take place. Veterans deserve the benefit system
    that they were promised--one that provides seamless access to an
    effective claims-processing system centered on an adjudication process
    that is fair and timely.
        Mr. Chairman, if these changes do not take place, we will have a
    21st century VBA that is even more inept than it currently is. VVA
    believes that prescience is in order here and asks that your committee
    act now and provide a VA budget that can afford to make the necessary
    changes in VBA before it manifests into an even larger and more
    expensive problem. VVA seeks a VBA that puts veterans first and also is
    not a drain on taxpayers' dollars.
        Mr. Chairman, I would like to respectfully remind your committee
    and all of Congress that we now stand on the threshold of yet another
    ground war in Kosovo which has the potential to consume and harm many
    young American men and women. Already three U.S. service members are
    being held prisoner. Is under funding the VA, and most especially the
    health care system, the right signal to send to these soldiers? VVA
    thinks not, and asks that you ensure that there is a system in place to
    truly care for these future veterans.
        Again, I thank you for considering our views on this most critical
    issue to veterans of every generation.
                                     ______

       Prepared Statement of the American Gastroenterological Association
                           Summary of Recommendations
        The American Gastroenterological Association (``AGA'') urges
    Congress to increase funding for medical research on digestive diseases
    and disorders through budgetary increases to the Department of Veterans
    Affairs (``VA''). Specifically, the AGA encourages Congress to provide
    at least a 14 percent increase over fiscal year 1999 raising the
    funding for VA health research programs from $316 million to $360
    million, as recommended by the Friends of VA Medical Care and Health
    Research (``FOVA'').
                        medical research recommendations
        The AGA appreciates the opportunity to present its views regarding
    fiscal year 2000 appropriations for the VA. The AGA is the nation's
    oldest, not-for-profit specialty medical society, consisting of over
    10,000 gastroenterologic physicians and scientists who are involved in
    research, clinical practice, and education on disorders of the
    digestive system. As the nation's largest and leading voice of the
    gastrointestinal research community, the AGA is uniquely qualified to
    advise Congress on the current status of federally-supported digestive
    disease research programs and the areas in need of further research.
        Digestive tract disorders cost more than $115 billion annually.
    Gastrointestinal cancer, foodborne illness, gastroesophageal reflux
    disease (``GERD'') and ulcers, motility disorders, inflammatory bowel
    disease, and hepatitis C account for the majority of digestive
    illnesses, impacting the lives of millions of Americans. They affect
    more than half of all Americans during their lifetime, ranking second
    among all causes of disability due to illness in the United States.
    Digestive disorders likewise strongly impact America's veteran
    population.
        For some digestive diseases, medical research has brought us close
    to developing lifesaving treatments and cures. Yet, in others, we lack
    even a basic understanding of the cause and transmission of the
    disease. This testimony focuses on these serious health problems and
    makes recommendations on how Congress should allocate this country's
    precious medical research dollars.
                            gastrointestinal cancers
        Approximately 226,300 new cases of gastrointestinal cancers will be
    diagnosed this year. Sadly, 131,000 Americans will die from these
    cancers. Certain veteran populations are especially at risk including
    those exposed to ionizing radiation, such as atomic test participants
    and Hiroshima/Nagasaki occupation forces. The most common cancers are
    described below.
      --Colorectal Cancer is the second leading cause of cancer-related
            deaths in the United States. It is estimated that 129,400 new
            cases will be diagnosed this year with approximately 56,000
            Americans projected to die from this disease in 1999.
            Colorectal cancer is linked to age with over 90 percent of
            people diagnosed being over 50 years old. Further, African
            Americans have higher prevalence and mortality rates.
      --Lower esophageal and upper stomach cancers have experienced a
            dramatic rise in incidence rates in the last 10 years.--In this
            year alone, nearly 22,000 Americans will be diagnosed with
            stomach or gastric cancer; 13,500 will die of it. A slightly
            lower number of people, 12,500, will be diagnosed with
            esophageal cancer this year. This cancer is more prevalent
            among African Americans.
      --Pancreatic cancer will be diagnosed in 28,600 Americans in 1999
            with the same number of people projected to die from this
            disease.
      --Approximately 14,500 new cases of liver/intrahepatic bile duct
            cancer will be diagnosed this year in the United States and
            13,600 deaths due to this cancer will occur. The incidence of
            liver cancer is increasingly dramatic due to the epidemic of
            chronic hepatitis C, notably more common among veterans.
      --An estimated 3,600 people will die of cancer of the gallbladder and
            other biliary cancers this year with approximately 7,200 being
            diagnosed with this cancer.
        The good news is that biomedical research, basic and clinical, has
    yielded increasingly positive cancer survival rates when patients'
    conditions are detected early. For example, 90 percent of people who
    develop colorectal cancer can be effectively treated if the disease is
    caught sufficiently early. Improved screening alone, however, is not
    sufficient. We need additional research to continue our understanding
    of this disease.
        One of the greatest breakthroughs in gastrointestinal cancer
    research has been the discovery of a stepwise genetic progression in
    the development of gastrointestinal cancer. Researchers have identified
    a genetic link to gastrointestinal cancers in 20 percent to 30 percent
    of cases. Research shows that a genetic mutation at one generational
    level continues to mutate at succeeding generational levels, increasing
    a person's likelihood of developing cancer.
        The VA has made cancer a medical research priority, but has not
    focused research on the following areas: (1) the genetic aspects of
    gastrointestinal cancer including the potential identification of other
    genes; (2) diagnostic tests for genetic abnormalities and prevention;
    (3) nutritional and environmental factors relating to the development
    of this disease, such as diet; and (4) the development and treatment of
    Barrett's syndrome (a common precursor to lower esophageal/upper
    stomach cancer) in patients with GERD. Research indicates that people
    with long-standing and severe heartburn symptoms are 43.5 times more
    likely to develop esophageal cancer. We urge the subcommittee to
    include language in the report accompanying the fiscal year 2000 VA-HUD
    Appropriations Bill which encourages the VA to intensify its research
    efforts on the genetic and nutritional/environmental causes of
    gastrointestinal cancers.
                               foodborne illness
        Foodborne illness is estimated to cost annually $5 to $6 billion
    dollars in medical costs and productivity losses. Some 6.5 to 33
    million Americans suffer from foodborne illnesses each year, resulting
    in 9,000 deaths. Among the more common pathogens are Salmonella,
    Escherichia coli 0157:H7 (the pathological strain of the bacterium
    E.coli), Shigella, Campylobacter, Cyclospora, Listeria monocytogenes,
    and Cryptosporidium.
        Not only does the VA population face the average risk of foodborne
    illness but also an increased risk due to potential bioterrorist
    attacks. As the goal of war turns from political concessions to mass
    injuries and casualties, one expects to see more bioterrorist attacks
    both against the military and the general population. Although people
    fear the more deadly anthrax and cholera viruses, some anticipate that
    actual attacks will involve foodborne and waterborne pathogens
    especially for terrorists trying to create mass panic and high
    morbidity costs with fewer deaths. This type of attack has already
    occurred in the United States in 1984 when a religious cult sprayed
    salad bars with Salmonella infecting over 750 people in an attempt to
    influence voter turnout and election results.
        Current congressional efforts, which largely focus on inspection
    programs and on preventing the ingestion of contaminated food and
    water, would not protect against a deliberate bioterrorist attack.
    While these prevention-oriented initiatives certainly are important,
    treatments for those who do get sick once tainted food is consumed is
    essential. For some of these pathogens, we unfortunately lack even a
    basic understanding. As such, we encourage Congress to channel
    additional resources into research in the following areas: (1) the
    pathogenesis of the disease to identify the pathogens, to understand
    contamination and transmission patterns, to understand how pathogens
    translate into disease in humans, and to determine the reason for
    antibiotic resistance; (2) the reaction of the gut to infections. The
    research currently being performed has focused on the kidney where few
    people are affected but the mortality rate is high. Stopping the
    disease when it is initially confined to the gut, however, would
    prevent the kidney from even being affected; (3) the development of
    animal models to understand how the pathogens cause disease and to
    develop treatment; and (4) the invention of vaccines or substances that
    bind with the toxins to prevent the illness.
        The VA should join with the National Institutes of Health, the
    United States Department of Agriculture, the Food and Drug
    Administration, the Centers for Disease Control and Prevention, and the
    Department of Defense in implementing the Administration's Food Safety
    Initiative. The VA should emphasize research required to develop a
    greater understanding of the pathogenesis of foodborne illness and to
    discover effective treatments.
                               motility disorders
        Motility disorders affect five million Americans accounting for
    half of all gastroenterologic visits and ten percent of the visits to
    primary care physicians. Eight to seventeen percent of Americans suffer
    from functional gastrointestinal disorders, making it a major cause of
    morbidity and mortality from digestive illnesses, particularly among
    females. A higher prevalence of motility disorders was noted in Persian
    Gulf veterans, suggesting a potential link between the disorder and
    stress.
        Research is needed due to the high prevalence of this disease and
    the lack of knowledge on how to identify, diagnose, and cure the
    disease. Irritable Bowel Syndrome (``IBS''), the most common motility
    disorder, is especially troubling because a patient does not present
    with any pathognomonic symptoms or laboratory findings of the disease,
    making diagnosis and treatment extremely difficult. IBS research is
    needed on: (1) understanding how the muscular and nervous system of the
    gut; (2) clinical descriptions and epidemiological studies of patients
    with IBS including family backgrounds; (3) genes that determine
    susceptibility and resistance; (4) brain interactions with the gut; and
    (5) virus foodborne infections that appear to initiate IBS in
    previously unaffected individuals.
        A lack of a basic understanding of IBS has made drug manufacturers
    reluctant to fund research. If more federally funded research was
    focused on IBS, it would stimulate more private-public partnerships,
    and lead to advances in medical knowledge
      inflammatory bowel disease (ulcerative colitis and crohn's disease)
        Inflammatory bowel disease affects two to six percent of Americans
    or 300,000 to 500,000 people. Unlike IBS, inflammatory bowel disease
    (``IBD'') involves an inflammation of the bowel. One type of IBD is
    Crohn's disease, which primarily involves the colon and small bowel.
    The other is ulcerative colitis affecting the inner lining of the large
    intestine. IBD usually begins in early adulthood and persists
    throughout life with remissions. IBD affects people in the prime and
    most productive years of their lives and results in substantial
    morbidity and economic loss to them and society. People with IBD
    experience abdominal pain, fever, bowel sores, intestinal bleeding,
    anorexia, weight loss, fullness, diarrhea, constipation, and vomiting.
    In severe cases, the patient can hemorrhage or contract sepsis/toxemia
    resulting in death. The cause of IBD is unknown; it may be a virus or
    bacteria that alters the body's immune response causing an inflammatory
    reaction in the intestinal wall. Studies on the cause of IBD are
    desperately needed to better understand the disease and work towards
    more effective management and treatment.
                                  hepatitis c
        Viral hepatitis is caused by six different viruses (commonly
    labeled A, B, C, D, E, and G). Hepatitis C accounts for 60 percent to
    70 percent of all chronic cases of hepatitis. Approximately four
    million Americans are chronically infected with the hepatitis C virus
    (``HCV'') with an estimated 200,000 new cases diagnosed annually. HCV
    is more prevalent among veterans than non-veterans with rates estimated
    at between 10 percent to 20 percent of all inpatients in VA Medical
    Centers. This higher prevalence may be linked to transfusions which are
    more common among veterans, especially those who experienced combat.
    Further, minority populations have a higher prevalence of HCV. This
    disease is projected to cost $600 million a year in terms of medical
    care and work loss, excluding transplantation costs. Between 8,000 to
    10,000 people are expected to die from HCV this year with the death
    rate expected to triple over the next decade. It ranks second only to
    alcohol abuse as the cause of cirrhosis (i.e., liver cell damage and
    scarring) and liver disease, and is the leading cause for liver
    transplants in the United States. Further, 52 percent of all VA liver
    transplant patients have HCV. Chronic alcoholism, a common concern
    among veterans, may increase the likelihood of developing chronic liver
    disease.
        Acute hepatitis C results in a chronic infection in over 85 percent
    of the cases with most contracting chronic liver disease. This chronic
    infection is often asymptomatic, making detection extremely difficult.
    In fact, many people are not aware that they are infected, despite easy
    detection through a simple blood test. Twenty-five to thirty percent of
    HCV infected people develop symptoms ranging from mild to moderate
    problems of jaundice, fatigue, abdominal pain, loss of appetite,
    intermittent nausea, and vomiting to more severe, life-threatening
    conditions such as liver disease, cirrhosis, and end-stage liver
    disease, including cancer. In fact, the three main risk factors
    associated with developing liver cancer include HCV, the hepatitis B
    virus (``HBV''), and alcoholic cirrhosis with the increase in liver
    cancer being attributed to the rise in HCV and HBV.
        Despite vigorous support by Congress and the VA, long-term
    remission can only be attained in up to 40 percent of HCV patients
    receiving anti-viral therapies. Further, no vaccines are currently
    available to prevent hepatitis C. Accordingly, more research is needed.
    The AGA urges Congress to support research in the following areas: (1)
    the molecular biology of HCV; (2) longitudinal study on the normal
    clinical course of hepatitis C and factors resulting in progression to
    cirrhosis and liver cancer; (3) epidemiological studies on hepatitis C
    and alcohol consumption; and (4) the interaction between HCV and other
    diseases such as diabetes and acquired immunodeficiency syndrome
    (``AIDS''). This research would enable the development of therapies to
    stop the progression of the disease, a vaccine to prevent transmission
    of HCV, and strategies for educating at-risk groups.
        S. 71, introduced by Senator Olympia Snowe (R-ME), creates a
    presumption of service connection for the occurrence of hepatitis C for
    veterans who developed hepatitis C after experiencing the following
    while serving: (1) transfusion of blood/blood products before December
    31, 1992; (2) blood exposure on or through skin/mucous membranes; (3)
    hemodialysis; (4) tattoo, body piercing or acupuncture; (5) unexplained
    liver disease or abnormal liver function tests; and (6) working in a
    health care occupation. S. 71 would raise the number of veterans
    eligible for treatment of hepatitis C at VA Medical Centers, making
    this research on a treatment even more pressing and cost-effective in
    the long term.
                             funding recommendation
        The diseases, illnesses, disorders, and syndromes described above
    continue to take a huge toll on the American public and economy. The
    AGA appreciates Congress' commitment to biomedical research and to
    digestive diseases research in particular. However, more effort is
    needed. Many of the illnesses described above are only now beginning to
    emerge as the next epidemic. For others, like certain gastrointestinal
    cancers, research advances have placed the hope of eradication within
    our grasp. In either case, now is not the time to shortchange VA
    research programs. As such, we encourage Congress to ensure that the VA
    has adequate resources to appropriately pursue research opportunities
    in the areas discussed above by increasing funding 14 percent, from
    $316 in fiscal year 1999 to $360 in fiscal year 2000.
        The AGA appreciates the opportunity to present its views on the
    fiscal year 2000 appropriations. Please call Michael Roberts, Vice
    President of Public and Government Relations at the AGA, at (301) 941-
    2618 if you have further questions.
                                     ______

           Prepared Statement of the Air Force Sergeants Association
        Mr. Chairman and distinguished committee members, thank you for
    this opportunity to present what we believe should be among this
    committee's funding priorities for fiscal year 2000. As a nation, we
    ask our servicemembers to turn their mortal beings over to the dictates
    of their country. Their term of service is always arduous, and the job
    they do for all of us is fantastic. This committee among all segments
    of our national leadership holds the key to protecting and honoring our
    nation's warriors. You, in a very real sense, are the conscience of a
    nation in ensuring that our veterans are viewed as a vital national
    resource--not a financial burden.
        As you work toward your appropriations decisions, the Air Force
    Sergeants Association and its 150,000 members urge you to ensure
    sufficient funding to provide for the integrity of the entire VA
    system. This funding and this nation's commitment to our veterans
    should ensure, with no delay, the full benefits, entitlements and
    medical treatment that those who have served have so rightfully earned.
        AFSA members view all honorably discharged veterans as worthy of a
    full range of benefits that they earned through sacrifice and voluntary
    subjection to the unlimited liability clause: they formed a covenant
    with the nation to sacrifice their lives, if necessary, to protect its
    interests. This nation's reciprocal response should be based on certain
    principles that this association urges you to use as a guide during
    your deliberations.
                               guiding principles
        1. First, this nation owes its veterans dignified, transitional,
    recovery assistance . . . not based on rank or status, but simply
    because they served in the most lethal of professions.
        2. Any decisions on care for the member must factor in a
    realization that most veterans are enlisted veterans. These veterans
    served with lower pay, generally reentered the civilian populace with
    non-transferrable military skills, probably had relatively little
    civilian education, and served in skills that are less marketable.
        3. This nation's commitment cannot waiver simply because of the
    large number of veterans. Congress and (in turn) the VA must never make
    determinations simply because ``the money is just not there.'' It is
    more a situation of national will--not economic constraints.
        4. Our enlisted guardsmen and reservists are full-time players.
    They are part of the total force. Any differences between reserve
    component members and the full-time force, in terms of VA programs or
    availability of services, need to be systematically erased.
        5. It is important that the commitment of our troops to combat or
    high-risk situations also involves an absolute commitment to care for
    any malady that results.
                                 general issues
        Many veterans are frustrated and disappointed because promises that
    were made during their careers are simply not being kept. They feel
    that the covenant between the nation and the veteran was one-sided,
    with honor on the side of the veteran. We urge this committee to
    support a written guarantee in writing of benefits to which veterans
    are legally entitled by virtue of their service.
        We applaud the Veterans Administration for progress made toward the
    reduction in the time required to process claims and adjudicate
    appeals. We urge you to do all that you can to facilitate the VA's
    continued progress in this effort.
        Despite military service draw downs and the resultant lack of the
    availability of ``honor guard'' personnel, it is incumbent that this
    government to ensure full military honors and burial rights for those
    who have served.
        Because of the ravages of war, the unique nature of military
    service, and numerous other reasons, many veterans are homeless. These
    people, by and large, paid a tremendous price by serving their nation.
    We must expend an extra effort to assist our homeless veterans.
        Over the last few years, there have been several efforts to make
    ``Veterans' Preference'' a reality. We urge this committee to support
    any improvement that will put ``teeth'' into such programs to help
    veterans transition back into the civilian workforce.
                                  medical care
        Without question, the health care system administered by the
    veterans administration impacts, in one way or another, those who
    served. Some issues that are reflected in the many phone calls we have
    received follow.
        1. All honorably discharged veterans must have the full continuum
    of care--mandated by law.
        2. VA-Medicare subvention is very promising, and we request full
    support for this effort. Under this plan, Medicare would reimburse the
    VA for care it provides to non- disabled Medicare-eligible veterans at
    VA medical facilities. This is an opportunity to ensure that those who
    served are not lumped in with all those who never chose to do so.
        3. The enlisted force is pleased with the possibility of VA-DOD
    sharing arrangements involving network inclusion in the DOD health care
    program, and especially, the practice of consolidating physicals at the
    time of separation. Theses decisions represent a good, common sense
    approach that should eliminate problems of inconsistency, save time,
    and take care of our veterans in a more timely manner; AFSA supports
    these approaches so long as neither DOD or VA beneficiary access and
    care are jeopardized
        4. It is our contention that any limitation on the VA treatment of
    tobacco-related illnesses must be eliminated. Just as we care for those
    with other physical situations caused by their own lifestyle choices,
    it is absolutely wrong to draw the line here. I and many of you in this
    room can point out numerous situations from ``care packages'' with free
    3-cigarette packs, to field duty and training punctuated by ``smoke'em
    if you gottem,'' as indisputable facts that smoking was (until very
    recent times) a very real part of the military lifestyle. Full VA
    funding for tobacco-related illnesses needs to be reinstated.
        5. While the VA's drive to save money by reducing its expenses is
    commendable, we caution the VA that these reductions must not be the
    overriding target. The only bottom line in this system should be the
    welfare of the veteran.
        6. The VA must be fully funded to provide for long-term care
    including nursing home care; care for chronically mentally ill
    veterans; and home care aid, support and services.
        7. The number of veterans who are women has significantly increased
    in recent years. The VA must be funded to provide the resources and
    legal authority to care for women to include obstetric services and
    after-birth care for the mother and child.
                                   education
        Many members join our Armed Forces to get an education. Those who
    entered the service after December 31, 1976, and before July 1, 1985,
    were offered the Veterans Educational Assistance Program (VEAP). Within
    that program, the military member contributes up to $2,700 which the
    government matches with up to $5,400. VEAP pays $300 a month for 27
    months; however, there are approximately 55,000 members who came into
    the service between 1977 and 1985 who chose not to participate in VEAP
    because it was considered a relatively poor benefit in relation to the
    actual cost of classes. These G.I.s are now retiring (20-plus years of
    service) without any educational benefit.
        Since 1985, the Montgomery G.I. Bill has been offered to new airmen
    entering the Air Force. If an airman chooses to participate, this
    program requires a $1,200 payroll deduction, $100 during each of the
    member's first 12 months of service. For that $1,200, the member
    receives an educational benefit of $528 per month for 36 months--
    clearly a much more valuable benefit than VEAP. However, the airman's
    enrollment decision must be made at basic military training; it is a
    one-time, irrevocable decision. At that critical juncture, many choose
    not to participate because they can't afford to do so due to their
    already-relatively- low pay. We ought to eliminate the current $1,200
    payroll reduction taken from each member who opts to enroll in the
    MGIB. During the pressure of basic training (and at a time of lowest
    pay) is not the appropriate time that airmen, many of whom have
    families to support, should have to make such an important decision. We
    should let them elect to enroll in the MGIB at any time during their
    first enlistment.
        The 1997 VA Authorization Act created an open window for some VEAP
    participants to convert to the MGIB. However, 110,000 (DOD-wide) VEAP
    participants were excluded from converting to the MGIB because
    government counselors gave them faulty information. We have received
    dozens of phone calls and letters decrying the fact that these airmen
    followed the rules; but were excluded because the government decided to
    change the rules at the last minute. Under VEAP, there is a 2-for-1
    matching. If you have money in your VEAP account, it is non-interest
    bearing. Accordingly, education counselors in all services advised VEAP
    participants not to put money into their VEAP accounts until they were
    ready to use the benefit. Unfortunately, when the 1997 VEAP-MGIB window
    opened, the law allowed only those with money currently in their
    accounts to convert to MGIB. Tens of thousands of VEAP participants
    were excluded from the conversion because they followed the guidance of
    government counselors. In basic fairness, we need to reopen that window
    one more time and allow all currently serving military members to
    convert to the MGIB.
        Finally, while the MGIB is a good program relative to VEAP, it has
    not kept up with inflation. While the cost of undergraduate education
    has gone up 5 to 7 percent per year since 1985, the MGIB benefit has
    not kept pace. If the MGIB was at the same relative value as at its
    inception, the MGIB benefit would be approximately $800 a month. I urge
    you to increased the value of the MGIB benefit and make it the same
    value (relative to inflation) it held when the program began.
        Because many enlisted members have no choice but to go to work
    immediately after retirement, many never use their MGIB educational
    benefit. Those that are unable to use the benefit (many of whom have
    given the government $1,200 to invest for a significant long-term
    return) don't receive a cent in return from the government. In fairness
    to them, and in recognition of their unique sacrifices and risks,
    participating members should be allowed to transfer their educational
    benefit to family members--we ask your support in that regard.
        With all of the national attention on educational programs, it is
    important that we include military members in that dialogue.
                                   home loans
        The current VA home loan program primarily attracts only marginally
    qualified veterans. Fees, closing costs, and down payment requirements
    should be restructured to reduce the overall risk to the program. The
    best way to attract new veterans is to eliminate fees and make the
    program as attractive a possible.
        For our reserve component members, the Selected Reserve Home Loan
    Program was authorized as a temporary initiative and was, last year,
    once again temporarily extended. Congress should permanently extend
    this program. The concept of ``weekend warriors'' is certainly an
    unfair, inaccurate misnomer. This nation owes our guardsmen and
    reservists great deal, the least of which is provision of a full
    benefits package for their service.
        AFSA supports all programs that give veterans viable alternatives,
    especially in the area of housing assistance. However, if other home
    loan programs are made available, liberal qualification criteria and
    the ``no down payment'' feature should be maintained for all sources.
    Additionally, the reusability feature of the VA Home Loan program is
    very important to military members and veterans who are required to
    relocate several times during a career.
        In conclusion, AFSA believes that the work your committee does is
    among the most important done on the Hill. Your job is not only to
    protect and reward those who served; it is to demonstrate to those
    currently serving and who someday will serve that this nation is
    committed to honor those who give a portion of their lives to their
    nation. Today, we have touched upon just a few of the important issues
    that you will wrestle with during the coming months.
        In conclusion, Mr. Chairman, we thank you for this opportunity to
    present the views of the Air Force enlisted community. As you ponder
    and debate the proper focus of appropriations for future VA programs,
    AFSA asks you to determine to capture a fair portion of the reported
    $1.6 trillion budget surplus for those who made that surplus and this
    nation's prosperity possible: America's veterans. On behalf of all AFSA
    members, we appreciate your effort and, as always, are ready to support
    you in matters of mutual concern.
                                     ______

                  DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
     Prepared Statement of the American Association of Homes and Services
                                 for the Aging
        The American Association of Homes and Services for the Aging
    (AAHSA) is pleased to take this opportunity to present our comments
    regarding the fiscal year 2000 budget request for the U.S. Department
    of Housing and Urban Development (HUD) from the Clinton Administration.
    AAHSA is the nation's largest organization representing only nonprofit
    sponsors of senior housing. Our members own and manage over 300,000
    units of market rate and federally assisted housing--including the
    largest number of nonprofit-sponsored HUD Section 202 elderly housing
    facilities.
        As we stated in the past, as nonprofit sponsors of elderly housing
    we respond to entirely different motivations in developing housing for
    the poor, the needy, and the frail elderly. Our motivation is born of
    mission not profit. Ours is a mission of helping those whose needs are
    the greatest and of striving to provide housing and supportive services
    to all low-income elderly who need it.
    Overview
        As we begin the discussion of funding for elderly housing programs
    in the fiscal year 2000 HUD budget, we ask you to keep in mind the
    features that make elderly housing unique. Elderly housing provides a
    sense of physical and emotional security, which is particularly crucial
    for vulnerable older persons. It facilitates informal support among
    residents--generally an older woman living alone--and prevents a sense
    of isolation. It provides a cost effective means to link supportive
    services with housing for older persons, particularly critical in
    promoting independence and delaying more costly institutional care.
    Elderly housing has special design features unique to older persons,
    such as grab bars, pull-cords, lower cabinets, elevators, increased
    lighting, and non-skid surfaces. And, elderly housing incorporates
    programmatic features to encourage wellness, interaction with peers,
    and promotes community volunteerism. It provides and/or links community
    services, both formal and informal, through public and private
    institutions, neighbors, families and friends. As we stated in last
    year's testimony, housing for the elderly is more than a unit, it's
    home and it's a community.
        Last year, AAHSA was particularly critical of an administration
    budget proposal that sought to fundamentally change the nature of the
    Section 202 elderly housing program. We believed--and appreciated this
    committee's leadership to get Congress to agree--that last year's
    Administration-proposed changes were ill-conceived, ill-planned, and
    ill-advised. Congress and elderly housing proponents believe strongly
    in the success of Section 202, and rather than dismantling this
    preeminent housing program for the elderly, were of the opinion that it
    could form the foundation around which other successful housing
    programs serving the elderly could be developed.
        Last year, Congress roundly defeated each aspect of the
    Administration's elderly housing budget proposal, and challenged HUD to
    go back to the drawing board and craft a workable model for elderly
    housing that focused on both the present and the future. During the
    past year, HUD and the Administration worked closely with elderly
    housing proponents in studying the state of elderly housing and sought
    to meet that challenge.
    Fiscal Year 2000 HUD Budget Proposal
        The fiscal year 2000 HUD budget proposal that eventually emerged
    from the Administration incorporated many of the ideas, approaches and
    objectives that AAHSA and other elderly housing proponents have
    advocated over the years. Central to the Administration's elderly
    housing proposal is an historic multi-faceted housing initiative, a
    ``Continuum of Care for the Elderly'' program to ``enable low-income
    and frail elderly to obtain decent housing and access the services that
    aging requires.'' During the fiscal year 2000 budget briefing conducted
    by Secretary Cuomo and HUD's various program Assistant Secretaries,
    AAHSA praised the department for taking innovative steps in this new
    direction to serve our nation's senior population. Specifically, the
    continuum of care for the elderly builds on existing programs--
    particularly Section 202--and was showcased as a comprehensive
    ``housing security'' approach for the elderly. The Administration's
    continuum of care includes: $510 million for Section 202 new
    construction; $50 million expansion of the service coordinator program;
    $87 million for 15,000 rental assistance vouchers linked to low income
    housing tax credits for new construction; rental assistance vouchers
    linked to Medicaid for assisted living; $100 million to renovate and
    retrofit existing elderly housing facilities for assisted living; use
    of the reverse mortgage program for rehabilitation and property
    improvement loans; and up to $5 million of Section 202 funds for
    intergenerational learning centers.
        The Administration proposal serves the purpose of opening a
    positive debate over how best to serve elderly housing needs as we
    enter the new millennium. While AAHSA has a few modifications for
    further refinements, we believe the Administration's fiscal year 2000
    budget proposal is a bold step positioning elderly housing as part of
    long term care. Because AAHSA has long been an advocate of a continuum
    of care approach utilizing elderly housing as part of the solution to
    long-term care for the elderly, our testimony will predominantly focus
    on that aspect of the Administration budget proposal. AAHSA's
    commitment to, and vision for the continuum of care dates back to the
    founding of the organization in 1961 and the earlier ``lifecare''
    practices of some of our members. As we look to the future, AAHSA
    encourages policymakers to see elderly housing as a key component of
    this ``continuum for the millennium.''
    Continuum of Care for the Elderly Proposal
        Our comments below are designed to help the committee in its
    deliberation on specific parts of the Administration's continuum of
    care for the elderly proposal:
        Section 202.--As Section 202 celebrates its fortieth anniversary in
    1999, it is recognized as the nation's best and largest producer of
    affordable housing for very-low income seniors. Over the years, Section
    202 has earned strong bipartisan support as the primary government
    program responding to the special housing needs of low-income elderly
    Americans. The program has coupled the cost benefits of project-based
    rental assistance with supportive services for frail elderly persons;
    has maintained a long record of sound management; and, its nonprofit
    sponsors have built a major portion of the nation's supply of quality,
    affordable elderly housing while demonstrating long-term commitment to
    their communities.
        Although the Administration asserts that it has maintained full
    funding of $660 million for the Section 202 program in fiscal year
    2000, in actuality, there are set-asides in the proposed budget that
    would reduce the funding level by $150 million to $510 million for
    development of 5,790 new units and rental assistance activities in
    fiscal year 2000. However, neither AAHSA nor the Administration should
    be forced to make a Solomon-like decision of choosing between
    supporting the continuum of care approach with its attendant parts, or
    supporting ``full funding'' for Section 202 development. Both are
    needed, and neither should be shortchanged. In recent housing
    legislation, particularly in H.R. 202 and H.R. 1624, the Section 202
    development program would be authorized at least at $700 million in
    fiscal year 2000. And, H.R. 1624 would establish separate funding
    streams, including mixed-financing, for the other elderly housing
    continuum of care-type activities without ``robbing Peter'' or Section
    202 to pay for those other activities.
        Additionally, AAHSA has long advocated for flexibility in the
    Section 202 program to enable mixed-financed, mixed-income, and mixed-
    use facilities. AAHSA supports the flexibility in the program offered
    by H.R. 202, which allows use of funds for acquisition, modifies income
    limits in high vacancy areas, and allows Section 202 funds to be use in
    conjunction with other federal and non-federal financing sources. The
    ``other sources of financing'' feature would be particularly useful in
    coupling Section 202 with low income housing tax credits to develop and
    increase the production of new housing units.
        While we strongly support much in the Administration's continuum of
    care proposal, we encourage you to prevent reduction in funding for
    development activities under the Section 202 program and support $710
    million in fiscal year 2000 funding for Section 202 development and
    project rental assistance. We urge Congress to establish a continuum of
    care for the elderly account and provide an additional $200 million for
    the Section 202 program to be available for mixed-financing and
    leveraging other development financing sources and enabling greater
    program flexibility. Program flexibility should include a change in
    statute to enable linkages between Section 202 and the low income
    housing tax credit program.
        Service Coordinators.--AAHSA testified last year that the use of
    service coordinators in elderly housing facilities is an integral part
    of the continuum of care, and our facilities have come to reflect the
    vast support systems that enable the frail elderly to live
    independently with dignity and respect. Under the continuum of care
    concept, there are economies of scale benefits that accompany groups of
    older persons living together who have access to services to help make
    their life easier.
        The Administration proposes $50 million for an expanded service
    coordinator program to serve residents of HUD-assisted elderly housing
    and other eligible elderly persons living in a project's neighborhood.
    Funding for the expanded program would be instituted as a set-aside
    under the Section 202 program. Over the years, AAHSA has advocated for
    a more reliable and stable source of funding for service coordinators,
    including funding service coordinators as a part of a facility's
    routine operating expenses. Once again, we urge Congress to establish a
    more routine funding mechanism for service coordinators. We suggest
    that Congress provide new funding for service coordinators through the
    current competitive grant process, and subsequently allow grant
    recipients the option to build the cost of service coordinators into
    their operating budget upon the expiration of the grant. In addition,
    many elderly projects are constrained from providing a service
    coordinator because HUD's 120 percent fair market rent cap prevents
    them from building the cost of a service coordinator into their budget.
    A waiver for nonprofit sponsors who specifically exceed the rent cap in
    order to fund service coordinators would resolve this problem. While we
    support the funding level proposed by the Administration--and it is
    consistent with the level of funds originally provided when the service
    coordinator program was first established--we oppose the notion that
    service coordinators should be funded out of Section 202 development
    funds as a set-aside in the Section 202 account. We urge Congress to
    establish a continuum of care for the elderly account in fiscal year
    2000 and provide at least $50 million in funding for (1) renewal of
    expiring service coordinator and congregate housing contracts, (2) new
    service coordinator contracts, and (3) expansion, to enable service
    coordinators to serve other residents residing in the community.
        Assisted Living Vouchers.--AAHSA continues to favor the project-
    based approach over tenant-based vouchers as the preferable method of
    providing rental assistance to low income elderly persons for many of
    the reasons we outlined in last year's testimony, including the most
    obvious reason that an older resident wants a place to age-in-place and
    prevent or delay placement in other institutional care settings.
    Vouchers make it more difficult for older persons, particularly more
    frail elderly and persons who need the service enriched environment of
    elderly housing, to find available and suitable housing in the
    community. And, vouchers do not expand the supply of affordable housing
    for the elderly. We continue to view vouchers as ``eating our seeds,''
    we can live off our seeds for awhile, but it is short-sighted, and does
    not build or grow the future.
        However, HUD proposes a change in law to allow existing Section 8
    tenant-based vouchers currently used by low income elderly to cover the
    rent portion of assisted living costs. Given the fact that these
    vouchers are currently in use by elderly residents, AAHSA would support
    the expansion and use eligibility of these Section 8 vouchers. The
    purpose is to both prevent the transitioning of the elderly resident to
    more costly institutional care, and to provide greater options to
    elderly residents in their choice of residential and care settings.
    H.R. 1624 would also authorize an additional $87 million for 15,000
    incremental Section 8 vouchers to be utilized by low income elderly to
    help pay the rent cost of assisted living facilities on a 10 city/state
    demonstration basis. Priority would be given to very low income seniors
    who are Medicaid-eligible. The purpose of the demonstration is to gauge
    the effectiveness of Section 8 rental assistance in assisted living
    facilities, under controlled conditions, and report back to Congress
    with findings, particularly on the savings realized by serving
    Medicaid-eligible elderly persons in a non-nursing home environment.
        These are objectives that AAHSA supports. We urge Congress to
    extend to low income elderly persons currently using Section 8 rental
    assistance vouchers the option to use their vouchers in assisted living
    facilities. We additionally support $87 million in funding for 15,000
    incremental vouchers to be used by frail elderly in assisted living
    facilities.
        Assisted Living Conversion.--Just as our residents are aging-in-
    place, our housing is aging-in-place, and is in need of modernization
    and retrofit. For years, AAHSA has urged Congress and the
    Administration to establish a modernization and retrofit program to
    address the problem of aging buildings, especially since the loss of
    the Flexible Subsidy program and non-implementation of Project Retrofit
    under the Congregate Housing Services Program in the 1990 National
    Affordable Housing Act.
        Under the continuum of care, the Administration proposes up to $100
    million of Section 202 development funds to be available for an
    innovative, competitive grant program to convert all or part of
    existing Section 202 projects to assisted living facilities through
    rehabilitation, modernization or retrofit. While AAHSA applauds the
    Administration for taking this particular half step forward, we believe
    that a full step is needed. This is a desirable objective, but we
    believe that increased flexibility would be more beneficial. H.R. 202
    would allow savings generated from financial conversion of Section 202
    facilities to be used for modernization and retrofit of facilities.
    H.R. 1624 establishes a $100 million capital grant program for the
    rehabilitation, modernization, and repair of most project-based
    federally assisted elderly housing, and allows for conversion of
    elderly housing units to assisted living. We urge Congress to support a
    continuum of care for the elderly account in fiscal year 2000 that
    provides up to $100 million in funding for the rehabilitation,
    modernization and retrofit of project-based federally assisted elderly
    housing, and up to $100 million for conversion of elderly housing units
    to assisted living.
        Intergenerational Learning Centers.--AAHSA has long promoted the
    concept of co-location, or locating services and service providers on
    or in close proximity to elderly housing facilities. HUD proposes to
    use up to five percent or $5 million of assisted living conversion
    funds to provide space within elderly housing projects for
    Intergenerational Learning Centers where ``the skills and experience of
    seniors will be harnessed to meet the need for affordable child care
    and allow seniors and children to learn new skills together.'' While
    AAHSA supports this co-location approach, we would expand the eligible
    use of funds to other co-location activities, including adult day care,
    senior centers, home health care centers, and other types of services
    and service providers. We urge Congress to support a continuum of care
    for the elderly account in fiscal year 2000 that provides up to $5
    million in funds for co-location activities; and to provide language
    that encourages the use of funds from the CDBG account for co-location.
    Other Issues
        Financial Restructuring.--Last year, AAHSA outlined the arguments
    for the financial conversion of the existing debt-laden Section 202
    inventory with Section 8 assistance to the capital advance program with
    project based rental assistance (PRAC), and urged this committee and
    Congress to consider changing existing budget rules to permit debt
    conversion while minimizing the budgetary impact. Since then, progress
    has been made in considering other ways of minimizing the up-front
    budgetary costs, including year-by-year debt abatement, prepayment and
    refinancing proposals. Once again, AAHSA urges the committee and
    Congress to allow for a range or menu of options in financial
    restructuring of the Section 202 inventory including debt conversion,
    prepayment and refinancing.
        Program Funding.--AAHSA is additionally concerned with full funding
    for expiring Section 8 contracts; adequate funding at the
    Administration-requested level for the Section 811 and HOME programs;
    and prevention of resident displacement caused by owners opting out of
    the Section 8 program. We particularly urge Congress to proactively
    pursue ways to help stem the loss of affordable housing caused by owner
    prepayment and opting-out. Congress could help prevent resident
    displacement by reducing the opt-out incentive by ensuring market
    returns to owners; by providing a right-of-first-refusal and other
    incentives to encourage the transfer or sale of opt-out properties to
    nonprofit organizations; by removing barriers to sales; and by
    facilitating acquisitions among sponsors with a long-term commitment to
    providing affordable housing. We also urge Congress to provide funding
    for ``enhanced vouchers'' to elderly residents in cases where expiring
    Section 8 contracts may cause rent levels to increase.
    Conclusion
        AAHSA is thankful for the leadership this committee has provided
    for elderly housing and for this opportunity to provide testimony. We
    are pleased to be able to contribute to the committee's deliberation on
    these critical issues, and we urge your support for the recommendations
    outlined in these comments. We hope that our comments will assist in
    helping you formulate a budget that is responsive to the increasing
    needs of very-low-income elderly. If you desire additional information,
    please contact Gerard Holder, Associate Director for Housing Policy at
    202-508-9476 or gholder@aahsa.org.
                                     ______

     Letter From the National Association For Equal Opportunity In Higher
                                   Education
                                     Silver Spring, MD, April 28, 1999.
    The Honorable Christopher S. Bond,
    Chairman, Subcommittee on VA-HUD-Independent Agencies, Committee on
            Appropriations, United States Senate, 274 Russell Senate Office
            Building, Washington, DC.
        Dear Chairman Bond: As President and Chief Executive Officer of the
    National Association for Equal Opportunity in Higher Education (NAFEO),
    I am writing to respectfully request your support and assistance with
    efforts to secure funding for minority programs in the fiscal year 2000
    VA-HUD-Independent Agencies Appropriations bill. Specifically, on
    behalf of the 118 HBCUs represented by NAFEO, we ask that $20 million
    be provided to support the HBCU-UP program.
        NAFEO is the national umbrella organization representing the
    nation's 118 Historically Black Colleges and Universities (HBCUs). Of
    this number, over 100 of the NAFEO/HBCUs were founded prior to the
    Civil Rights Act of 1964 with the primary mission of educating African
    Americans. In fact, many of these schools were established during the
    Reconstruction Era as a means of educating persons who had been slaves.
    The other 14 institutions that belong to NAFEO, known as ``NAFEO's
    Other Equal Opportunity Educational Institutions (EOEIs)'' were
    established after 1964 and serve significant numbers of African
    Americans and other minorities.
        Underrepresentation of minorities in science, engineering and
    mathematics (SEM) fields is a serious problem that threatens our
    nation's ability to effectively address the scientific and
    technological challenges of the next century. As the nation prepares
    for these challenges, it is essential that available resources be
    focused on improving the ability of young people from underrepresented
    groups to acquire the skills needed for meaningful employment in the
    high technology enterprise. Given the strong track record of HBCUs in
    producing a disproportionately large number of minority undergraduates
    with degrees in these fields, additional resources are needed to assist
    these initiatives.
        Currently, the National Science Foundation (NSF) Directorate for
    Education and Human Resources (HER) provides $6 million to three HBCUs
    ($2 million per institution) with the expressed purpose of
    strengthening their SEM education and research infrastructure,
    including support for faculty, research experiences for undergraduates
    and scientific instrumentation. Another $2 million is provided by the
    research and related activities account. While a 6 percent increase has
    been proposed for NSF generally, no increase is recommended for HBCU-
    UP, or the other minority programs administered by HER.
        With respect to the fiscal year 2000 VA-HUD-Independent Agencies
    Appropriations bill, NAFEO is seeking increased funding for the NSF
    Education and Human Resources account. The request provides an
    additional $12 million above the fiscal year 1999 level, and will
    support an additional six institutions. This would ensure that the
    current centers would continue to receive support at the fiscal year
    1999 level of $8 million while allowing for additional program
    participants.
        A chart listing NAFEO's specific priority requests and the
    organization's general request is attached for your review. Thank you
    for your attention to this request. I look forward to meeting with you
    to discuss this and other initiatives in more detail. The National
    Association for Equal Opportunity in Higher Education thanks you for
    all you do in ``keeping the doors of opportunity open.''TM
                Sincerely,
                                                  Henry Ponder,
                                                       CEO & President.
                                     ______

             Prepared Statement of the County of Sutter, California
        Thank you, Mr. Chairman, and members of the committee for this
    opportunity to speak before you today on behalf of the County of
    Sutter, California in support of two project requests for fiscal year
    2000. The County of Sutter appreciates this committee's support, and we
    look forward to working with the committee to continue to improve our
    economy.
        Emergency Operations Center.--The County of Sutter, California
    requests a $3.6 million earmark in the fiscal year 2000 VA-HUD
    Appropriations bill under Economic Development Initiative to construct
    a new Emergency Operations Center in Sutter County.
        The County of Sutter has experienced four presidentially declared
    flood disasters in the last four years alone. In January 1997, Sutter
    County was part of the third largest evacuation in U.S. history when
    nearly 50 square miles were inundated. Given Sutter County location in
    the Sacramento River watershed, it is likely that additional emergency
    events will occur in the future.
        The existing Emergency Operations Center (EOC) is wholly inadequate
    to meet the needs of the County and the region. It is located in a
    rural fire station pre-dating World War II that was actually dismantled
    and moved from San Francisco to its present location. It is small,
    noisy, poorly heated, and badly lit. Further, sanitary facilities are
    inadequate when the facility is in full operation. Perhaps most
    critical is the fact that modern communications devices--essential to
    emergency operations--do not operate in the existing EOC. And perhaps
    most ironically, the fire department must be relocated to a remote
    facility when the fire station is taken over for EOC purposes, thus
    placing the community at an even higher level of risk at the very time
    the risk level needs to be reduced.
        The new facility will be located on high ground. The 10,000 square
    foot facility will include space for disaster operations, operational
    branch offices/meetings, media briefing facilities, restrooms, briefing
    areas, kitchen and dining areas, and off-shift rest facilities. Site
    improvements will include security gates, driveways, parking, a secure
    water source, an on-site wastewater disposal system, and security
    lighting.
        The focus of the project is to upgrade the County's and region's
    disaster response capabilities by increasing usable area, centralizing
    vital communications and situation monitoring equipment, and adding
    modern support systems, such as networked computers and satellite
    communications.
        The County is committed to constructing this facility and is
    willing to commit significant resources to capital facilities. However,
    federal assistance is needed if the County is to construct a facility
    capable of meeting the proven needs of the County and region. The
    assistance of this committee is greatly needed and appreciated.
        Sutter County Industrial Development Projects.--Mr. Chairman,
    Sutter County also requests an earmark of $300,000 in the fiscal year
    2000 VA-HUD Appropriations bill under the Economic Development
    Initiative to provide critical assistance in the County's efforts to
    improve its economy by way of developing two industrial areas in Sutter
    County.
        Sutter County, located north of the City of Sacramento, is an
    economically depressed rural region which relies heavily on agriculture
    for economic stimulus. Sutter County has relatively high unemployment
    rates and relatively low per capita income levels, and needs to
    diversify its economy in order to improve the lives of its citizens.
        Two areas in Sutter County are well-positioned geographically to
    provide economic development opportunities in the form of an
    industrial/commercial reserve and an industrial park. The South Sutter
    County Industrial/Commercial Reserve provides an opportunity to develop
    approximately 3,500 acres of land near the Sacramento International
    Airport and major transportation corridors. The Sutter Industrial Park
    is located five miles west of Yuba City. While these two areas provide
    real economic development and diversification opportunities, the County
    lacks the financial resources to stimulate significant interest and
    development in these areas.
        Mr. Chairman, the County of Sutter appreciates the committee's
    continuing assistance related to improving our region's economy. Thank
    you for the opportunity to appear before your committee. I would be
    happy to answer any questions.
                                     ______

             Prepared Statement of the City of Gainesville, Florida
        Mr. Chairman and Members of the Subcommittee, my name is Pegeen
    Hanrahan and I am the City Commissioner of Gainesville, Florida. I
    would like to submit the following testimony for the record and ask for
    your assistance with regard to two important initiatives on which the
    City is currently working.
    Sweetwater Branch/Payne's Prairie Stormwater Protection Project
    Background
        The Sweetwater Branch basin contains approximately 1,710 acres and
    is located in the southeast central portion of the City of Gainesville.
    The outfall from this basin discharges into Payne's Prairie, a state
    owned preserve and park system, which eventually flows into the Alachua
    Sink, a natural sinkhole that drains directly into the Floridan
    Aquifer. This Aquifer provides the majority of drinking water to
    Florida's residents.
        The Sweetwater Branch drainage basin contains urban, commercial,
    industrial and residential area stormwater runoff. Because the branch
    runs through some of the oldest portions of Gainesville, most
    stormwater runoff is directly discharged into the Branch with very
    little flooding attenuation or pollution loading reduction. The runoff
    has the potential to affect threatened and endangered wildlife such as
    the Bald Eagle, the Woodstork, the Sandhill Crane, and the Southeastern
    American Kestrel. In addition, many domestic wells are used to obtain
    water from surficial and intermediate aquifers in the area.
        Water monitoring sites along Sweetwater Branch indicate that
    inorganic constituents and nutrients are elevated. These compounds
    adversely impact water quality and, potentially, vegetation in Payne's
    Prairie and degrade water recharging the Floridan aquifer system
    through Alachua Sink. Specific conductance has been increasing over
    time, with averages ranging from 305 to 945 umhos/cm during 1997. The
    average total nitrogen concentrations range from 0.25 to 1.08 mg/L.
    Average total phosphorus concentrations are found to be 1.16 mg/L, with
    many values exceeding 3.00 mg/L. There is a presence of relatively high
    levels of total and fecal coliform, with total coliform bacteria found
    to exceed 1,600 MPN/100mL. Aquatic macroinvertebrate sampling and
    analyses performed in 1996 indicate an overall poor health of
    Sweetwater Branch. In summary, the situation has created concern
    amongst environmentalists, business leaders, and concerned citizens
    throughout the region that Paynes Prairie and the Floridan Aquifer are
    being compromised.
    Project Description
        The City of Gainesville intends to conduct surveying and
    engineering analysis to determine the most beneficial and appropriate
    means of providing treatment of the stormwater being transported
    through the Sweetwater Branch prior to discharge to Paynes Prairie.
    Conceptual studies have been conducted previously to identify optional
    locations for such treatment facilities. Based on these studies, a
    tentative location has been selected for further analysis.
    Project Benefits
        The primary goal for the proposed project is to provide a
    comprehensive ecosystem management solution to the problem of
    stormwater runoff from downtown entering Sweetwater Branch, Paynes
    Prairie and the Alachua Sink. The project will reduce or eliminate the
    sediment, debris, nutrients and general pollutants currently being
    discharged.

                            SUMMARY OF FUNDING NEEDS
    ------------------------------------------------------------------------
                  Project Phase                Funding Need        Year
    ------------------------------------------------------------------------
    Engineering/Surveying...................        $200,000             1st
    Property Acquisition....................         800,000             2nd
    Construction............................       1,000,000             3rd
                                             ----------------
          Total.............................       2,000,000
    ------------------------------------------------------------------------

        It will be the City's intent to utilize $500,000 appropriated last
    year for this project through USEPA to fund the engineering phase and
    assist in the property acquisition phase.
    Stormwater Treatment
        The City of Gainesville has been developing a multi-faceted
    approach to addressing stormwater runoff problems within the highly
    urbanized 1,700 acre Sweetwater Branch watershed.
        At the upper most limit of the watershed, there is a Duck Pond
    Wetlands Restoration project under design. This section of Sweetwater
    flows through the Northeast Historic District. The Restoration project
    includes restoring a channelized section of the creek to a more natural
    flowing creek.
        Sweetwater then flows through the Central City District adjacent
    and through the Matheson Historic Park. The City recently completed the
    installation of a Bafflebox treatment structure and has permitted the
    installation of another type of treatment structure called a Vortex
    Box. These structures efficiently remove sediments and floatables that
    are generally carried to and through the creek.
        The City obtained a Brownfields designation for property located on
    the southern perimeter of the Central City District for purposes of
    designing a stormwater and groundwater wetlands treatment and flood
    attenuation facility that will be developed and integrated into a city
    park. In addition, the facility will serve as the master stormwater
    detention facility for the Downtown Redevelopment District.
        This site is located adjacent to the Historic Train Depot that the
    City has recently acquired and plans to renovate. The park will provide
    interconnections to several major rail/trail facilities that connect
    Downtown Gainesville to the City of Hawthorne and the University of
    Florida campus. There is an intermodal transportation center under
    design as well to be located on property adjacent to the proposed
    stormwater park site.
        The City's Electric Utility is in the process of designing a
    repowering plan for the historic Kelly Power Plant located adjacent to
    this site. There is consideration of utilizing the reuse water from a
    nearby wastewater treatment plant. This water is currently being
    discharged to the Sweetwater Branch downstream of the proposed
    stormwater park site.
        The final proposed treatment facility is located towards the
    southern terminus of the creek as it enters into the State owned Paynes
    Prairie Preserve. This treatment facility will provide final treatment
    of the runoff prior to discharging into the preserve and ultimately
    into the Floridan Aquifer through the Alachua Sink.
        The City of Gainesville intends to utilize the $500,000 from USEPA
    to fund engineering phase and assist with property acquisition.
    Additional funding up to $1.3 million is needed to provide total
    property acquisition and construction. The City of Gainesville is
    providing funding from the Stormwater Utility Program for portions of
    this overall master plan as well.
    The Depot Avenue Project
        The Depot Project includes the reconstruction of approximately two
    (2) miles of Depot Avenue from SR 331 to US 441 and the development of
    the Depot Wetlands Park. The Depot Avenue portion of the project is
    intended to address current safety and capacity issues and includes the
    construction of two travel lanes, turn lanes, curbs, sidewalks and
    landscaped medians. Depot Avenue traverses Gainesville from west to
    east, approximately one-half mile south of, and parallel to, SR 26
    (University Avenue). Its western terminus is at the eastern edge of the
    campus of the University of Florida and its associated student housing
    development, and its eastern terminus is at SR 331 in Southeast
    Gainesville. It skirts the southern edge of downtown Gainesville at its
    mid-point, and its intersection with SR 329 (Main Street) is considered
    to be the southern ``gateway'' to Downtown.
        Depot Avenue is located adjacent to the existing Depot Avenue Rail-
    Trail, which is an 8 foot wide asphalt bike trail. It alternately
    connects an existing recreational park and the proposed Depot Wetlands
    Park, residential areas, commercial areas, and industrial land uses
    along its length. The redesign of the road will address these varying
    conditions and will also provide for the involvement of the
    neighborhood residents it serves.
        The enhancement of Depot Avenue will encourage increased
    utilization of mass transit, bicycle and pedestrian modes of travel and
    increase accessibility to a major public heritage and recreation
    destination for the community. The City of Gainesville's RTS
    Transportation Center is located on the north side of Depot Avenue
    directly south of the core of Downtown Gainesville. The Transportation
    Center is a multi-modal transportation hub for the Regional Transit
    System, Greyhound, Amtrak and the Bicycle Commuter Facility.
        The enhancement of Depot Avenue will also provide infrastructure
    and improved safety while accessing from downtown and the University of
    Florida area to the Porters Community, just west of SR 329 (South Main
    Street) and Southeast Gainesville. The Porters Community lies within
    Census Tract 2, which extends north of University Avenue, and Southeast
    Gainesville lies within Census Tract 7. Census Tract 2 is approximately
    37.7 percent African American and Census Tract 7 is approximately 75.6
    percent African American (Census, 1990). Approximately 35.1 percent of
    all families in Census Tract 2 are in poverty and approximately 31.6
    percent of all families in Census Tract 7 are in poverty (Census,
    1990). The socio-economic conditions of these areas include high crime
    rates, sub-standard housing, and lack of services and investment. The
    enhancement of Depot Avenue provides for safer access to the higher
    employment areas of Gainesville, including downtown and the University
    of Florida, improving physical infrastructure, including drainage
    improvements, lighting and streetscaping, and providing safe bicycle
    and pedestrian facilities that connect both east and west Gainesville
    to Downtown.
        The Depot Avenue Project will provide for beautification, and
    encourage redevelopment and infill in the urban core of Gainesville and
    its adjacent areas. This enhancement will provide a region-based
    incentive for reducing sprawl development in the Gainesville
    Metropolitan Area by providing an alternative east-west corridor to SR
    26 that allows for maximum use of alternative transportation. As a
    consequence, this project will increase mobility while minimizing
    pollution and congestion associated with the use of single occupant
    vehicles.
        The Depot Wetlands Park is a proposed 22-acre Stormwater Wetlands
    Restoration Park that will serve as the stormwater management facility
    and developed urban recreational park that will serve many adjacent and
    nearby residential neighborhoods.
        As part of the stormwater management component of the project, the
    facility is intended to provide water treatment for the Depot Avenue
    Project as well as the Central City District portion of the watershed
    that is located upstream of the facility. This project is in the
    planning stages as the centerpiece of a USEPA and Florida DEP funded
    Brownfields pilot project.
        Once constructed the Park will serve as a hub for several existing
    and planned rail trail bikeways. The Depot Project provides linkages to
    the Depot Avenue Rail-Trail that links with the Waldo Road Rail-Trail,
    the proposed Downtown Connector Rail-Trail that links with the
    Gainesville Hawthorne Rail-Trail, and the proposed 6th Street Rail-
    Trail. This trail system provides connections between the Downtown
    area, the University of Florida campus, many residential neighborhoods,
    and other municipalities. The trail system serves not only recreational
    users but also serves as an alternative transportation facility.
        The Depot Park is home to the Historic Train Depot Building that
    was recently purchased by the City of Gainesville for purposes of
    rehabilitation. The Old Gainesville Depot was built in 1907, and was
    placed on the National Register of Historic Places in 1996. The City of
    Gainesville was founded as a rail hub linking Fernandina Beach on the
    east coast of Florida to Cedar Key on the west coast in the mid-1800's
    and uses a train symbol as its official seal. The Old Gainesville
    Depot's under-roof, otherwise open loading docks will provide open
    vistas to the adjacent Stormwater Park. The Depot building will house a
    unique mix of destination-oriented cultural and commercial uses
    supportive of redevelopment in the Depot Area, the Depot Park, the
    rail-trail system, and the RTS Transportation Center. The historic
    Depot building's unique character and location will serve to make it
    both a lively destination hub for the neighborhood and a catalyst for
    further redevelopment of the area south of downtown. The building is a
    standing testament to and a significant visual emblem of Gainesville's
    rich history. It is also an historic symbol of transportation choice
    that is particularly appropriate to its envisioned new uses, the
    Stormwater Park, the adjoining rail-trail and its nearby connections
    that are being developed, and to the RTS Transportation Center that
    will be built across the street. The restoration of this building in
    conjunction with the restoration of the 22-acre Depot Park is expected
    to provide a major community destination and regional ``eco-tourism''
    attraction for the community.
        The City's Electric Utility is in the process of designing a
    repowering plan for the historic Kelly Power Plant located adjacent to
    the Transportation Center, Depot Historic Structure and the Stormwater
    Wetlands Restoration Park. The planning firm of Dover, Kohl and
    Partners has recently completed a community-planning process held in
    conjunction with the repowering project. This community-planning
    process included the entire Depot Avenue area adjacent to Downtown. The
    City encourages citizen participation in the community-planning process
    and actively provides opportunities for participation in the planning
    of public infrastructure such as the Depot Avenue Project.
        The Depot Avenue Project will include property and right-of-way
    acquisition, design and construction activities at a cost of
    approximately $18.8 million. The Depot Wetlands Park includes property
    acquisition, design, remediation and construction activities at a cost
    of approximately $10.0 million.
                                     ______

                   Prepared Statement of City of Dayton, Ohio
        Chairman Bond, Ranking Member Mikulski, and Members of the
    Subcommittee, thank you for the opportunity to submit the following
    testimony which briefly details a concept that we call `` Tool Town''
    for which we are seeking your partnership and support in the amount of
    $2 million.
        Tool Town is an idea that was created by a tooling community and
    machining task force during the development of the comprehensive plan
    for the city of Dayton. Tool Town will be a precision metalworking park
    for the tooling and machining industry located on underutilized
    industrial property in downtown Dayton. Tool Town will concentrate
    tooling and machining companies, support services, and educational
    opportunities in a unique campus-like environment. It will provide the
    opportunity for companies to share equipment, staff, and resources and
    to cooperate in new ways to meet a variety of customer needs. This
    unique approach will not only support the region, but also help the
    tooling and machining industry compete globally and retain these high-
    paying jobs in the United States.
        In the short term, Tool Town would provide a home for 23 businesses
    employing over 1,500 people, and through its growth over the next 20
    years, would house over 80 tooling and machining businesses and still
    have the capacity for additional growth. Just within the city of
    Dayton, this industry would be the direct supplier of 5,600 new jobs
    and the generator of an equal number of new, spin-off jobs.
        Ensuring the success of the tooling and machining industry will
    help accomplish goals established in our comprehensive plan, including
    increased per capita income, poverty reduction, revenue generation, and
    job creation. These goals are relevant to the entire region, especially
    in areas that formerly were centers of manufacturing and distribution
    and whose citizens have suffered the most from the loss of those
    industries and the impacts of urban sprawl. The creation of Tool Town
    will support the long-term viability of the tooling and machining
    industry and provide jobs for people who need them.
        Tooling and machining businesses can provide secure, well-paying
    jobs with benefits and the potential for advancement. The jobs are
    available to a high school graduate after a nine-month training program
    at Sinclair Community College, located in downtown Dayton. Sinclair has
    a tooling and machining certification program that is recognized as the
    best in the United States.
        The average graduate has a minimum of three job offers and all
    graduates get jobs. They are also designing a new curriculum to provide
    advanced training which will produce ``top gun'' machinists.
        The development of the Tool Town campus will also demonstrate the
    feasibility of reusing brownfields. We have already received an U.S.
    EPA Brownfield Pilot Program grant to complete an environmental
    assessment and develop a reuse strategy for this site. A successful
    brownfield project in our region will stimulate similar activities on
    other underutilized and abandoned industrial sites. Its location in the
    urban core permits economic development without additional major
    investments in public infrastructure by reusing the existing roadways
    and utilities that are already adequate to support full development of
    this site.
                               regional strengths
        The Miami Valley region has tremendous strengths in tooling and
    machining. We are the fourth largest concentration of tooling and
    machining industries in the United States. A recent survey of 11
    counties in this region \1\ indicates that there are currently over 825
    tooling and machining companies employing approximately 26,000 people.
    This represents a $1 billion yearly payroll and $2.2 billion annual
    sales revenue.
    ---------------------------------------------------------------------------
        \1\ Survey completed by the Center for Business and Economic
    Research, the University of Dayton, Survey area includes Butler
    (northern portion), Champaign, Clark, Clinton, (northern portion),
    Darke, Greene, Miami, Montgomery, Preble, Shelby, and Warren (northern
    portion) counties.
    ---------------------------------------------------------------------------
        The industry is growing in our region. In the last five years, the
    number of jobs in tooling and machining has increased by 22.7 percent.
    This is compared to a total employment growth rate of 5.3 percent in
    the Dayton-Springfield area and 7.1 percent in the state of Ohio.
        We have a wide breadth of capabilities in the industry, including
    precision machining; molds; and special machines, processes, and
    services. We have the ability to meet a variety of customer needs
    through cooperating among area firms.
        Educational opportunities are also a regional strength. As
    mentioned above, Sinclair Community College is located near Tool Town
    and is currently providing training for this industry. They are also
    working with Dayton Public Schools on a possible joint venture to be
    located at the Tool Town campus.
                                    partners
        There is a network of partners already involved in and committed to
    this project. Partners at the local level include public and private
    organizations such as the Dayton Tooling and Machining Association,
    whose members have contributed $250,000 to provide two years operating
    capital for the Tool Town Foundation; Montgomery County; Sinclair
    Community College; the Brownfield Redevelopment Authority; and the
    Miami Valley Economic Development Coalition. Local funding
    contributions toward tooling and machining initiatives represent over
    $1.7 million, including the construction of the Dayton/Miami Valley
    Entrepreneurs Center, an Edison technology incubator to be located in
    tool Town. Local in-kind contributions represent $835,000 worth of
    staff time dedicated over the next three years to implement these
    initiatives.
        At the state level, the Ohio Department of Development has pledged
    operating funds for the Entrepreneurs Center of up to $200,000 a year
    and the Ohio Department of Transportation is supporting our application
    for a Transportation and Community and System Preservation Pilot
    Program (TCSP) planning grant for the Tool Town campus.
        As previously mentioned, the federal government is also partnering
    on this project, including awarding Dayton a U.S. EPA Brownfield Pilot
    Program grant and the U.S. Economic Development Administration
    contributing $1.1 million toward the Entrepreneurs Center. We were also
    selected to participate in the final round of the TCSP grant program
    and hope to receive a $300,000 planning grant for the Tool Town campus.
    In addition, the city of Dayton has allocated $670,000 of our HUD funds
    toward acquisition of a former foundry that comprises 11 acres of Tool
    Town.
                                   conclusion
        The tooling and machining industry is globally significant. It has
    a bright future. It is the core technology of every kind of
    manufacturing and is essential to research and development, not to
    mention our country's infrastructure, space program, and defense
    readiness. It is essential, that as a nation, we maintain our ability
    to engineer, build, and maintain tools.
        While the global market presents opportunities there are those who
    are working hard to take this lucrative business away from the United
    States. The Pacific Rim countries already have 40 percent of the world
    market in this industry, equivalent to the United State's share, and
    their stated plan is to acquire 80 percent of it. Tool Town will be a
    national demonstration project of a new way for businesses to work
    together to meet this challenge. It will help ensure that the United
    States will increase its share of this industry in the new century.
                                     ______

          Prepared Statement of the Habitat for Humanity International
        Mr. Chairman, Ms. Ranking Member, Distinguished Members of the
    Committee, colleagues, and guests: It is a privilege to testify on
    behalf of legislation which advances the opportunity for low-income
    people to achieve the American Dream of homeownership. Habitat for
    Humanity has two basic goals: To build houses with--not for--persons
    who in no other way could own their homes; and to make it a matter of
    conscience that everyone deserves a simple, decent place to live. The
    SHOP and Capacity Building programs support and advance both of these
    goals in important ways.
        Before I illustrate just how much of an impact these programs make,
    allow me to describe Habitat for Humanity International and its role in
    the process. Habitat for Humanity is an ecumenical Christian
    organization; for 23 years, we've been building houses with people in
    need throughout the United States and much of the rest of the world.
    Last fall, Habitat dedicated its 70,000th house. In little more than a
    year, we expect to complete our 100,000th house. The families who move
    into these houses make monthly payments on no-profit, no-interest
    mortgages; they also contribute as much as 500 hours of ``sweat
    equity.'' Habitat for Humanity offers these families--chosen without
    regard to race, religion, sex, or national origin--a ``hand up,'' not a
    handout. Habitat's nearly 1,500 affiliates in the United States select
    homeowners on the basis of need, their ability to pay the no-interest
    mortgage and their willingness to partner with us (invest sweat
    equity). Each of these affiliates carries 501(c)(3) non-profit status
    and is directed by its own locally elected volunteer board of
    directors. Only about one of every four affiliates has any paid staff;
    the rest are operated entirely by volunteers.
        Habitat uses two federal programs to help ``set the stage'' for its
    homebuilding: the Self-Help Housing Opportunity program (SHOP) and
    Capacity Building. These programs make grants to Habitat for Humanity
    International, which, in turn, makes grants to its affiliates in all
    parts of the country. Habitat is strictly accountable to the Congress
    for use of program funds. We make regular reports to the Secretary of
    HUD.
        The Congress last year re-authorized SHOP and Capacity Building for
    fiscal year 1999 and fiscal year 2000; now the programs await
    appropriations for which national and regional non-profit groups will
    compete. SHOP and Capacity Building merit appropriation of funds,
    because they work. At Habitat, for example, we're on track to build
    more than 4,000 houses with the SHOP 1996 and SHOP 1998 awards we've
    received--in fact, when the building is done, we'll have built about
    400 more homes with the assistance of the two SHOP grants than our
    agreement with HUD calls for. SHOP funds are used only for land and
    infrastructure. Organizations awarded funds must average one house
    built for every $10,000 included in the two-year grants (we're
    averaging $9,071 for each SHOP 1996 house and $8,086 for each SHOP 1998
    house). At Habitat, our affiliates are responsible for raising the rest
    of the funds to build each house, which, on average, costs at total of
    $43,251.
        In the three years since the inception of SHOP, Habitat for
    Humanity and Housing Assistance Council have been the primary users of
    the funds. SHOP has made a significant impact on housebuilding among
    Habitat's affiliates in the U.S.; affiliates participating in the
    program built 60 percent more units in 1998 than they did in 1996.
    Every day, we see SHOP do exactly what it's meant to do--give Americans
    in need the chance to move into their own homes and slip the bonds of
    poverty. We respectively request that $20 million be appropriated for
    SHOP for fiscal year 2000.
        The Capacity Building program allows Habitat for Humanity
    International to fund affiliates' initiatives to increase the number of
    houses they build. Affiliates are required to show us how Capacity
    Building funding can help them increase home-building volume by at
    least a 15 percent increase. With Capacity Building funds from the
    Supplemental 1997 budget, 62 Habitat affiliates plan to increase
    homebuilding volume by 169 percent in the next three years!
        Capacity Building funds are used in two ways. Approximately one-
    third of the funds helps provide technical assistance to affiliates
    through the support of affiliate managers (each affiliate manager
    advises 30 affiliates). Affiliate managers provide a variety of
    training to local volunteers, resulting in increased production of
    Habitat homes. Approximately two-thirds of Capacity Building funds are
    made available to local Habitat affiliates to provide equipment and
    persons to develop capacity to increase house numbers. Since no more
    than one-fourth of Habitat affiliates have any staff and since
    Habitat's experience is that even one staff person raises the numbers
    of houses almost exponentially, affiliates may apply for funds for
    staff positions on a three-year diminishing basis (100 percent funding
    the first year, 75 percent the second year, 50 percent the third year).
    This method motivates affiliates to take full responsibility for
    staffing by the fourth year. Many more affiliates seek these funds than
    can be accommodated. It is important to note that each affiliate must
    first raise $3 for each $1 in Capacity Building funds it receives. We
    respectively seek $10 million to be appropriated in fiscal year 2000
    for Capacity Building.
        SHOP and Capacity Building are not about statistics or processes;
    they're about building hope for Americans who have so little. I could
    not describe these programs adequately if I didn't offer at least a few
    examples of the lives they have touched.
        Minnie Burgess, a new Habitat homeowner in Miami, Fla., only
    dreamed of homeownership before she heard of S.H.O.P. and Habitat. She
    spent much of her time keeping eight grandchildren from the drug
    dealers milling about her former apartment complex. Today, thanks to
    Habitat and S.H.O.P. funds, she and her family live in a safe
    neighborhood.
        ``I can't even explain what Habitat has done for me and my
    grandkids,'' Burgess said. ``We're all prouder now and have room to get
    around a little more.''
        Carol Seumptewa, a Habitat homeowner in Arizona, couldn't afford a
    decent house for her 21-year-old quadriplegic daughter and herself on
    her receptionist's salary. But because of S.H.O.P., they will soon move
    into a brand new handicapped-accessible home equipped with a roll-in
    shower, lower sinks and handrails.
        SHOP also helps improve lives by fighting crime. A Habitat-
    developed subdivision in Lynchburg, Va., deters wrongdoing through
    design features incorporated in its street layout, landscaping and
    lighting. The 88-home development--Jubilee Heights--can be traced to
    S.H.O.P. money that ``set the stage'' for housebuilding.
        Capacity Building is also building a repertoire of success stories
    at Habitat. One of the best examples is that of four affiliates in the
    Mississippi Delta area of northwest Mississippi that are putting
    Capacity Building funds to work to hire a resource developer who will
    target other sources of funding. The new fund-raising impetus is
    expected to result in about 20 houses in less than three years. It's
    just one instance of how Capacity Building provides the seed money for
    even more resources that accelerate housebuilding.
        There is a story behind every new house. SHOP and Capacity Building
    are changing lives one family at a time and thousands with each grant.
    Let's keep the momentum going. Appropriations of the SHOP fiscal year
    2000 and Capacity Building fiscal year 2000 programs will see to it
    that more Americans build better futures.
                                     ______

           Prepared Statement of St. Joseph's Hospital Health Center
        Mr. Chairman, thank you for the opportunity to submit this
    testimony and for the support that this Subcommittee gave to St.
    Joseph's Hospital Health Center last year. St. Joseph's, located in
    downtown Syracuse, New York, is a non-profit 431-bed hospital and
    health care network providing services to Onondaga County and to
    patients from 15 surrounding counties. St. Joseph's is best known for
    its ranking as the #1 hospital in New York State for open-heart surgery
    in terms of lowest overall mortality rate. We are very proud of this
    ranking, which we have held for three consecutive years. What many
    people do not know is that we are also the largest hemodialysis center
    outside metropolitan New York. My statement is focused on these two
    areas of expertise at St. Joseph's and how we plan to initiate a
    chronic disease management model that will benefit our current patients
    with heart and kidney disease and enhance the quality of life for at-
    risk patients in the region. We see this initiative as one with not
    only health enhancement benefits but also with significant positive
    economic implications for the community and the region.
        St. Joseph's provides over $7 million in bad debt and charity care
    to our service region. This comes to about 4 percent of our operating
    budget. This number has steadily risen over the years and we feel it
    will continue to do so unless some dramatic steps are taken. In order
    to increase access to patients who are underserved and at-risk for
    disease, we have implemented a program of ``patient-centered care.'' We
    believe we achieved our #1 ranking for cardiac care through this
    process, which employs a secondary prevention model for disease
    management. By applying a multidisciplinary team approach to heart
    disease and preparing patients before surgery and rehabilitating them
    after, we have reduced mortality rates as well as the number of second
    hospitalizations. We have done this to improve the overall health of an
    underserved and underinsured patient base, but also for practical
    financial reasons. While our rehabilitation and education programs for
    our cardiac patients are largely unreimbursed, we are rewarded by
    having to perform less expensive charity care on patients who would
    typically end up back in the hospital without disease management.
        Recognizing that early assessment is important to reducing the
    number of expensive treatments required later in life, St. Joseph's
    instituted a Wellness Place at a local mall so that people could stop
    in at their convenience. The Wellness Place provides free, general
    health screenings such as blood pressure readings, cardiac and diabetes
    risk assessment, counseling and patient education and seminars. Last
    year, approximately 15,000 people used the Wellness Place. Nearly 1000
    of these people were determined to be at risk for heart disease,
    diabetes, or vascular problems. These individuals were offered follow-
    up services intended to change lifestyle, such as nutritional
    counseling, smoking cessation, exercise programs and other similar
    regimens. They were also offered a choice of primary care physician if
    none was identified. This is all done at considerable unreimbursed
    expense to St. Joseph's but with the knowledge that a great deal of
    money will be saved in the long run--for the patient, the Medicare
    system and the hospital. The most dramatic economic implications I
    mentioned are encompassed within this concept--but not all. At risk
    patients are working people who may lose jobs if their disease
    progresses. It is important to realize, however, that patients with
    diagnosed diseases or who have congestive heart failure, may still work
    and lead productive lives if an effective disease management program is
    initiated at the earliest stage possible. The other economic benefits
    come in the form of the support required for this program. I will
    detail those later in this statement.
        Assessment is the first line of defense in chronic disease
    management; but, there are many other factors involved after this step
    is taken. A program for management of disease must adequately educate
    patients and then foster a sense of individual responsibility for the
    importance of following prescribed regimens. This takes a great deal of
    initial monitoring and time spent with patients by telephone, at
    community health centers, and in the home. This also requires
    coordinated community participation by physicians, nurses, pharmacists,
    physical therapists, educators, behavioral specialists and even
    employers.
        Diabetes, leading to kidney disease and kidney failure, is the most
    expensive disease in the country. The second most expensive, and #1
    admitting diagnosis for Medicare, is congestive heart failure. The U.S.
    spends more than $7 billion annually in Medicare dollars for these
    diseases. The clinical relationship between chronic kidney failure and
    heart disease (e.g., high blood pressure) requires similar early
    intervention techniques as well as later management, treatment, and
    rehabilitation. Utilizing resources already developed and in place for
    our cardiac rehabilitation program, St. Joseph's is proposing to
    further develop a chronic disease management program focused on
    hemodialysis. Combining resources in this way will be cost effective
    and has the potential to radically change the management of kidney
    disease.
        The specific objectives of the program will begin with early
    identification. Timely referrals to a nephrologist can be improved so
    that more aggressive treatment can be initiated to prolong kidney
    function and allow better preparation of the patient for dialysis.
    Second, we will identify, investigate, evaluate, and implement
    technology that will promote in-center self care and home hemodialysis
    modalities. The Aksys Corporation has developed a product that has the
    potential of achieving this objective. Third, we will utilize the St.
    Joseph's Cardiac Rehabilitation Model for the renal patient. This model
    will emphasize education and exercise with the goal of improving the
    percentage of patients that stay employed, reduce frequency and length
    of hospitalizations, and improve patient acceptance of and control over
    disease processes. Finally, we will apply our disease management
    techniques to our overall goal of reducing the percentage of candidates
    for kidney transplantation. The ultimate goal of the renal patient and
    the health care industry is to have renal patients lead a ``normal''
    life. Currently, kidney transplantation is the modality that is most
    associated with that goal.
        Our history of service and specialization in the areas of cardiac
    and kidney disease has proven that there is a demonstrable need for a
    chronic disease demonstration in these areas for the Central New York
    region. The demonstration will involve relationships and initiatives in
    Dialysis, Cardiac Care, Home Care, and Wellness. What we lack at this
    point, is a facility that can be shared by both cardiac and dialysis
    patients. Our current dialysis facility, the largest outside the New
    York Metropolitan area, is woefully inadequate in every way. The
    facility was originally built as a modular, temporary, unit over 20
    years ago. We now treat our overload of patients in the hallways and
    have legitimate safety concerns that come with overcrowding and
    questions as to the future structural integrity of the plant itself. We
    have not replaced this facility for financial reasons but, fortunately,
    have been able to treat patients satisfactorily. We have three
    satellite clinics in the region that are also operating at capacity.
    Our goal is to implement our demonstration program in an on-campus
    facility that will provide the space needed for dialysis, exercise
    facilities, classrooms, meeting rooms, examination rooms, and nurse and
    allied professional training space. Training of personnel is an
    important aspect of implementing an innovative chronic disease model.
        In terms of economic development for the region, we believe that
    keeping our patients healthy and productive will have the most dramatic
    impact on the economy albeit in the long term. For the shorter term, we
    believe the training programs that we currently provide and will expand
    in areas such as home care, nursing, rehabilitation specialists, and
    counseling, to name a few, will bring employment opportunities to
    people in and around Syracuse. As we expand our efforts, we will likely
    train people outside the immediate area to be able to serve the
    outlying areas where our satellite clinics are and in homes in more
    remote locations. The facility we envision will also provide many
    construction jobs over the next couple of years. The two-story
    facility, equipment and program operation will cost approximately $12.5
    million. St. Joseph's has requesting Federal partnership grant funding
    of $5.1 million that will also cover start-up operating costs. We
    estimate, based on our current services, that our operating budget will
    exceed $5.5 million per year.
        As you know, St. Joseph's received $750,000 last year to begin the
    planning and site preparation necessary for the new Center. We are very
    grateful for this support and urge you to complete this investment with
    an additional $2 million in fiscal year 2000 toward our total requested
    federal share for the intiative. Having made this request, which we
    realize is considerable, we would like to assure the Subcommittee that
    St. Joseph's will provide, through private sources, the remainder of
    the estimated total for this effort or $7.4 million.
        We recognize the magnitude of this request but believe
    wholeheartedly that this facility, and the implementation of our
    chronic disease management model will repay this initial investment
    many times over in terms of Medicare savings and in terms of providing
    a national model for replication across the country.
        Thank you.
                                     ______

           Prepared Statement of the Village of Freeport, Long Island
        Chairman Bond and members of the Subcommittee, I am Mayor William
    F. Glacken of the Village of Freeport, Long Island.
        I appreciate your receiving this testimony from me about the
    revitalization of the Freeport Nautical Mile, a critical project
    affecting our Village and Region. Representative Peter King is fully
    aware of the importance of this project to our community, and has
    written to you in support of our project.
        The Village of Freeport is the largest Village on Long Island's
    South Shore. It is located approximately 25 miles east of Manhattan. We
    have a population of approximately 50,000, making us the second largest
    Village in the State of New York.
        Freeport is one of Long Island's historic commercial, residential
    and recreational centers, with a history of settlement stretching back
    over 300 years. We have welcomed successive waves of immigrants
    throughout our history. Large percentage increases in our population
    occurred at the turn of the century, in the 1920's, and particularly in
    the rush to the suburbs which followed World War II. Our identity as a
    multiracial, ethnically diverse community goes back for decades. I am
    particularly proud that in our community black, white and hispanic
    residents are almost equally represented in our total population. These
    residents are also equally committed to building their futures in our
    Village. I know they represent a tremendous asset in making Freeport a
    model for 21st century growth and cooperation.
        As an older suburb, we share many of the problems and challenges
    that face urban areas and small cities. Our central business district
    has been ``hollowed out'' by competition from regional shopping malls.
    We have a high property tax burden in relation to other areas of the
    County and region, due in large part to a growing school system with a
    higher than average population of children at risk and new immigrants
    with limited English language capability.
        When I came into office two years ago, the Village faced a looming
    deficit and a true financial crisis. In addition, Freeport had not made
    necessary infrastructure improvements needed in our waterfront and
    central commercial areas to retain small businesses and attract
    visitors. With hard work and tough decisions, we have stabilized that
    situation, but this is the situation and the context in which we face
    the project I want to talk about with you today: the Revitalization of
    one of the Freeport's priceless assets, our working waterfront, ``The
    Nautical Mile.''
        Freeport is one of New York State's Historic Maritime Centers, the
    largest one within Long Island's South Shore Estuary. It is the only
    large, diverse working waterfront in Nassau County, home to commercial
    fishing vessels, fish markets, boat sales, seafood restaurants, charter
    boats and marine-related businesses and shops. Although it has been a
    vital engine of economic and recreational activity for more than a
    century, a number of factors including the economic downturn of the
    early 90's, changes in the region's commercial fishing industry, the
    closing of several marinas which had been long time anchors on
    Woodcleft Avenue, and a deteriorating infrastructure caused by
    recurrent flooding and postponed rehabilitation contributed to decline
    along The Nautical Mile.
        We needed to act to save the Nautical Mile from irreversible
    decline. We have acted. We have begun to implement one of the most
    ambitious revitalization projects now underway in Nassau County. In the
    coming months, the entire one mile length of Woodcleft Avenue will be
    raised by as much as 2 feet as necessary to finally end the recurrent
    flooding that has hit our businesses so hard. Magnificent water views
    and public access to the water along boardwalks and bike paths will be
    opened, as the Village develops the Little Swift Creek Recreational
    Facility at the water gateway to Woodcleft Canal. A new 11 foot wide
    brick-paved Promenade will replace existing narrow walkways. Utility
    lines will be relocated underground and decorative lighting installed
    to further enhance the Nautical Mile. A new pier and Esplanade will be
    built at the center of the Nautical Mile on the grounds of the Long
    Island Maritime Education Center, a unique museum and educational
    facility also known as ``The Seaport at Freeport'' and the only
    satellite program managed by the South Street Seaport Museum.
        We are also working to consolidate some of our wholesale and retail
    fish marketing to a ``mini-Fulton Fish Market'' to help retain and
    strengthen the Nautical Mile's remaining commercial fishing ventures.
    And finally, working with Nassau County we hope to reconstruct the road
    which Freeport named for one of its celebrity citizens, Guy Lombardo
    Avenue, to provide a thematically designed link between the Nautical
    Mile and our currently economically distressed central business
    district.
        This ambitious project has stretched our resources to the maximum.
    Protecting and revitalizing Freeport's waterfront has been recognized
    as a regionally significant project, and we have received critical
    support through competitive proposals that have won support from FEMA,
    federal ISTEA funds, Empire State Development and other State agencies,
    and from private industry. I am requesting $4.2 million today from your
    Committee to provide vitally needed assistance that will ensure the
    momentum we need to make the Nautical Mile Program a success. I thank
    you on behalf of all of Freeport's citizens for your consideration and
    help in working with us to build Freeport's future on high ground.
                                     ______

      Prepared Statement of the University of the Sciences in Philadelphia
        Mr. Chairman and Members of the Subcommittee, thank you for the
    opportunity to submit this testimony to your hearing record. As
    President of the University of the Sciences in Philadelphia (USIP), I
    make an appeal on behalf of both campus and community. The University
    of the Sciences in Philadelphia, formerly known as the Philadelphia
    College of Pharmacy and Science, has been a member of the Philadelphia
    community since 1821. USIP is the oldest institution of higher
    education in the field of pharmacy in the country and holds the very
    special distinction of having most past and current pharmaceutical
    founders and/or CEOs in the country as alumni. The specific purpose of
    my statement is to make a case for federal assistance to develop a
    highly visible, 11.2-acre tract of land donated to the University by
    the Unilever Corporation, parent company to Breyer's Ice Cream. This
    piece of land is adjacent to the University and actually doubles the
    size of our city campus and provides USIP an unprecedented opportunity
    to significantly change the face of our West Philadelphia community.
        The University of the Sciences in Philadelphia has developed a $100
    million campus development plan that will take 20 years to complete.
    This would include off-street parking facilities for students, a new
    academic building to showcase the University's science programs, a new
    field house to address the long-standing and critical need for
    recreational facilities, a new laboratory building and/or a new
    dormitory. All of these will be built around a central quadrangle of
    open space, which will enhance the University's unique green, urban
    environment, and provide a link for an existing community park, The
    Woodlands, and a proposed Botanic Trail. A new 650-space parking lot
    will help ease congestion and parking issues in the community, freeing
    up space for commuters who use the trolley, residents, and consumers at
    local businesses.
        Presently, the University campus is somewhat fragmented. A major
    thoroughfare into downtown Philadelphia runs through the center of the
    campus and currently contains pedestrian, vehicular, and trolley
    traffic. On the southwest side, the campus backs up to the historic
    Woodlands Estate now located in a 55-acre cemetery. While this is being
    promoted as a tourist attraction as part of a West Philadelphia revival
    effort, very few tourists would venture beyond this point. On the other
    side of the campus, the 11+ acre tract containing the abandoned Breyers
    Ice Cream plant abuts a newer part of the campus.
        The first phase of this plan addresses current safety and
    appearance issues. It involves the demolition of the ice cream plant
    that covers more than half of the total acreage of this new plot. This
    structure, parts of which are 75 years old, has fallen into a state of
    severe disrepair. Since Breyer's Ice Cream left the Philadelphia
    region, this dilapidated, abandoned structure has been an eyesore for
    the community as well as a reminder of lost jobs. In addition to the
    removal of the Breyer's Ice Cream plant, the first phase of the
    development plans calls for improving the safety of the campus,
    beautification of the area and creating a more integrated campus. To
    address these concerns, the University of the Sciences in Philadelphia
    plans to make several improvements to the roads bordering or running
    through the campus. These include redesigning traffic patterns and
    parking around the campus to be safer and more efficient for
    pedestrians and commuters; and developing a clearly delineated,
    geometrically-organized system of pedestrian pathways and open spaces
    linking the southern and northern campuses.
        Philadelphia is a federally designated Enterprise Zone, but the
    University's neighborhood is just beyond the boundaries of this Center
    City-focused initiative. The University of the Sciences in
    Philadelphia, however, is located in West Philadelphia, an area
    recognized by the Economic Development Administration as an area
    eligible for federal assistance. The average income for West
    Philadelphia residents is half of those living in Center City and
    Chestnut Hill/Mount Airy. The news stories, highlighting crime
    activity, and general appearance of pockets of West Philadelphia, has
    been a major concern for prospective students from outside the area.
        Unlike other area universities and colleges where the safety of
    students has forced many institutions to become contained communities,
    students at the University of the Sciences are active participants in
    the Philadelphia community. Our students gain valuable training and
    professional experience from the local community and feed this
    experience into Philadelphia's growing health care, pharmaceutical and
    biotechnology economies. These include 160 hospitals, 150 research
    labs, five medical schools, schools of dentistry, podiatry, optometry
    and veterinary medicine as well as seventy-five percent of the United
    States pharmaceutical firms, all located within a two-hour drive of
    Philadelphia.
        The University of the Sciences in Philadelphia is scheduled to
    receive $369,000 in earmarked funds through the recently enacted TEA-21
    legislation. These funds will be requested as reimbursement in the
    costs of the beautification of streets surrounding the campus, the
    development of open green space, and the relocation and diversion of
    certain side street traffic.
        These efforts will contribute significantly to redevelopment
    efforts currently underway just to the north with very positive
    implications for the residents of the immediate community in terms of
    safety and beautification. Recognized by the federal government as an
    area eligible for federal assistance, the University of the Sciences in
    Philadelphia is seeking a $3 million HUD Economic Development
    Initiative (EDI) grant in the fiscal year 2000 VA, HUD and Independent
    Agencies Appropriations bill. This Federal help will allow
    revitalization in West Philadelphia to happen more quickly and lessen
    hazards associated with abandoned property and mixed traffic
    thoroughfares.
        The proposed campus expansion plan will provide numerous benefits
    to the University, the community and the City of Philadelphia,
    including increased job opportunities, a safer community and reduced
    traffic congestion. The University of the Sciences will be better
    positioned to continue its long-standing tradition of educating health
    care professionals. Unfortunately, this will not be possible without
    the development of this donated land. Regardless of the development
    plans of the University, the Breyers Ice Cream plant is a hazard, not
    to mention an eye-sore to the community, that is in desperate need of
    removal.
        On behalf of the students at the University of the Sciences and the
    community of West Philadelphia, I thank you for your time.
                                     ______

            Prepared Statement of the Tubman African American Museum
        Mr. Chairman and Members of the Subcommittee, as Director of the
    Tubman African American Museum I appreciate the opportunity to submit
    testimony for the record addressing the economic development initiative
    developed for the Tubman African American Museum.
        The Tubman African American Museum is located in Macon, Georgia and
    is Georgia's largest African American Museum. Founded in 1981, the
    Museum is dedicated to educating all people on aspects of African-
    American art, history, and culture. In addition to its permanent and
    visiting art exhibits, the Tubman hosts concerts, plays, celebrity
    storytelling and frequent lectures by well-known authors. Through
    workshops, festivals, publications, youth camps, special events, and
    community and school outreach programs, the Tubman offers school
    children and the residents of Macon, Georgia a forum for social and
    cultural understanding in an accurate and historical perspective.
        Mr. Chairman, the Tubman African American Museum is clearly a
    leader in educating people about African-American art, history, and
    culture. Numerous articles in national publications attest to the fact
    that the Museum is already having a large impact on many lives. Recent
    articles in the Washington Post and the Wall Street Journal and
    segments on NPR, PBS, and CNN highlight the positive influence the
    Tubman is making in the Macon community. The Tubman not only provides
    resources to the local community, the Georgia Council for the Arts also
    recognizes the Museum as the 38th out of 184 art organizations in the
    State of Georgia.
        The Tubman's popularity and public visitation continues to grow at
    a rapid rate. In the last five years, the Tubman has grown from less
    than 5,000 visitors in 1992 to more than 65,000 in 1997. We have
    documented that visitors come from around Georgia and from all fifty
    states to visit the Tubman African American Museum. As audiences grow,
    it is apparent that the Museum's current facility is no longer adequate
    to accommodate the dynamic and popular educational and community
    programming.
        The Tubman African American Museum is literally bursting at the
    seams. Large school groups are often turned away due to the lack of
    Museum space. The lack of physical space also makes it difficult to
    meet the public's demand for public lectures, workshops, and summer
    camp, forcing the Tubman to rent space ``off-campus'' for these
    activities.
        The turn-of-the-century building that currently houses the Tubman
    is substandard in many ways. The ceilings throughout the building are
    eight feet tall, making the facility inadequate for many exhibitions.
    In addition, the current facility does not have a loading dock or
    elevator, limiting the Museum to a variety of exhibits. Limited space
    at the Tubman also confines the Museum to only display 5 percent of its
    permanent and prized collection, ``The Noel Collection.'' The Noel
    Collection represents thirty years of Lynn and Michael Noel's
    acquisition of thousands of pieces of African-American art. As a
    contribution to understanding African-American art and culture, the
    Noels have honored the Tubman with pieces of their collection to
    display at the Museum. Unfortunately, about ninety-five percent (95
    percent) of the collection is in storage in Houston.
        In 1997, as a result of the Tubman's facility restraints, the
    Museum's Board of Directors and Executive Director undertook a long-
    range planning study to determine ways in which the Museum can
    appropriately expand its services to state and regional suffices and to
    position itself as a primary tourist attraction. After carefully
    planned research and feasibility studies, the decision was made to
    build a new Tubman African American Museum seven times the current
    size. The new Tubman African American Museum will be located in the
    heart of downtown Macon. Positioned downtown near the Georgia Music
    Hall of Fame and the Georgia Sports Hall of Fame, the new Tubman
    African American Museum will be another added attraction to bring
    tourists to vibrant downtown Macon.
        The development of a new Tubman African American Museum promises
    great economic growth for downtown Macon, Georgia. In fact, this
    initiative is one of the top priorities for the ``New Town Macon,''
    Macon's downtown revitalization organization. The Mayor of Macon, City
    Council, County Commissioners, and a wide range of community
    organizations have endorsed this project as an important component of
    downtown's economic development efforts. To this end, the City and the
    County have pledged funds in support of the new Tubman. In addition to
    public funds, the Tubman has initiated a private capital campaign to
    raise funds for the $15 million project.
        Mr. Chairman and Members of the Subcommittee, I urge your careful
    consideration in awarding the Tubman African American Museum with an
    Economic Development Initiative (EDI) grant in the amount of $5.2
    million. An Economic Development Initiative grant would complement our
    community, state, private, and local support and funds for the Tubman's
    program growth and facility expansion.
        With the Tubman's history of contributing to Macon's social,
    economic, and educational growth, we hope that the Senate
    Appropriations Subcommittee on Veterans, Housing and Urban Development,
    and Independent Agencies will take careful consideration in awarding
    the Tubman a grant for fiscal year 2000.
        Mr. Chairman, I would like to take this opportunity to thank our
    Georgia Senators, Senators Paul Coverdell and Max Cleland, and their
    staffs for their leadership and efforts in supporting this project. The
    Tubman African American Museum and the citizens of Macon appreciate
    their commitment and hard work.
        Mr. Chairman, thank you for this opportunity.
                                     ______

              Prepared Statement of the City of Newark, New Jersey
        Mr. Chairman and members of the Subcommittee, thank you for giving
    us the opportunity to submit testimony about projects under your
    jurisdiction that are critical to the people of Newark, New Jersey.
    Newark is truly at a crossroads: we are a City with all of the problems
    of many major urban centers, but we are also a City with vast
    potential. We have begun to turn the corner--there is a renewed
    vitality and sense of optimism in Newark.
        Our downtown is undergoing vibrant revitalization. The acclaimed
    New Jersey Performing Arts Center (NJPAC), which includes a new public
    plaza open space, opened in 1997. An adjacent waterfront park and
    historic area along the Passaic River is scheduled to begin
    construction by the U.S. Army Corps of Engineers later this year, and a
    minor league baseball stadium where the Newark Bears will begin to play
    this summer is almost completed. Renovated office buildings, and new
    retail spaces add to the mix of activities which are all changing the
    face of Newark. But we know that the renaissance of our City cannot
    just happen in the downtown business and arts center; it must also
    include the residents and their neighborhoods in meaningful,
    substantive ways. The proposals for economic development activities
    outlined herein may be disparate, but they all relate to improvements
    in the quality of life for residents of and visitors to Newark.
        Newark is the largest City in New Jersey, with 275,221 residents in
    1990, and ranks sixty-third in the nation in population. Newark's
    twenty-four square miles of land makes it the smallest of the country's
    top one hundred cities, with the fifth highest population density in
    the nation. Much of our land is taken up by Newark International
    Airport, higher education and medical facilities, and other
    institutional uses, increasing the density of our actual ``livable''
    space. The median family income, according to the 1990 Census, was only
    $25,816--as opposed to $47,589 for the State--and our population is
    five years younger than the State average. Twenty-nine percent of our
    population was under the age of 18, and twenty-six percent lived below
    the poverty line. For people living in these conditions, there are
    basic needs which must be met: the availability of open space and
    recreation areas, the availability of jobs, and the availability of an
    infrastructure which is conducive to the development of business and
    industry.
        Fundamental to the goal of bringing Newark back is the
    revitalization of its neighborhoods. Key to this improvement is the
    revitalization of municipal parks in some of our poorest and most
    densely populated areas, in full partnership with neighborhood
    residents and community based organizations. Toward this end, the City
    of Newark seeks the assistance of this Subcommittee in securing funding
    to execute a plan to revitalize neighborhood municipal parks. Projects
    have been selected in each of the City's five wards, with specific
    strategies developed for each. The City of Newark will make every
    effort to match dollar for dollar federal support through its operating
    and capital budgets, staffing and in-kind services. Support is also
    expected from the private sector, including foundations, corporations
    and individuals.
        The City's Department of Neighborhood and Recreational Services
    will embark on a community partnership for parks strategy, currently
    being tested in the largest municipal park, Jesse Allen Park. A local
    grassroots campaign with advertising will be coordinated to invite all
    neighborhoods surrounding each of the thirty-five small city parks to
    collaborate and make theirs a community park according to the
    established process. In each of the cases described below, a ``Friends
    Of'' park association is being formed of citizens who live around the
    park, and anchoring community institutions, such as schools, the faith-
    based community, community development groups, and local agencies. Each
    association will be helped by the City to form a board and become a
    501c3 non-profit organization. Each group will be expected to get at
    least 10 percent of the surrounding neighborhood residents to join the
    association and donate at least one dollar, and will participate in
    joint orientation and training with peers from similar groups city-
    wide. The City will award additional funds for that particular park,
    which the ``Friends Of'' group will help to administer to execute
    improvements and create programming. It is anticipated that funding
    will be in the amount of $1,000 per acre of park, plus matching with
    various foundation and corporate partners.
        Federal support will be utilized to match municipal capital
    investment in improvements. The City administration will maintain its
    current efforts and services, such as lawn mowing, trash removal and
    basic landscaping. In addition, our comprehensive strategy will include
    support from other municipal departments. The Engineering Department
    will address capital needs, develop comprehensive physical plans and
    drawings for each park, compiled in consultation with the community
    group. The Police Department has pledged to create walk-ride units of
    officers who patrol in and between specific parks, train watch groups
    who undergo association training, and organize police youth and adult
    athletic leagues to compete in the parks. The Newark Public Information
    Office will coordinate the communications and media strategy, both for
    initial outreach and with each association in determining its own
    campaign direction and format.
        The specific municipal parks that have been identified for
    participation in the demonstration project and the unique strategies
    for each are briefly described below.
        Riverbank and Independence Park in the East Ward.--These parks are
    in the crowded Ironbound section, where the neighborhood has very
    little open space. The City is working with local groups to develop the
    designated park area near the Passaic River with jogging trails, soccer
    fields, and new open space.
        Jesse Allen Park in the Central Ward.--This park is adjacent to one
    school and near several others. It was recently the focus of several
    discussions and meetings with community groups. It is in the heart of
    the City's poorest area, and has been subject to repeated vandalism.
    The City and the newly formed Jesse Allen Park Association are working
    jointly to develop and execute a plan that includes the refurbishment
    of ballfields, a revitalized playground, a new concert area, and
    security measures.
        Kasberger Field in the North Ward.--These playing fields and
    recreation area are virtually hidden in the neighborhood in North
    Newark. It has attracted the attention and interest of many little
    league groups who want to help fix up the facility for ongoing use. A
    security fence, lighting and better drainage have been identified as
    vital needs.
        Boylan Center and West End Park in the West Ward.--Boylan is the
    only City recreation Center in the West Ward, and West End is the only
    municipal park. Both need landscaping, furniture and signage to better
    serve their local area populations.
        Mildred Helms Park and St. Peter's Recreation Center in the South
    Ward..--Mildred Helms is a long narrow park in the heart of a dense
    residential neighborhood. It adjoins an elementary school, but is
    littered with crack vials, debris and broken glass, and has broken
    playground equipment. Yet the area children play there daily, as it is
    the only open space in the immediate area. This is a site where
    neighborhood organizing will potentially enable substantial change in
    the environment. St. Peter's is a complex including basketball courts,
    a pool and a center building on the other side of the ward. This
    facility, too, is in need of community support to overcome chronic
    vandalism and return it to full utilization.
        The City of Newark is seeking the support of this Subcommittee for
    a $5 million allocation to help to implement the City's overall
    strategy for park and neighborhood revitalization. Based on community
    partnerships and a sense of pride and ownership, the children of Newark
    will truly have the opportunity to be a part of the City's renaissance.
        The second project is one that will have a tremendous impact on the
    redevelopment of industrial property close to Newark International
    Airport, known as the Airport Support Zone. In order to accommodate the
    expanding businesses which must be close to the airport and Port
    Newark/Elizabeth, adequate drainage and unflooded roadways are
    necessary. Simply put, the roadways in this area are prone to flooding,
    making access to local firms and homes impossible. Motorists are often
    stranded during severe rain, and the ground floors of some area
    businesses become waterlogged.
        The South Side Interceptor/Queens Ditch are the principal
    stormwater conveyances draining the southern part of the City of
    Newark. The South Side Interceptor picks up stormwater in the vicinity
    of Weequahic Park and carries it to the Queens Ditch in the vicinity of
    Newark Airport. Queens Ditch empties into the Airport perimeter ditch,
    before discharging into the Newark Channel at Port Newark. Both
    conveyances suffer from collapsed sections, heavy sedimentation due to
    relatively flat gradients, and other blockages. The result is
    insufficient capacity, leading to flooding on several key traffic
    arteries. Major rehabilitation is required to restore flow and
    capacity.
        The project is critical to support expansion of Newark Airport. The
    redevelopment of Frelinghuysen Avenue--the heart of the Airport Support
    Zone--and the Waverly Yards property--an old railroad facility directly
    across Rte. 1 from the Airport--are vital. This area is located
    immediately adjacent to the Northeast Corridor, the Airport Monorail
    Extension, and a proposed conference center and hotel complex.
    Reconstruction of the South Side Interceptor will eliminate the
    flooding problems on Frelinghuysen Avenue, especially in the vicinity
    of the critical connections with Route 22 and I-78. The removal of
    standing water will enhance the connections of this area to Newark
    Airport and further its development as an Airport Support Zone. The
    rehabilitation of the Queens Ditch will reduce flooding in the vicinity
    of International Way and Waverly Yards. The combined project cost is
    estimated at $10,000,000.
        The Newark Museum's New Science Initiative is another project which
    ties together economic development, community outreach and educational
    opportunities. The Museum is recognized as one of the nation's leading
    cultural institutions, and serves almost a half million adults and
    children each year. Science-related programs draw more visitors than
    any other offerings.
        Realizing the opportunity to attract larger audiences and better
    serve Newark and New Jersey residents, the Museum has embarked on a new
    science initiative. In planning the program, the Museum staff has been
    guided by the principles contained in Goals 2000 and by New Jersey's
    recently adopted Core Curriculum Content Standards. Critical thinking,
    mathematical and scientific understanding will be fostered as visitors
    question, experiment, compare, and analyze real specimens from the
    Museum's science collections, and participate in planetarium and Mini
    Zoo programs developed to effectively communicate complicated and
    abstract science concepts.
        The Newark Museum seeks $2.0 million to support the Science
    Initiative. The City of Newark has committed $1.7 million to date
    toward the preparatory collections care necessary to make this
    initiative possible. Additionally, The Museum plans a $5 million
    operating endowment fund based upon a public/private partnership to
    assure adequate on-going support, of which $1.2 million has been raised
    to date.
        The final project brought to the Subcommittee for consideration is
    a major economic development initiative that will create a professional
    sports and entertainment complex in downtown Newark. It is being
    planned by a consortium of private businesses, nonprofit
    representatives and the City administration. As this new economic
    development initiative is evolving from preliminary to concrete plans,
    there is a unique opportunity for an important downtown facility linked
    to a key transit hub.
        This project will use the attraction of a major league sports
    franchise to locate a state-of-the-art arena as a key cornerstone for
    development. The mission of this project is to harness the momentum
    initiated by the successful opening of NJPAC, and create a vibrant,
    state of the art sports and entertainment district in downtown Newark.
    It will be a catalyst to the evolving creation of a vibrant downtown
    corridor--as development continues based on strong anchors elements.
    These include NJPAC, the Gateway complex of modern office buildings,
    the Newark Museum and Main Library, the refurbished Newark Penn
    Station, the new Joseph G. Minish Waterfront Park, and the Newark Bears
    baseball stadium. A new light rail system, the Newark Elizabeth Rail
    Link, is in final design, and will ultimately be the spine along which
    these projects are arrayed.
        The preliminary plan for the Newark Sports and Entertainment Center
    master plan consists of a covered multi-purpose sports arena with
    19,000 seats, ancillary parking, a new television production and
    broadcast complex, up to 2 million square feet of new commercial and
    retail space, including hospitality facilities. The sports and
    entertainment center will provide superior access to a broad customer
    base, create sizable, measurable, bankable fiscal benefits for the
    taxpayers of New Jersey, and will, consistent with the commitment of
    the New Jersey State Plan, ``steer development from environmentally
    sensitive zones and back into urban areas.'' As the project creates a
    destination location--which will create new incremental spending--it
    will help to revitalize New Jersey's oldest and largest city and
    establish a new sports paradigm linking professional athletes to the
    youth of the state.
        The Newark Sports and Entertainment Center is expected to draw
    nearly two million people to the city each year. The estimate includes
    those attending sporting events, family entertainment shows like the
    circus, concerts and other attractions. In addition, the development of
    the Newark Sports and Entertainment Center will act as a catalyst to
    the increased demand for and opening of restaurants, shops, hotels and
    small service businesses that meet the needs of patrons. Local
    corporations, small businesses, city residents, and local employees are
    expected to benefit from the Newark Sports and Entertainment Center
    through improved quality of life, better entertainment and retail
    options for is current workforce, and improved job opportunities. At
    least 5,000 jobs in construction, ancillary services and direct
    employment are anticipated.
        A unique aspect and public benefit of this project is the
    establishment of a foundation to benefit inner-city youth in New
    Jersey. Community Youth Organization (CYO) has been formed by the
    largest investor in the ownership group of the NJ Nets. CYO will be a
    partner in the profits of the team, and is committed to investing its
    profits in children, people and businesses in Newark.
        The total population of the region in a 25-mile radius of Newark--
    excluding New York--is 5,088,656, and includes New Jersey's five most
    populous cities. In an approximate 10 mile radius of Newark, the
    population is 2.1 million with a median family income of $54,683. This
    contrasts with Newark's population of 265,000 and median income of half
    that of residents in the 10 mile radius. A recent survey of Newark's
    mid-day population found 266,000 local residents, 52,000 non-resident
    workers and 24,000 non-resident students. The six colleges and
    universities in the city have over 45,000 students and faculty. Newark
    is also home to major corporations, including Prudential Insurance,
    Continental Airlines, Blue Cross/Blue Shield of NJ and Public Service
    Electric and Gas. Newark's Penn Station, a stop on the Northeast
    Corridor for Amtrak as well as New Jersey Transit trains and buses from
    throughout the State, is only a short walk from the proposed sports and
    entertainment complex. This concentration of people with discretionary
    income for entertainment and dining, and easy access to public
    transportation, will be encouraged to use this significant purchasing
    power in the City of Newark.
        The ownership group for a major league sports franchise has
    indicated the ability to contribute approximately $200 million of
    private funds toward the anticipated $300 million project cost. The gap
    in financing will be filled with a combination of tax-exempt revenue
    bonds (subject to debt limits), user fees and grants related to the job
    generating abilities and economic development potential of the project.
    The City plans to use proceeds from parking and hotel taxes to
    subsidize the project. The city will immediately benefit by the
    presence of the Newark Sports and Entertainment Center, as it will pay
    property taxes on land that is currently city-owned or underutilized.
        Public funds are expected to be utilized for site acquisition and
    off-site infrastructure improvements. The project area includes a large
    tract of vacant land and underutilized buildings which has been
    declared an ``Area in need of Redevelopment'' under the Redevelopment
    statutes of the State of New Jersey. This Committee's endorsement of an
    allocation of $15 million in funding through the Economic Development
    Administration for site acquisition and project construction is
    respectfully requested.
                                     ______

      Prepared Statement of the Department of Neighborhood and Community
                     Services, City of Tallahassee, Florida
        Mr. Chairman, I would like to thank you and the Members of the
    Subcommittee for this opportunity to submit testimony to discuss the
    commitment and the partnership between the City of Tallahassee and
    Florida State University for the comprehensive revitalization of the
    oldest historically African American community in the capital of the
    State of Florida. We are requesting your support for an Economic
    Development Initiative grant for $3.5 million to assist us in our
    efforts to develop an $80 million arts and entertainment district that
    would rebuild the economic and employment base of this community.
        Frenchtown, established in 1841 by French settlers who created a
    small enclave of homes and businesses is one of the first neighborhoods
    established in Tallahassee. After suffering many hardships the French
    gave up on this area, which after the Civil War was then claimed by
    freed slaves. The Frenchtown neighborhood grew as a community and for
    over 100 years became the economic and cultural center of Tallahassee's
    Black Community.
        In the late 1950's and early 1960's with the onset of integration,
    the closing of the historically Black high school, and the urban flight
    that occurred continued into the 1970's and 1980's the Frenchtown
    community began its downward spiral of social and economic decline.
        The deterioration of the Frenchtown community can be traced to a
    breakdown in the basic cycle of community regeneration. People who
    raised their families in Frenchtown have aged and remained. Their
    offspring faced with the increase in urban decay, coupled with the
    phenomena of expanded choices brought on by integration, chose not to
    develop their lives in Frenchtown. The children who were raised in the
    Frenchtown community, opting for the expanded choices brought on by
    integration accelerated the trend of decline in the social, cultural,
    economic and home-ownership base of Frenchtown.
        The City of Tallahassee has joined with the citizens who have
    remained and have undertaken the implementation of a long standing
    commitment for the comprehensive revitalization of this community
    strategically located in the center of the urban core of Tallahassee.
    Frenchtown has the potential to become one of the most desired and
    diversified neighborhoods in the City. The Frenchtown community is
    within a one mile radius of two major state universities, Florida A&M
    University and Florida State University. Florida State University is
    located directly across the street from the Frenchtown community. The
    State Capitol, the Tallahassee-Leon County Civic Center and the City's
    downtown, which accounts for over 15,000 jobs and the hub of the City's
    public transportation system are all located on the southern boundary
    within a four block radius of Frenchtown. The City's plan for
    redevelopment of this community is all encompassing. It consists of a
    concentrated effort to rebuild the home-ownership base of the
    community, to revitalize the main commercial thoroughfare of the
    community, to preserve the historic and cultural institutions of the
    community and through the development of the Frenchtown Arts and
    Entertainment District to recapture the legacy of Frenchtown as a
    center for commerce and entertainment for the Tallahassee community and
    provide a major infusion into the employment base of Frenchtown.
        A comprehensive neighborhood revitalization strategy, in order to
    be successful must seek to create partnerships among federal, state and
    local governments, the private sector, community organizations and
    neighborhood residents. In this pursuit, the City of Tallahassee and
    the Florida State University (FSU) have formed a partnership, coming
    together and combining key aspects of their major development and
    redevelopment activities to develop a $85,000,000 Economic Development
    Initiative, the Frenchtown Arts and Entertainment District. This
    partnership will result in the linking of the University's proposed $40
    million new performing arts center with the City's proposed $45,000,000
    Frenchtown Arts and Entertainment Complex. This City/University
    partnership will encompass the following activities:
      --A joining of the University's and the City's respective development
            and redevelopment efforts, which are on either side of US
            highway 90 (Tennessee Street), through an attractive and
            convenient pedestrian promenade. The promenade would link the
            exit of the Arts and Entertainment Complex's 1,000 space garage
            in Frenchtown with the entry of Florida State University's Fine
            Arts Complex which is anchored by a 1,200-seat Performing Arts
            Center.
      --The development of a 261,000 square foot Arts and Entertainment
            Complex constructed around an 1,000 space parking garage. The
            Complex includes a 75,000 square foot museum of African-
            American History Science and Technology, a 60,000 square foot
            100 unit suites hotel, 30,000 square feet of retail shops,
            20,000 square feet of restaurants and night clubs, a six-plex
            movie theater and 76,000 square feet of apartments and
            condominiums.
        The Economic Development Initiative grant is a critical element of
    this project. The funds will be used to cover the finance charges for
    the first ten years of a $8,000,000 108 loan. The 108 loan proceeds
    will be used for property acquisition and for the installation of
    infrastructure for the Frenchtown Arts and Entertainment Complex.
        This development of this complex will create approximately 300
    temporary jobs and 500 permanent employment and training opportunities
    for very low income individuals who are transitioning from welfare to
    work and for other low- and moderate-income persons from the Frenchtown
    community specifically, and from other low income neighborhoods of
    Tallahassee. The development of this Complex on this site will complete
    the revitalization of the Frenchtown commercial district, returning it
    once again into a viable commercial, cultural, residential and
    employment center.
        The acquisition of the site for the Arts and Entertainment Complex
    with the 108 loan proceeds will remove from this community slum and
    blighted conditions. These conditions that exist on the site stem from
    vacant dilapidated abandoned buildings and vacant lots that foster
    illegal drug traffic, vagrancy, illegal dumping and other crimes.
        The development of this project will satisfy all of the
    requirements associated with the Economic Development Initiative Grant
    and the Community Development Block Grant Programs.
        Mr. Chairman, granting this request will position us to complete
    the comprehensive revitalization of this community. It will enable us
    to return the Frenchtown community to the time when it was a center of
    employment opportunity, business ownership, home-ownership,
    entertainment and a thriving cultural life.
        Again, I thank you for this opportunity to request your support of
    our efforts to rebuild this neighborhood.
                                     ______

                    Prepared Statement of Hampton University
        Mr. Chairman and members of the Subcommittee, I am Dr. William R.
    Harvey, President of Hampton University in Hampton, Virginia. I would
    like to thank you for allowing me the opportunity to testify in front
    of the Senate Appropriations Subcommittee on Veterans Affairs, HUD, and
    Independent Agencies to discuss the development of the Technology
    Implementation Initiative, an important effort currently underway at
    Hampton University. Hampton University is requesting a $3 million
    Economic Development Initiative (EDI) grant in your fiscal year 2000
    Veterans Affairs, HUD, and Independent Agencies Appropriations Bill to
    help implement the Technology Implementation Initiative.
    About Hampton University
        Hampton University is a comprehensive institution of higher
    education, dedicated to the promotion of learning, building of
    character and preparation of promising students for positions of
    leadership and service. Its curriculum emphasis is scientific and
    professional with a strong liberal arts undergirding. An historically
    black institution, Hampton University is committed to multiculturalism.
    The University serves students from diverse national, cultural and
    economic backgrounds. From its beginnings to the present, the
    institution has enrolled students from five continents: North America,
    South America, Africa, Asia and Europe and many countries including
    Gabon, Kenya, Ghana, Japan, China, Armenia, Great Britain and Russia,
    as well as the Hawaiian and Caribbean Islands and numerous American
    Indian nations.
        Research and public service are integral parts of Hampton's
    mission. In order to enhance scholarship and discovery, faculty are
    engaged in writing, research, and grantsmanship. Faculty, staff and
    students provide leadership and service to the University as well as
    the global community. In achieving its mission, Hampton University
    offers exemplary programs and opportunities that enable students,
    faculty and staff to grow, develop and contribute to our society in a
    productive, useful manner.
    The Technology Implementation Initiative at Hampton University
        According to the Institute for Higher Education Policy, the top
    information technology challenges confronting colleges and universities
    include helping faculty integrate technology into instruction,
    providing adequate user support, and providing the appropriate
    financial planning for information technology. More college courses are
    using technology then ever before. The percentage of classes using e-
    mail increased to 44 percent in 1998, up from 33 percent in 1997, 25
    percent in 1995, and only 8 percent in 1994. Today, one-third of all
    classes are using Internet resources as part of the syllabus, compared
    with 25 percent in 1997, and 15 percent in 1996. Further, almost one-
    fourth of all college courses are using World Wide Web (WWW) pages for
    class materials and resources, compared with 8 percent in 1996 and only
    4 percent in 1994.\1\
    ---------------------------------------------------------------------------
        \1\ Institute for Higher Education Policy. February 1999. Distance
    Learning in Higher Education. Data available from .
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        Hampton University recognizes that the quality of undergraduate
    education must keep pace with the needs of students who will take their
    place in an information intensive workplace. The University also
    recognizes that its teaching faculty should be sensitized to the
    potential benefits and trained in these new and emerging technologies.
    In order to address the needs of our students and faculty, the
    Technology Implementation Initiative concept has been initiated as a
    university-wide project that plans to integrate educational technology
    with the teaching and learning environment.
        The Technology Implementation Initiative is designed to enhance
    Hampton University's ability to provide cutting-edge technological
    services in order to create an interactive web that will link the
    entire Hampton University community all over the globe, including
    learners, faculty, staff, and the community. The Technology
    Implementation Initiative will fully integrate the Hampton University
    campus infrastructure in a unified secure network. The administrative
    and academic buildings and dormitories will be wired for the delivery
    of the Internet and the University's Intranet system. The Initiative
    will also expand the University's uplink/downlink capabilities to
    develop distance learning relationships through on-site programs in the
    Caribbean, Africa, Europe, and other settings.
        A key to the success of the Technology Implementation Initiative
    will be the development of our faculty's technological skills.
    Workshops and programs will be offered to our faculty and staff that
    will focus on the integration of technology in the classrooms and in
    the community.
        The Technology Enhancement Initiative will incorporate the
    development of the Academic Technology Mall (ATM), a comprehensive
    service center designed to support information literacy and promote the
    application of new and emerging educational technologies that enhance
    the teaching-learning process. The ATM currently serves as the hub of a
    campus-wide network that distributes voice, video, and data throughout
    key instructional and administrative buildings. The ATM facility is
    composed of a public access laboratory, faculty development laboratory,
    computer classroom, electronic classroom, and the media productions
    department.
        The Technology Implementation Initiative will provide for a
    student-focused entity that offers an array of computer and multimedia
    services and resources. It will foster a creative work environment
    where students utilize self-directed and self-paced technologies in
    identifying, accessing, and generating data and documentation needed
    for their courses and research applications. The student laboratory
    will consist of Pentium and PowerMac computers, Internet access, and a
    wide variety of software, printers, and other peripheral equipment that
    are fully networked.
        Mr. Chairman, Hampton University's goal is to become the preeminent
    minority research institution capable of competing with majority
    institutions. The creation of the Technology Implementation Initiative
    will greatly enhance Hampton University's position as a leading
    minority research institution. It will spur further business and
    scientific investment in the Tidewater region, and will create an ideal
    atmosphere for coordinated, interdisciplinary research at the
    University. The Initiative will enable Hampton University to be better
    positioned to attract collaborative research between the University and
    national laboratories and industry, and thus enhance the academic,
    scientific, and economic climate of the University and the entire
    Tidewater region.
        I thank you for this opportunity to testify.
                                     ______

      Prepared Statement of the College of Agriculture and Technology at
                             Morrisville, New York
        Mr. Chairman and members of the Subcommittee, I am Dr. Ray Cross,
    President of the College of Agriculture and Technology at Morrisville,
    New York. I would like to thank you for allowing me the opportunity to
    testify in front of the Senate Appropriations Subcommittee on Veterans
    Affairs, HUD, and Independent Agencies to discuss the development of
    the Telecommunications Center for Education, a vital initiative
    currently being developed by the SUNY Colleges of Technology (UCT)
    Alliance. The UCT Alliance is requesting a $3 million Economic
    Development Initiative (EDI) grant in your fiscal year 2000 Veterans
    Affairs, HUD, and Independent Agencies Appropriations Bill to help
    develop the Telecommunications Center for Education.
        The UCT Alliance is a strategic partnership of the State University
    of New York's five colleges of Agriculture and Technology that has been
    created to better serve the educational and economic needs of the
    people of rural New York. The UCT Alliance colleges, located in Alfred,
    Canton, Cobleskill, Delhi, and Morrisville, have historically shared a
    common emphasis on experiential and ``practical'' learning through
    extended laboratory and internship experiences. The UCT Alliance has
    established relationships with business and industry across New York,
    and sponsors partnerships with high schools in their region. Through
    local Advisory Committees, the Alliance Colleges maintain close contact
    not only with local businesses and industry, but also with both the
    public and private sectors throughout the state. The Alliance Colleges
    are thus uniquely situated to assist in the economic development of the
    region.
        In order to effectively transform the five Colleges of Agriculture
    and Technology into more collaborative institutions and assist the
    Alliance's students and local communities, each campus must upgrade
    their respective distance learning technologies and facilities. To
    obtain this goal, the UCT Alliance is developing the Telecommunications
    Center for Education. The Telecommunications Center for Education will
    create a virtual campus that will fully connect and integrate the more
    than 14,000 students currently enrolled in the five colleges. We know
    from recent semesters that the current and future demands for these
    types of services far exceeds our current ability to provide these
    needed resources.
        The Telecommunications Center for Education will house a variety of
    cutting-edge telecommunications equipment designed to enhance
    instruction and learning. The centers will contain ``classrooms of the
    future,'' which will be equipped with videoconferencing/distance
    learning equipment, computer ports and cabling for networking, and
    technology that will provide access to satellite downlinks and uplinks.
    These high-tech conferencing and instructional facilities will make it
    possible for each campus to fully develop its capacity as a workforce
    training center for its students and the region's business community.
        A mainstay of the economy throughout New York State, agriculture
    and technology training is highly specialized and critical to the
    nation's economy. Training for these careers, however, is not widely
    available in New York. In addition, employers in such fields as
    manufacturing, construction, physical therapy, and telecommunications
    continue to clamor to hire skilled employees. Students in the rural
    areas of upstate New York, though, do not have the exposure and
    resources to properly train to be competitive for the industries.
        Through the Telecommunications Center for Education, The UCT
    Alliance will step fully into its role of providing training centers
    for the skilled technical workforce. The Telecommunications Center for
    Education will provide benefits to the agricultural community by
    creating linkages to agriculture-related businesses and institutions.
    These linkages will spur the development of a more skilled workforce,
    enhance competitiveness in national and international markets, and
    stimulate many of the diverse facets of the rural economy.
        The Alliance has a responsibility to not only generate new
    knowledge, but to deliver that knowledge to businesses and citizens in
    our area. Business and industry located near each of the alliance
    colleges are interested in providing continuing education for their
    employees. On each of the campuses, the Alliance will also make the
    distance learning centers available to these businesses as centralized,
    off-site training centers. In other cases, the video-conferencing/
    distance learning capabilities will make it possible to deliver
    instructions and training directly to the worksite. In the future, the
    Alliance Colleges will work to develop training contracts with national
    companies based in New York State and other neighboring states to
    deliver specialized coursework over video networks to train employees
    on the new technologies and techniques needed to remain competitive in
    the global marketplace.
        Rural communities are faced with the very real need to provide a
    better and more highly trained employment base. The Alliance Colleges
    have accepted this mission and are creating the Telecommunications
    Center for Education as a model demonstration that can be replicated in
    numerous other states whose rural communities are facing similar
    challenges. For these reasons, the UCT Alliance is seeking initial
    federal funding of $3 million in the fiscal year 2000 Veterans Affairs,
    HUD, and Independent Agencies to help develop the Telecommunication
    Center for Education. This is part of a two-year federal request of $6
    million, out of a total project budget of over $14 million. This
    federal partnership, in conjunction with the over $8 million to be
    provided by the State of New York and from private sector resources,
    can help make the mission of a more highly trained and technologically
    competitive rural America a reality in the years to come.
        I thank you for this opportunity to testify.
                                     ______

     Prepared Statement of the Information Technology Center at Fairfield
                                   University
        Mr. Chairman, thank you for providing the opportunity to submit
    testimony concerning an important initiative Fairfield University is
    undertaking to ensure the progress of information technology education
    and training in two educationally underserved cities in the State of
    Connecticut. In particular, my testimony addresses the need to
    establish an Information Technology Center, and the importance of such
    a resource as a logical step in advancing the knowledge of information
    technology among primary and secondary school students and adults in
    and around the cities of Bridgeport and Norwalk. As President of
    Fairfield University, I would like to provide the Subcommittee with a
    brief overview of the state-of-the-art resources that the University
    can bring to address the educational and workplace challenges brought
    about technology.
        As you are aware, constant advances in technology have resulted in
    an ever-changing workplace environment. This is especially true for the
    computer industry, where the Labor Department estimates that an average
    of 95,000 new computer scientists, systems analysts and programmers
    will be needed every year from now until 2005. As a result, studies
    have indicated that to ensure national economic growth into the
    millennium we must prepare our school systems to meet the demands of
    the technological era by providing cutting-edge skills at the primary
    and secondary level. In addition, educational programs must also be
    developed at the collegiate level for university students, as well as
    for returning adult students who need to modernize or enhance their
    skills.
        Fairfield University, a leading university in Connecticut, has
    proposed a solution to meet the occupational needs in its State for the
    twenty-first century. The proposal involves the utilization of an
    existing state-of-the art telecommunication infrastructure that will
    provide educational programs and training to children at local primary
    and secondary schools, to returning students through satellite learning
    programs, as well as to students throughout the University.
        The proposed Fairfield program is unique for a number of reasons.
    First, it will provide technical education and training for primary and
    secondary school students studying in local urban public schools. A
    recent study published by the National Assessment of Educational
    Progress indicated that more than half of urban public school students,
    many from areas similar to those surrounding Fairfield, scored far
    below national averages in reading, math, and science. The Fairfield
    programs will reach students who have historically not received extra
    support for basic and advanced technical skills and training. While
    school funding at the local level remains scarce, this program will
    assist public schools to advance the skills of its children without
    tampering with its budget. Second, similar to the federally funded
    School-to-Work movements, these newly founded programs will help
    students to improve and excel in basic and advanced educational areas,
    while simultaneously preparing them to enter a modern-day workforce. As
    a result, the programs offered by Fairfield will prove beneficial to
    securing economic growth for the State.
        Another feature that makes the Fairfield telecommunication
    infrastructure unique is its ability to provide technical training
    through the creation of its convenient satellite learning programs.
    This is especially important for returning adult students who need to
    modernize their skills in order to be competitive in the contemporary
    workplace. Recent State of Connecticut employment cutbacks in the
    banking, insurance, and manufacturing industries have produced alarming
    unemployment rates among its highly trained workers. Fairfield
    University is prepared to meet the challenges posed by this problem
    through satellite learning programs that will train these workers so
    they can re-enter the workforce. In addition, the satellite learning
    programs will target members of the community who have little or no
    technical skills, so they also can obtain work in the technical field.
    The benefits of satellite learning programs from Fairfield University
    are then twofold: The programs will decrease recent State unemployment
    rates among highly-skilled workers, and concurrently provide better job
    security for the low-skilled and low-income wage earner.
        As Connecticut seeks to address the educational needs of its
    citizens and meet the workforce needs of employers it must develop
    strategies for capitalizing on the resources and strengths of its
    higher education system.
    Technology uses at Fairfield University: A Career Preparation Model for
            the State of Connecticut
        There is a need in the State of Connecticut and across the country
    to create partnerships between institutions of higher learning and the
    community. The primary focus of these collaborations should be with
    secondary education and business/industry. The proposed relationships
    can reduce high school dropout rates by infusing added resources and
    expertise into the school system, and can increase the caliber and
    breadth of job-training opportunities for local industry.
        The computer industry has initiated outreach efforts, putting
    equipment and software into schools to train students in information
    technology, helping to increase skills and combat the shortage of high
    tech employees. For example, it has been estimated that currently there
    are approximately 350,000 computer programmer and system analyst jobs
    vacant in the U.S. These companies cannot sell products without a
    skilled workforce to install and service systems. Unfortunately,
    privately funded pilot programs cannot be set up in every U.S. city.
    Institutions of higher education in partnership with industry can fill
    this gap for training in information technology.
        Telecommunications technology is the vehicle through which
    institutions of higher education can provide broader educational access
    to the community. Students, educators, parents, senior citizens, and
    the unemployed are just a small sampling of the potential recipients of
    on-line training sites throughout the community.
        Connecticut's Fairfield University possesses a singular, award-
    winning resource that can bridge the gap and help accomplish these
    goals. An already established state-of-the-art telecommunications
    infrastructure consists of a fiber system that reaches every computer
    in every classroom, faculty office and student residence hall. In
    total, 23 campus buildings share voice, video, and data services. The
    backbone portion of this system was recently upgraded to 155 Mbits from
    10 Mbits. In addition, the University operates satellite dishes for
    program downlinking and teleconferencing and a campus television
    network with 50 channels, eight of which are programmed exclusively by
    the University.
        Cablevision Head End is a facility on campus providing a high-speed
    networking hub for Cablevision in Connecticut. Through this resource,
    voice, video, and telecommunications are made available to
    Cablevision's residential and commercial customers. This facility has
    the potential of providing the University with access to Cablevision's
    entire customer base with national outreach potential. Cablevision Head
    End is also fiber optic and reaches a broad audience inclusive of local
    schools, private homes, work places, and community centers.
        The academic and administrative staff at Fairfield possesses
    extensive expertise in working with the local community, as witnessed
    by the multitude of community outreach projects that complement current
    programs. These efforts can be greatly enhanced, reaching broader
    audiences through the development of a comprehensive distance learning
    curriculum. What is required to take this step is modest when compared
    to what can be accomplished in a very short time. The establishment of
    an Information Technology Center will provide the central location for
    all departments and disciplines to meet, develop, and transmit
    curricula via television or computer to classrooms, workplaces,
    community centers, or homes. It will also provide easy access to
    digital library resources for the students and the business community
    regionally and potentially statewide.
    Establishing an Information Technology Center (Academic Computing,
            Media, and Technology Training): A Bridge between Fairfield
            University and the Community.
        Building upon the existing telecommunications infrastructure,
    Fairfield University can provide expanded services to the community.
    Utilizing a distance learning model, training opportunities can be
    developed serving the school systems, State agencies, and businesses.
    Proposed training opportunities can be designed to increase skills,
    improving workforce readiness for emerging employment in the State.
        Fairfield University plans to upgrade, expand, and renovate a large
    portion of its library structure and establish a Center dedicated to
    utilizing the telecommunications infrastructure to improve community
    outreach efforts from all of the various departments of the University.
    The Center will have state-of-the-art facilities for distance learning
    including: Satellite up-link and redistribution; Electronic classrooms;
    Multimedia rooms; Conference center auditorium; Computing and
    projection equipment; Electronic information databases; Research in
    collaborative teaching and learning; and A digital library collection
    for community and business use.
        The Center will be used by the University faculty and staff for
    internal instruction, and will be available to residents of the
    surrounding communities on an as needed basis and, through various
    partnership relationships, designed collaboratively to meet the
    emerging needs of the community.
        Fairfield University has comprehensive career preparation resources
    that can be utilized and shared with the community. These include: The
    School of Continuing Education; the Graduate School of Education and
    Allied Professions; the School of Engineering; the School of Business;
    the School of Nursing; and the College of Arts and Sciences.
        Fairfield University's telecommunication capability is one of the
    best in the country. The construction of an Information Technology
    Center will help to coordinate and expand existing outreach as well as
    provide the foundation for new collaborations. Using expanded
    technology resources, faculty will be able to design and develop new
    curricula. The current technology resources at Fairfield, combined with
    the existing expertise of faculty and administrators, represents a
    strong foundation upon which this Information Technology Center will
    flourish.
        The specific programmatic components of this Center, in brief, will
    include information technology and computer training (including
    Internet-2) as well as a Global Information Resource Center for
    Fairfield County's corporations. This proposal seeks a federal
    partnership grant from HUD in the amount of $3 million to assist in the
    establishment of the Information Technology Center at Fairfield
    University to foster the essential dialogue required to ensure that the
    University's curricula is aligned with the ever-changing needs of
    society and the workplace.
        For these reasons, we believe a Federal partnership demonstration
    at Fairfield University has the potential to meet the economic
    development needs of Connecticut's schools and businesses as well as
    the broader community throughout the State. We appreciate the
    Subcommittee's attention and consideration of our proposal for such a
    partnership opportunity.
        Thank you.
                                     ______

     Prepared Statement of the University of Medicine and Dentistry of New
                                     Jersey
        Mr. Chairman and members of the committee, I am Dr. Stuart Cook and
    I am the president of the University of Medicine and Dentistry of New
    Jersey (UMDNJ), the largest public health sciences university in the
    country. The UMDNJ statewide system is located on five academic
    campuses and consists of 3 medical schools, and schools of dentistry,
    nursing, health related professions, graduate biomedical sciences and a
    school of public health. UMDNJ also comprises a University-owned acute
    care hospital, three core teaching hospitals, an integrated behavioral
    health care delivery system, a statewide system for managed care and
    affiliations with more than 100 health care and educational
    institutions statewide. No other institution in the nation possesses
    the resources which match our scope in higher education, health care
    delivery, research and community service initiatives with state,
    federal and local entities.
        I appreciate this opportunity to appear before you to testify on
    behalf of two priority projects of UMDNJ which we believe are
    consistent with the mission of this committee; namely, the Child Health
    Institute of New Jersey and the Neurological Institute of New Jersey.
        The Child Health Institute of New Jersey is located at the UMDNJ-
    Robert Wood Johnson Medical School (RWJMS) in New Brunswick, New
    Jersey. Nationally, RWJMS ranks among the top ten medical schools in
    the percentage of minority student enrollment. The school ranks in the
    top one-third in the nation in terms of grant support per faculty
    member. RWJMS is home to The Cancer Institute of New Jersey, the only
    NCI-designated clinical cancer center in New Jersey; The Center for
    Advanced Biotechnology and Medicine; the Environmental and Occupational
    Health Sciences Institute, the largest environmental institute in the
    world, and the Child Health Institute.
        Disorders of health affecting infants and children exact a terrible
    toll in both human suffering and economic impact on families and the
    community. State and Federal public policy places a priority on efforts
    to prevent and treat childhood disorders. The prevention of conditions
    such as mental retardation, muscular dystrophy, sickle cell disease or
    cystic fibrosis has nearly incalculable benefits to society. Although
    such centers are common in some parts of the country, the metropolitan
    New York/New Jersey region does not have a research center designed
    specifically to address issues of child health.
        The Child Health Institute is a comprehensive biomedical research
    center focused on the health and wellness of children. In this program,
    medical researchers direct efforts toward the prevention and cure of
    environmental, genetic and cellular diseases of infants and children.
    The Institute is integral to the long-term plan for the enhancement of
    research at the medical school in developmental genetics, particularly
    as it relates to disorders that affect a child's development and
    growth, both physically and cognitively.
        The Institute will be linked physically and programmatically with
    both the medical school and the Children's Hospital at Robert Wood
    Johnson University Hospital, the core teaching hospital of Robert Wood
    Johnson Medical School. Locating the Institute in New Brunswick will
    promote the development of new partnerships among the Institute, the
    medical school, the teaching hospitals affiliated with UMDNJ and with
    the multinational pharmaceutical, biotechnology and chemical interests
    throughout New Jersey.
        The Child Health Institute will act as a magnet for additional
    growth in research and health care program development in the region.
    New Brunswick has emerged as the premier ``Health Care City'' in New
    Jersey through the efforts of UMDNJ, its schools and affiliated
    hospital network, and the ongoing support of Johnson and Johnson, the
    largest manufacturer of health care products, and the Robert Wood
    Johnson Foundation, one of the largest philanthropic foundations in the
    world.
        The Institute will encompass 83,000 gross square feet and will
    house more than 40 research laboratories and associated support
    facilities. Fourteen senior faculty will direct teams of M.D. and Ph.D.
    researchers, visiting scientists, postdoctoral fellows, graduate
    students and technicians for a full complement of some 130 employees.
    At maturity, the Institute is expected to attract $7 to $9 million of
    new research funding annually. The Institute's total annual operating
    budget is projected to be $10 to $12 million. Applying a standard
    economic multiplier of 5, the total impact on the New Brunswick area is
    estimated to be $50 to $60 million per year. Construction costs for the
    Institute are estimated at $27 million, with approximately half of that
    figure associated with local employment.
        The Child Health Institute has already received $11.8 million in
    private funding from the Robert Wood Johnson Foundation and from
    Johnson & Johnson. The Institute has also applied for a $1 million NIH
    Research Facilities Construction Grant, and we anticipate some state
    funds to be available for our research facilities. We respectfully
    request $10 million for infrastructure development and program
    assistance for the Child Health Institute of New Jersey. This
    combination of state, federal and private resources will enhance
    UMDNJ's commitment to children, health care and the economic
    development of our communities.
        The Neurological Institute of New Jersey has been established by
    the UMDNJ-New Jersey Medical School and UMDNJ-University Hospital as a
    center of excellence in the neurosciences in recognition of the
    expertise that exists in this discipline on our Newark campus. No other
    entity in New Jersey approaches the depth of human expertise,
    technological advancements and research achievements that exist in the
    variety of services at the medical school and the hospital.
        University Hospital is the core teaching hospital of the medical
    school. It is the major provider of tertiary neurological and
    neurosurgical services to the State of New Jersey including patient
    care, education and research. The NJMS Department of Neurosciences is
    ranked sixth nationally in research funding with about $4 million
    annually. NJMS offers the only fully accredited neurosurgical residency
    program in the state.
        The Neurological Institute would serve as an umbrella under which
    clinical, research and educational efforts would be focused. The
    delivery of clinical care would be provided through University
    Hospital, its clinics, physician offices and affiliates. Education
    would be provided by multi-disciplinary teams focused on neurological
    disease including prevention, early diagnosis, treatment and
    rehabilitation. The Institute would collaborate with its regional
    academic affiliates, the New Jersey Institute of Technology and Rutgers
    University in promoting research.
        Neurological disorders including stroke, epilepsy, multiple
    sclerosis and Alzheimer's disease are common and debilitating.
    Neurological diseases are a leading cause of death and disability in
    the United States, affecting some 50 million Americans. Five million
    new cases of neurological disorders are diagnosed every year, which is
    five times the number of new cancer cases diagnosed.
        An estimated 4 million Americans suffer from Alzheimer's disease.
    With the baby-boom generation approaching retirement age, that number
    could triple in a few short years. Experts say that Alzheimer's is the
    fastest growing disease of the new millennium and America is ill-
    prepared to deal with it. New Jersey could be particularly affected.
    Despite our small size, New Jersey ranks ninth in all states in its
    number of senior citizens.
        Veterans are another group particularly at risk for neurological
    diseases because of post traumatic syndrome and exposure to chemical
    agents. More than 500,000 veterans live in New Jersey with some 150,000
    residing in UMDNJ's catchment areas.
        Neurological diseases and disorders account for about $400 billion
    in health care costs and lost productivity.
        While the devastation of neurological disease and injury can be
    horrific, amazing breakthroughs in treatment and new drugs or surgical
    techniques are occurring. These breakthroughs require painstaking
    research and testing, significant financial support, and a
    concentration of clinical expertise and potential research subjects in
    a controlled environment. Unfortunately, the lack of such a statewide
    focus in the neurosciences has limited New Jersey's participation in
    and access to leading edge research, clinical trials and beta-site
    technology. The Neurological Institute will allow New Jersey to
    establish the credentials and clinical material necessary to compete
    for the advanced basic science and clinical research projects that
    currently are out of reach. Also, the critical mass of expertise
    provided by the Institute will hasten the pace at which theories become
    therapies in New Jersey through its educational opportunities and
    sponsorship of new technology at its clinical sites.
        The employment of new MRI technology can aid in the diagnosis and
    treatment of neurological diseases. We are working on the newest
    treatments available, and an investment in the work of the Neurological
    Institute is critical to advance our work. The Institute would focus
    the attention of pharmaceutical companies on the concentration of
    patients and availability of physicians and research nurses experienced
    in drug trials. The Institute will provide direction and coordination
    to physician referral efforts. Targeted community-based primary care
    and neurological specialty physicians will be invited to join the UH
    medical staff and will be conferred member status in the Institute. An
    ambitious program of continuing medical education in all fields related
    to neurosciences will be established to provide referring physicians as
    well as patients with a positive exposure to the academic and clinical
    proficiency of the Institute.
        The Institute seeks a major step forward in the research arena with
    the acquisition and placement of a state-of-the-art Magnetic Resonance
    Imaging (MRI) instrument. This MRI, with a rated field strength of 3-4
    Tesla, would place New Jersey in the forefront of neuroimaging groups.
    Imaging instruments with this field strength are expected to provide
    spatial resolution in the millimeter range and temporal resolution of
    less than one second--both carrying great significance at physiological
    levels. Areas of research will include language, learning, memory,
    visual processing and spatial representation. Clinical applications
    will include Alzheimer's disease, multiple sclerosis, tumor
    characterization, and epilepsy where brain dysfunction is clearly
    established. Applications will also extend to fibromyalgia, chronic
    fatigue syndrome and post traumatic stress syndrome, where neurological
    origins are not yet established.
        UMDNJ already has established programs in neurosciences at the
    medical school and at the Veterans Administration Medical Center in
    East Orange. We are well positioned to conduct research of direct
    relevance to veterans. We would collaborate with the VAMC and with our
    research partners, Rutgers University and the New Jersey Institute of
    Technology, in the development of a neuroimaging lab.
        Before assuming the presidency of UMDNJ, I served as Chair of the
    Department of Neurosciences at the New Jersey Medical School for 25
    years. I also served as chair of the East Orange VA Medical Center's
    Neurology Services for 10 years. I am well aware of the strong, dynamic
    link between UMDNJ and the Veterans Administration Medical Center. The
    VA was there for me when I was starting my medical career and I want to
    be there for the VA to continue providing the very best health
    education, research and patient care to the men and women who risk
    their lives in service to our country.
        We respectfully request $1.5 million toward the capital and
    instrumentation costs from the Department of VA/HUD for the
    Neurological Institute of New Jersey.
        Thank you for the opportunity to appear before you today. We thank
    the members of this Subcommittee for your leadership in supporting
    national and international research and development initiatives. This
    committee has been a strong supporter of the universities and research
    institutions in this country. Your leadership on many biomedical
    initiatives is especially appreciated.
                                     ______

                        ENVIRONMENTAL PROTECTION AGENCY

        Prepared Statement of the National Association of Conservation
                                   Districts
        The National Association of Conservation Districts is a
    nongovernment association that represents the nation's 3,000
    conservation districts and more than 16,000 men and women who serve on
    their governing boards. Established under state law, conservation
    districts are local subdivisions of state government charged with
    carrying out community-based programs for the protection and management
    of natural resources. Conservation districts work with nearly two-and-
    half million cooperating landowners and operators and provide
    assistance in managing and protecting nearly 70 percent of the private
    lands in the contiguous United States.
        Conservation districts work with a number of local, state and
    federal natural resource agencies in carrying out a wide variety of
    conservation and environmental protection programs. Partnering with
    state water quality agencies, state conservation agencies and the U.S.
    Environmental Protection Agency, districts are key players in
    implementing federal and state water quality protection and enhancement
    programs.
        Since the passage of the 1972 Federal Water Pollution Control Act
    (Clean Water Act), tremendous strides have been made in cleaning up
    point sources of water pollution such as industrial and municipal
    wastewater discharges. The progress in treating point sources has been
    made possible, in large part, by an investment of nearly $100 billion
    in federal funds for the construction of municipal wastewater treatment
    plants. Nonpoint sources of pollution--runoff from cropland,
    construction sites, mining activities, lawns and city streets--are much
    more elusive targets and pose a significant obstacle to achieving the
    nation's water quality goals. Pollution prevention remains the key to
    effectively dealing with nonpoint source pollution.
        When Congress enacted Section 319 in the 1987 amendments to the
    Act, it recognized that nonpoint source pollution control is best
    addressed through state and locally driven cooperative, incentive-based
    management programs. With federal assistance and state matching
    efforts, Section 319 state management programs have resulted in
    considerable progress in controlling nonpoint source pollution. Some 38
    states have also established companion agricultural nonpoint programs
    that provide technical and financial assistance to farmers and ranchers
    to help them implement conservation practices that stem runoff.
        Although progress has been made, lack of adequate funding is still
    the primary obstacle to addressing the nation's nonpoint source
    pollution control problems. After 25 years and a near $100 billion
    federal investment in wastewater and industrial waste treatment, the
    most pressing water quality challenges today revolve around nonpoint
    source pollution and runoff from animal feeding operations.
        Section 319 of the Clean Water, which provides grants to states for
    nonpoint source pollution control, has proven to be a popular and
    successful tool for addressing nonpoint source water quality concerns.
    Conservation districts manage nearly 40 percent of Section 319 funds
    and have a proven track record of success in providing technical
    assistance to landowners to install practices to stem runoff. However,
    the workload facing us is considerable and this level of funding--about
    $80 million in fiscal year 1999--falls far short of the federal
    commitment needed to address local needs. The federal dollars invested
    in Section 319 also leverage considerable state and local resources.
    Last year alone, state and local governments invested more than $1
    billion in conservation efforts with much of that directed toward water
    quality concerns. An increase in federal funding will bring even more
    state and local resources to bear. Conservation districts believe that
    $300 million is the minimum needed for EPA's Section 319 grants-to-
    states program in fiscal year 2000.
        Clean Water Act Section 106 State Program Grants are another
    important tool to help states develop and implement effective water
    quality protection programs. Matching these funds with their own
    resources, states are able to better plan and set priorities that more
    effectively address those needs. Conservation districts recommend a
    funding level of $120 million for Section 106 in fiscal year 2000.
        In addition to the already pressing need for conservation
    assistance, EPA and USDA's recently released Unified National Strategy
    for Animal Feeding Operations (the AFO Strategy) calls for the
    voluntary development of comprehensive nutrient management plans
    (CNMPs) for some 450,000 agricultural operations that are not subject
    to the National Pollution Discharge Elimination System permit program.
    Although voluntary, the AFO Strategy will create a tremendous new
    workload for states to provide assistance to producers in developing
    the CNMPs. Estimates in the number of staff years needed at the field
    level to assist farmers and ranchers in this initiative range as high
    as 8,000 FTEs. The President's budget request recognizes some of this
    need by requesting $651 million in funding for its Clean Water Action
    Plan. However, that funding level still does meet the on-the-ground
    needs.
        Further, since EPA is moving forward with plans to increase its
    regulatory oversight of animal feeding operations, we urge the
    subcommittee to include in its report direction that any additional
    funds should be used to increase technical and financial assistance to
    farmers and ranchers to implement the AFO Strategy. Specifically, more
    assistance should support the development and implementation of
    integrated pest and crop management systems, nutrient and animal waste
    management plans, and installation of additional conservation measures
    to reduce erosion and the resulting polluted runoff.
        The Great Lakes National Program (GLNP) has been instrumental in
    protecting the water quality of the largest freshwater ecosystem on
    Earth. EPA works with 187 conservation districts in the Great Lakes
    Basin in carrying out erosion and sediment control programs, developing
    remedial action plans for areas of concern and helping landowners
    install needed conservation practices to protect water quality. While
    the Great Lakes Basin is home to some 40 million people, the impact of
    the Great Lakes National Program echoes throughout much of North
    America. To protect and enhance this important investment, conservation
    districts recommend funding the Great Lakes National Program at $16
    million and Great Lakes Erosion and Sediment Control at $600,000 in
    fiscal year 2000.
        The Clean Water State Revolving Fund (CWSRF) is a significant
    financial tool for achieving clean and safe water, and for helping meet
    the significant needs for the nation's wastewater infrastructure over
    the next 20 years. Conservation districts applaud the President's
    initiative to allow states to reserve up to 20 percent of their CWSRF
    for use as grants for nonpoint source pollution control and estuary
    management. We strongly encourage you to direct that a substantial part
    of the funding under a nonpoint source SRF set-aside be made available
    for agricultural landowners. Because of the difficulty many
    agricultural producers have in recouping the costs of implementing
    water quality management practices, loans from the SRFs have been
    little-utilized. However, grants to defray the costs of best management
    practices will be much more popular to landowners and effective in
    obtaining the water quality improvements we all seek. However, we
    oppose the President's proposal to cut funding for the CWSRF program by
    $500 million. At the very least, funding for the CWSRF program should
    be maintained at the fiscal year 1999 level of $1.350 billion.
        In addition to EPA's water quality and other programs, the
    President in his budget request proposes a new undertaking called the
    Better America Bond (BAB) program. The BAB provides $1.9 billion in
    bonding authority in fiscal year 2000 and $9.5 billion over the next
    five years to help communities preserve green-space, protect water
    quality and redevelop brownfields. Much of the program is aimed at
    obtaining easements for those purposes. Conservation districts support
    the Better America Bond program as long as easements are obtained on a
    willing-seller basis.
        In recent years, both the public and private sectors have
    recognized the valuable role wetlands play in proving both water
    quality benefits and valuable fish and wildlife habitat. Nonetheless,
    we still lose roughly 100,000 acres of wetlands annually to various
    types of development. Conservation districts strongly support efforts
    to reverse this trend and increase the inventory of wetlands
    nationwide. While we recognize some wetlands conversions will always be
    necessary, there are many innovative ways to restore lost wetlands and
    even create new ones. We believe that protecting and enhancing the
    nation's wetlands can be achieved through education and by providing
    landowners the technical and financial assistance they need protect
    these valuable resources. The nation's conservation districts support
    fully funding EPA's ``wetlands protection grants'' program in fiscal
    year 2000.
        We appreciate the opportunity to provide our recommendations to the
    Subcommittee. In addition to the above, other detailed program
    recommendations are outlined below.

       FISCAL YEAR 2000 RECOMMENDED APPROPRIATIONS FOR SELECT PROGRAMS OF THE U.S. ENVIRONMENTAL PROTECTION AGENCY
                                                  [Millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                              Fiscal year--
                        Programs                    ----------------------------------------------------------------
                                                     1999 Admin.   1999 NACD    1999 Final  2000 Admin.   2000 NACD
    ----------------------------------------------------------------------------------------------------------------
    State Programs Grants (Sect. 106)..............      115.000      120.000      115.000      115.500      120.000
    Nonpoint Source Pollution Control Grants to          200.000      200.000      200.000      200.000      300.000
     States (Sect. 319)............................
    Water Infrastructure (CWSRFs)..................    1,253.000    1,350.000    1,350.000      800.000    1,350.000
    Drinking Water Infrastructure..................      775.000    1.250.000      775.000      825.000      825.000
    Great Lakes National Program...................       13.441       16.000       14.700       13.367       16.000
    Great Lakes Erosion & Sediment Control.........        0.350          N/A        0.500  ...........        0.600
    Gulf of Mexico Program.........................        4.283        7.300        6.897        4.300        7.300
    ----------------------------------------------------------------------------------------------------------------

                                     ______

     Prepared Statement of the National Association of Convenience Stores
          and the Society of Independent Gasoline Marketers of America
        The National Association of Convenience Stores (``NACS'') and the
    Society of Independent Gasoline Marketers of America (``SIGMA'') submit
    this statement regarding the fiscal year 2000 appropriation from the
    Leaking Underground Storage Tank (``LUST'') Trust Fund that is part of
    the spending bill for the Environmental Protection Agency (``EPA'').
    SIGMA and NACS urge: (1) that the LUST Trust Fund statute be modified
    to allow the States to use some portion of the appropriations they
    receive under cooperative agreements with EPA for enforcement of the
    underground storage tank (``UST'') regulations; and (2) that the LUST
    Trust Fund appropriation be increased.
    Introduction of SIGMA and NACS
        SIGMA represents over 260 independent gasoline marketers operating
    in all 50 States. Last year, SIGMA members sold over $33 billion of
    motor fuel, representing over 22 percent of all motor fuels sold in the
    United States. SIGMA members supply over 26,000 retail outlets across
    the nation and employ over 195,000 workers nationwide.
        NACS is a trade association representing more than 2,200 retail
    members operating convenience stores, many with motor fuel dispensing
    operations, in the United States and around the world. NACS member
    companies operate more than 72,000 convenience stores across the nation
    and employ over 750,000 workers nationwide.
    Background
        Under EPA's UST regulations (40 C.F.R. Part 280), all USTs that
    were in the ground on December 22, 1988, had to be upgraded to new tank
    standards, replaced with new tanks, or closed by December 22, 1998. EPA
    provided a 10-year compliance period largely due to the diverse nature
    of the regulated community and the number of USTs owned or operated by
    small businesses.
        As the December 22, 1998 deadline approached, there were widely
    varying estimates of compliance rates. Based upon these estimates, EPA
    predicted that non-compliance on December 23, 1998 was going to be
    approximately 35 percent, largely from USTs owned by State and local
    governments and small businesses. NACS and SIGMA, based upon member-
    supplied information, believe that their members' USTS are better than
    96 percent compliant.
        In August 1998, EPA published its post-1998 UST enforcement
    strategy, relying primarily on the states to be the lead UST enforcers.
    The Agency, in response to an inquiry from the House Commerce
    Committee, indicates that it has approximately 33 full-time equivalents
    (largely borrowed from other Office of Solid Waste programs) available
    for UST enforcement at the regional level. Further, the August strategy
    document stated that non-compliance after December 22, 1998 was not an
    option and that temporary closure of out-of-compliance USTs was the
    appropriate response.
        On December 9, 1998, EPA issued supplemental guidance on its UST
    enforcement strategy. The Agency decided to prioritize its enforcement,
    essentially giving a six-month enforcement delay to ``low priority''
    UST owners and operators--that is, State and local governments and
    small businesses with four or fewer USTs. SIGMA and NACS have been very
    critical of EPA's December 9, 1998 guidance.
        During the past two Congresses, the House has passed amendments to
    the LUST Trust Fund, expanding the allowable uses by the States of the
    Trust Fund's appropriations they receive under cooperative agreements
    with EPA. One of these expanded, allowable uses is enforcement of the
    UST regulations. EPA supported State use of LUST Trust Fund monies by
    the States.
    Amend the LUST Trust Fund to Allow State Use for Enforcement
        NACS and SIGMA urge the Subcommittee, working with the Environment
    and Public Works Committee, to include in the fiscal year 2000
    appropriations from the LUST Trust Fund a statutory modification that
    allows the States to use some portion of the LUST Trust Fund monies
    they receive from EPA for enforcement of the UST Regulations.
        There is a substantial environmental benefit from allowing State
    use of LUST Trust Fund monies for enforcement. Older tanks that have
    not been upgraded, replaced or closed are the ones most likely to leak
    and threaten human health and the environment. Increased enforcement
    will uncover sooner these non-compliant USTs, abating the potential
    environmental harm earlier.
        State use of LUST Trust Fund monies for enforcement provides an
    equitable benefit to the regulated community. SIGMA and NACS support
    fair and even-handed UST enforcement. UST owners and operators,
    including NACS and SIGMA members, have spent considerable sums in
    complying with the tank regulations over an unprecedented 10-year
    compliance ``window.'' EPA and the States also have had a decade to
    figure out fair and even-handed UST enforcement. It is a slap in the
    face to those UST owners and operators who have spent hundreds of
    millions of dollars in complying with EPA and State UST mandates if the
    law is not appropriately enforced. With few enforcers and little UST
    enforcement leadership by EPA, increased State enforcement sends
    appropriate signals to the regulated community that non-compliance with
    the law will not be tolerated.
        At the recent House Appropriations subcommittee hearing on EPA's
    fiscal year 2000 spending, the Agency Administrator responded to LUST
    Trust Fund questions, expressing concern that stepped-up enforcement
    would put small businesses, especially ``moms-and-pops,'' out of
    business. NACS and SIGMA believe Ms. Browner's concern is misplaced for
    at least three reasons.
        First, in response to a question from the House Commerce Committee,
    EPA stated that State-supplied information suggested minimal
    dislocations, particularly in rural areas, if retail gasoline outlets
    were forced to close because of the December 22, 1998 deadline. SIGMA
    an NACS are not aware of any change in this information. EPA's UST
    regulations are not designed to protect competitors, especially when
    they have chosen for a decade not to comply with the law. At the same
    time, EPA ignores the moms-and-pops who have mortgaged their homes or
    their children's educations to comply with the UST regulations or who
    have gone out-of-business because UST upgrades or replacements were
    uneconomic.
        Second, as part of its December 9, 1998 supplemental guidance, EPA
    provided an opportunity for UST owners and operators to self-disclose
    their UST non-compliance in return for an abatement or elimination of
    civil penalties. According to the Agency, fewer than 200 self-
    disclosures were received and most were from New York companies where
    EPA is the lead UST enforcer. EPA's self-disclosure policy was broadly
    disseminated last December. Small businesses, including mons-and-pops,
    had a fair opportunity to enter into reasonable consent agreement with
    the Agency.
        Third, in a recent letter to Senator Chafee, EPA said that
    currently ``low Priority'' UST owners and operators, including moms-
    and-pops, will lose their enforcement status on June 22, 1998--that is,
    there will be no further ``grace period'' after this initial six
    months. If this truly is EPA's policy and position, then the
    Administrator should not be upset if the States use some of the LUST
    Trust Fund monies for enforcement after October 1, 1999.
        Based upon the foregoing, NACS and SIGMA believe a sufficient
    record exists for statutory modification to the LUST Trust Fund to
    allow the States to use some Trust Fund monies for enforcement of the
    UST regulations.
    LUST Trust Fund Appropriations Should Be Increased
        SIGMA and NACS support increased funding over the Administration's
    request from the LUST Trust Fund, especially if State use of the monies
    for UST enforcement is approved by the Congress. Because of the
    December 22, 1998 compliance deadline, it is expected that there will
    be a ``blip'' in reported UST Releases and resulting cleanups.
    Increased funding from the LUST Trust Fund will help to ensure that the
    pace of corrective actions are not retarded.
        At the same time, NACS and SIGMA are concerned that the LUST Trust
    Fund has a substantial unobligated balance which is being used to
    reduce the Federal deficit. LUST Trust Fund monies should go to the use
    for which the tax is levied and collected, especially when the tax
    often cannot be passed through in the per-gallon selling price of motor
    fuels.
                                     ______

      Prepared Statement of the Center for the Engineered Conservation of
                          Energy at Alfred University
        Mr. Chairman and Members of the Subcommittee, I submit this
    statement to encourage your support for the Center for the Engineered
    Conservation (EnCo) at Alfred University. The mission of this Center is
    to validate cutting-edge environmental technology and foster the
    conservation of energy and environmental resources. Alfred
    University's, record of accomplishments in these areas is well known in
    the research community, the private sector and with those federal
    agencies focused on Global Climate Change. To enhance EnCo's ability to
    assist with research, development and technology transfer in resource
    conservation, we request a $2.5 million federal partnership grant from
    the Environmental Protection Agency through your fiscal year 2000
    legislation to help establish the $24.7 million Center.
        EnCo was designed as a platform to develop, test and deploy
    environmentally-sound energy efficient technologies. It will oversee a
    consortial research effort involving industrial partners, state and
    local agencies, and the Federal Government. The EnCo Center which will
    function as a ``living laboratory''--the facility will be used by the
    consortium to deploy and validate next generation building, industrial
    manufacturing, and transportation technologies. The living laboratory
    concept involves the use of a ``smart,'' self-powered building where
    promising technologies can be tested and demonstrated full-scale. The
    laboratory will be flexible to allow it to continuously adapt emerging
    technologies.
        EnCo will bring together a multidisciplinary group of scientists
    and engineers from across the University, from industry and from other
    universities as appropriate and will interact closely with start-up
    companies currently located in twin incubator facilities constructed in
    Corning and Alfred, NY. These incubators have established a strong
    record in technology transfer, and will play a critical role in
    bringing the products and processes developed at EnCo to the
    marketplace. The research and development that will be undertaken by
    EnCo takes advantage of Alfred University's internationally-recognized
    expertise in ceramic engineering and materials science and its location
    in the ``ceramics corridor'' which is comprised of industry and
    academic talent in these areas of research. In this way, EnCo's
    programs will have a very substantial influence on national energy
    conservation research and product development.
        Given the link between energy efficiency, environmental impact, and
    developments in engineering and materials science, EnCo will provide
    numerous opportunities for interdisciplinary research in the areas of
    resource conservation and improved energy efficiency, the EnCo facility
    has been designed to meet and surpass the highest Environmental
    Protection Agency building codes and standards. The facility will
    greatly enhance technologies relating to indoor air quality while
    utilizing environmentally preferable materials. EnCo will also develop
    and incorporate into the building, cutting-edge technologies for water
    and wastewater usage. Further, this innovative facility will maintain
    low VOC content and incorporate recycled content materials into the
    structural framework.
        Following are examples of how EnCo's research activities complement
    and enhance the priorities of the Environmental Protection Agency:
      --Indoor Air Quality research conducted at EnCo will focus on:
        --Source control measures designed to control, reduce or eliminate
                harmful air contaminants that originate from the site, and
                from building materials, furnishings, equipment, mechanical
                systems and maintenance products.
        --Ventilation control measures designed to ensure that adequate,
                clean, outside air is delivered to inhabitants and entails
                the utilization of exhausting mechanisms, air filtration
                measures and monitoring for air contaminants.
      --Environmentally-Preferable Material Selection research at EnCo will
            focus on:
        --Emphasis will be placed on the validation of environmentally-
                preferable materials which offer multiple benefits, such as
                reduced emissions, increased durability and environmental
                advantages (such as recycled content).
      --Water Use research conducted at EnCo will focus on:
        --Reducing water use through low flow equipment, water efficient
                appliances and automatic cut-off valves.
        --Processing waste water via a Solar Aquatic wastewater treatment
                system couple with a constructed ``wetlands'' area.
        --Storm water reduction through the use of advanced roofing
                systems, pervious paving systems and other landscape
                architecture systems.
      --Waste Management research will take place during both the
            construction and operational phases of the EnCo facility,
            including:
        --Construction waste management designed to minimize the generation
                of waste material during the construction period, pre-
                identification of a recycling master plan for construction
                debris and the protection of existing trees, soils and
                other significant site features affected by the
                construction process.
        --Waste management programs deployed during the operational phase
                of EnCo will include the design of facility space to
                separate, sort and store the various waste streams
                (including hazardous waste) from the building and its
                laboratories.
        The EnCo initiative will benefit significantly from the New York
    State Energy and Research Development Authority (NYSERDA), which--has
    completed a building pre-design study for EnCo focusing on the building
    design process NYSERDA and will provide technical assistance for
    consideration of whole building approaches to energy conservation,
    cost-sharing for building modeling and design commissioning, as well as
    incentives for the purchase of energy efficient equipment. NYSERDA will
    continue to provide design assistance related to the sustainability
    issues cited earlier. In addition, EnCo has been selected by NYSERDA to
    partner with the National Environmental Technology for Waste Prevention
    Institute (NETI) at the University of Massachusetts to identify ``high
    impact'' industries in the Northeast Region (New York/New England.)
    Close attention will be paid to cross-linkages in energy, pollution and
    economic characteristics and to common processes that impact on energy
    usage and the environment.
        Through EnCo, new products can be brought to bear in the reduction
    of energy consumption in dramatic ways. To facilitate the introduction
    of these products into the marketplace, there must be a mechanism
    whereby the economic benefits of the products are validated by real
    world working experience. Private sector investments in advanced
    energy-efficient products and processes have a demonstrated positive
    economic return. What is required in order to do this is a coordinated
    research agenda based in a high impact, ``smart building'' or flexible
    laboratory. This research requires access to a facility which can be
    easily fitted with the latest technologies to test how different
    systems work alone or in tandem with other newly developed
    technologies. Effective technologies will then be transferred to our
    highly successful business incubators for development as products for
    market.
        Alfred University's accomplishments in the areas of renewable
    energy, energy conservation and efficiency, and its commitment to
    interdisciplinary research with industry and federal laboratories--all
    justify a strong federal partnership in the full implementation of
    EnCo. The institution and its non-federal partners have already
    committed significant resources towards the establishment of EnCo, and
    are now requesting that the Federal Government provide a reasonable
    match for this effort. The creation of the Center for the Engineered
    Conservation of Energy will serve as a model in the advancement of
    energy-efficient and environmentally sound technologies and research
    while producing economic benefits both regionally and nationally.
        Alfred University has already invested considerable resources in
    the establishment of EnCo, which will cost a total of $24.7 million to
    build, equip and operate. The EPA, through its Science and Technology
    and Environmental Programs and Management programs, is at the forefront
    of promoting and supporting initiatives aimed at preventing,
    regulating, and abating environmental pollution. EnCo has been designed
    to serve as a model facility that will incorporate the most advanced
    environmental standards and designs into its structural concept and
    research programs. For these reasons, and those outlined previously, I
    urge your consideration of Alfred's proposal for $2.5 million as a wise
    investment in our national search for ways in which to enhance our
    productivity and quality of life while protecting our energy and
    environmental resources.
        Thank you.
                                     ______

    Prepared Statement of the Committee for the National Institute for the
                                  Environment
        Chairman Bond, members of the Subcommittee, thank you for providing
    us an opportunity to present written testimony.
        The Committee for the National Institute for the Environment has
    been working since 1989 to improve the scientific basis for
    environmental decisionmaking. The CNIE is nonpartisan organization that
    takes no position on particular environmental issues other than the
    need for better connection between science and the decisionmaking
    process. We do not receive any federal money and we are not here today
    to seek any funding that will go to our organization.
        We have submitted testimony before this Committee for several years
    on the need for a trusted source of scientific information on
    environmental issues that is separate from the regulatory agencies of
    the federal government. This source should provide objective peer-
    reviewed science that answers the key questions of decision makers and
    affected parties inside and outside of the government. We believe that
    an opportunity to create such a trusted source now exists in the
    context of the National Science Foundation. Our testimony today
    encourages the Committee to take advantage of this opportunity and to
    fund NSF at a level above the President's budget for the purpose of
    improving the scientific basis for environmental decisionmaking--a need
    I know you recognize.
        The core principles that we advocate are:
        A non-regulatory science body with a mission to improve the
    scientific basis for environmental decisionmaking;
        Integration of:
      --Assessments of the state of scientific knowledge on environmental
            issues
      --Competitively awarded support for peer-reviewed research organized
            around environmental topics
      --Distribution of credible non-partisan information using modern
            technologies, and
      --Support for science-based environmental education and training.
        Involvement of all stakeholders in its activities equally, inside
    and outside the federal government.
        the need for a trusted source of scientific information on the
                              environmental issues
        No one seeks to perpetuate environmental problems that threaten our
    health, economy, and quality of life. Yet, we are often in a situation
    of making decisions without a strong scientific understanding of the
    issues. The impacts of those decisions can be very costly in terms of
    money spent without accomplishing real progress or in lives that are
    adversely affected by real problems that go un-addressed. Without
    sufficient investment in science, decision makers often lack the
    reliable information they need to make informed choices.
        Much of the environmental research supported by the federal
    government is conducted by regulatory or management agencies on short-
    term topics of direct importance to the agency. Because these agencies
    often act as an environmental police force, they and their science is
    viewed by many with mistrust or seen as tainted with a political
    agenda. This is not a criticism of regulatory and resource management
    agencies, simply an observation of an avoidable consequence of their
    missions.
        On the other-hand non-regulatory agencies like the National Science
    Foundation have a great deal of public trust and support. In the case
    of the National Science Foundation this trust and support is well
    deserved. The science supported by the non-regulatory Foundation have
    served this nation so well that we might well call it the National
    ``Success'' Foundation.
        Yet, many of the most important and controversial environmental
    issues such as urban air quality, potential effects of endocrine
    disrupters, ecological relationships related to collapsing fisheries
    stocks and possible relationships between ethnicity and exposure to
    toxicants are poorly addressed by the federal science agencies. They
    are tackled first within regulatory agendas and later, if at all,
    within science agendas. They become embroiled in controversy and make
    lawyers rich. This needs to change.
        The National Science Foundation is beginning to recognize that it
    has a role to provide the science to understand, resolve, and even
    prevent these environmental problems. Spurred, in part by the interest
    of this Committee as well as by our efforts, the NSF is beginning to
    recognize that this new role can be taken on in a way that complements
    its traditional role as the nation's source of fundamental science, but
    that it will take some institutional changes as well as additional
    funding to fulfill both its traditional role and this new role as a
    leading provider of science to improve environmental decisionmaking.
                         support for the nie initiative
        Our effort to create a source of credible scientific information on
    the environment has been developed in partnership and has been endorsed
    by more than 440 organizations, including:
      --State and local government groups such as the National Association
            of Counties, U.S. Conference of Mayors, Council of State
            Governments, National Association of Attorneys General and
            National Conference of State Legislatures,
      --Most national and many local environmental groups,
      --The U.S. Chamber of Commerce and more than 30 state and local
            chambers of commerce and business associations,
      --255 colleges and universities,
      --85 scientific societies,
      --Three former administrators of the Environmental Protection Agency
            and six of seven former EPA Directors of Research and
            Development.
        Our Board of Directors reflects this diverse support; I am one of
    three elected state and local governmental officials on the CNIE Board.
    As an environmental engineer and as the recently retired Majority
    Leader of the Utah State Senate, I have seen far too many examples of
    legislators and administrators needing to make a decision when the
    science was not sufficient. Many decisions can not and should not be
    deferred, but we also need a process to ensure the adequacy, quality
    and the independence of the science that we need. This nation needs to
    increase its investment in environmental science and engineering.
    However, it needs to do it in a way that involves decision makers and
    other stakeholders in helping scientists and engineers to determine
    priorities. The proposal to implement the principles of a National
    Institute for the Environment under the National Science Foundation
    offers this opportunity.
                this committee's support for the nie initiative
        We greatly appreciate the past support of your committee for the
    proposal is known as the National Institute for the Environment or the
    NIE. As part of the House-Senate Conference Report 105-297 to accompany
    the fiscal year 1998 appropriation to the National Science Foundation,
    you stated, ``Finally, the conferees encourage the National Science
    Foundation to study how it would establish and operate a National
    Institute for the Environment.''
                  response of the national science foundation
        Last April, the National Science Foundation reported to this
    Committee that it was ``committed to environmental research and
    education in all areas of science and engineering, and is eager to
    expand its role in a manner consistent with overall national goals and
    with its mission and strategic plan.'' But the NSF did not have a plan
    of action at that time.
        Last summer, the National Science Board (NSB) created a Task Force
    on the Environment ``for the purpose of assisting NSF in defining the
    scope of its role in environmental research, education, and assessment,
    and in determining the best means of implementing activities related to
    this area.'' The findings of the Task Force will be presented to the
    NSB at its meeting on May 7, 1999.
        Although we are not aware of the details of the Task Force report,
    we are very encouraged by the workings of the Task Force. We have been
    given considerable opportunity to work with the Task Force and have
    been impressed by it significant efforts to go beyond the status quo
    and provide genuine leadership for the nation on this issue. We
    understand that they will propose an ambitious initiative for NSF,
    which we hope will be consistent with the NIE principles and goals that
    we have outlined previously.
        The Task Force plan seems likely to provide mechanisms for making
    environmental science supported by the NSF more relevant and helpful to
    the nation's need for more scientific environmental decisionmaking.
    This is something that this Committee and Congress has urged for a long
    time. I hope that we can all look at the NSF plan as a real victory.
    However, the greatest plan will come to naught if this Committee does
    not provide support--both intellectual and funding.
        In addition to the work of the Foundation's Task Force on
    Environment, new NSF Director Rita Colwell, is making science for
    understanding the environment one of her top priorities. The NSF budget
    request for fiscal year 2000 includes a new $50 million initiative for
    integrated environmental science, under the theme ``biocomplexity''--a
    term coined by Dr. Colwell to describe the complex interrelationships
    between living beings and the environmental systems in which they live.
    This would boost NSF's environmental portfolio to $670 million, with
    the vast majority being managed through NSF's disciplinary
    directorates.
        Today, we wish to make the following points:
      --Congress should take advantage of this excellent opportunity to
            place environmental decisionmaking on a more scientific basis
            by giving a clear sign of its support for the NSF's efforts to
            connect its environmental science funding to the decisionmaking
            needs of the nation. We encourage this Subcommittee to give the
            same kind of priority to NSF that the subcommittee of
            jurisdiction has given to the National Institutes of Health.
            Investment in environmental science is essential to the health
            of our citizens and our economic strength. Only by investing in
            a new approach to science will we be able to achieve one
            without compromising the other.
      --We encourage the Committee to fully fund the NSF's biocomplexity
            and environmental initiatives.
      --We encourage the Committee to add additional funding above
            President's request for NSF to implement the principles of a
            National Institute for the Environment through the Foundation.
            We support the proposal of the Coalition for National Science
            Funding (CNSF), of which we are a member, for a $562 million,
            15 percent increase over fiscal year 1999 funding for NSF. This
            would help to maintain America's preeminence in science upon
            which so much of our economic well being depends. Such a level
            of funding would also allow the Foundation to take immediate
            steps to implement the principles of the NIE without adversely
            impacting other scientific endeavors.
      --We recommend that in the context of providing funding over the
            President's request, that this Committee give special attention
            to an increase in environmental science funding to implement
            the recommendations of the Task Force, consistent with the
            principles of the NIE. Since we do not yet know the details of
            these recommendations, we would like to keep the option open of
            coming back to this Committee with suggestions for ensuring
            that NSF's proposal is consistent with the desires of this
            Committee as expressed in the fiscal year 1998 report language.
        I, the Board and the staff of the CNIE, and the many supporters of
    this effort are ready to meet with Subcommittee members and their staff
    to provide further details and work with you to accomplish a goal that
    I know we all share--improving the scientific basis for making
    decisions on environmental issues.
        Again, we thank this Committee for its commitment to ensuring
    scientific excellence with respect to environmental decisionmaking and
    for its time and consideration.
                National Institute for the Environment endorsers
                        environmental organizations (50)
    Alliance for Environmental Education
    Alliance of Veterinarians for the Environment
    American Chestnut Foundation
    American Forests
    American Rivers
    Audubon Naturalist Society
    Audubon Council of Texas
    California Trout
    Center for Marine Conservation
    Chesapeake Bay Foundation
    Climate Institute
    The Coastal Society
    The Conservation Agency
    Conservation International
    Cosanti Foundation
    Defenders of Wildlife
    Environmental Defense Fund
    Environmental Law Institute
    Environment and Energy Study Institute
    Friends of the Earth
    The Georgia Conservancy
    Georgia Environmental Organization
    Georgia Wildlife Federation
    Global Environment and Technology Fdn.
    The Gorilla Foundation
    The Izaak Walton League of America
    Louisville Resource Conservation Council
    Massachusetts Audubon Society
    Michigan Environmental Council
    Minnesota Center for Environmental Advocacy
    Minnesota Conservation Federation
    National Audubon Society
    National Parks and Conservation Association
    National Wildflower Research Center
    Oregon Trout
    Pennsylvanian Environment Council
    Planning and Conservation League
    Population Action International
    Rails-to-Trails Conservancy
    Rainforest Alliance
    Save The Bay (RI)
    Save The Harbor /Save The Bay (MA)
    Seatuck Environmental Association
    Sierra Club
    Silicon Valley Toxics Coalition
    Trout Unlimited
    The Wilderness Society
    Wildlife Conservation Society
    World Wildlife Fund
    Zero Population Growth
                        state and local governments (17)
    Governor of Alaska
    American Public Works Association
    Mayor of Bellingham, Washington
    City of Baltimore, Maryland
    City of Chicago, Illinois
    City of Monterey Park, California
    City of Redlands, California
    County of Santa Cruz, California
    Council of State Governments
    Dade County, Florida
    Hennepin County, Minnesota
    National Association of Attorneys General
    National Association of Counties
    National Black Caucus of State Legislators
    National Conference of State Legislatures
    Southern Legislative Conference
    U.S. Conference of Mayors
                         religious and other groups (3)
    National Council of Negro Women
    National Religious Partnership for the Environment
    Unitarian Universalist Seventh Principle Project
                                 business (35)
    Albuquerque Chamber of Commerce
    American Recreational Coalition
    Arizona Chamber of Commerce
    Arkansas State Chamber of Commerce/Associated Industries of Arkansas
    Association of Engineering Firms Practicing in the Geosciences
    Association of Washington Business
    Business & Industry Association of New Hampshire
    Business Council of Alabama
    California Chamber of Commerce
    East West Corporate Corridor Association
    Florida Chamber of Commerce
    Greater Boston Area Chamber of Commerce
    Greater Corning Area Chamber of Commerce
    Greater Miami Chamber of Commerce
    Greater North Dakota Association
    Greater Providence Chamber of Commerce
    Illinois Chamber of Commerce
    Kansas Chamber of Commerce
    Kentucky Chamber of Commerce
    Louisiana Assn. of Business and Industry
    Maryland Chamber of Commerce
    Missouri Chamber of Commerce
    National Association of Minority Contractors
    National Multihousing Council
    Nebraska Chamber of Commerce
    New Jersey Chamber of Commerce
    Newport County (RI) Chamber of Commerce
    Ohio Chamber of Commerce
    Oregon Biotechnology Association
    Regulatory Environmental Group of Missouri
    Salem Area Chamber of Commerce
    Texas Association of Business and Chambers of Commerce
    The State Chamber--Oklahoma's Association of Business & Industry
    U.S. Chamber of Commerce
    Virginia Chamber of Commerce
                    academic & scientific organizations (86)
    Academy of Natural Sciences (Philadelphia)
    Air and Waste Management Association
    American Academy of Veterinary and Comparative Toxicology
    American Agricultural Economics Association
    American Anthropological Association
    American Association for the Advancement of Science (Biological Science
    Section)
    American Board of Veterinary Toxicology
    American Fisheries Society
    American Geographical Society
    American Institute of Biological Sciences
    American Malacological Union
    American Ornithologists' Union
    American Phytopathological Society
    American Society of Agricultural Engineers
    American Society of Agronomy
    American Society for Horticultural Science
    Am. Soc. of Ichthyologists and Herpetologists
    American Society of Landscape Architects
    American Society of Mammalogists
    American Society of Naturalists
    American Society for Neurochemistry
    American Society of Parasitologists
    American Society of Pharmacognosy
    American Society of Plant Taxonomists
    American Society of Safety Engineers
    American Sociological Association (Environment and Technology Section)
    American Solar Energy Society
    American Zoo and Aquarium Association
    American Veterinary Medical Association
    Animal Behavior Society
    Assn. of Environmental Engineering Professors
    Association of Field Ornithologists
    Association of Southeastern Biologists
    Botanical Society of America
    California Academy of Sciences
    Center for Conservation Biology (Stanford U.)
    Chicago Academy of Sciences
    Cooper Ornithological Society
    Council of Systematic Malacologists
    Crop Science Society
    Desert Fishes Council
    Ecological Society of America
    Field Museum of Natural History
    Foundation for Microbiology
    Georgia Academy of Science
    Herpetologists' League
    Institute for Marine and Coastal Sciences (Rutgers University)
    International Association for Hydrogen Energy
    International Association for Impact Assessment
    International Oceanographic Foundation
    Iowa Academy of Sciences
    Louisiana Academy of Science
    Marine Conservation Biology Institute
    Minnesota Academy of Science
    Mississippi Academy of Sciences
    Mississippi State University Research Center
    Monterey Bay Aquarium Research Institute
    Mycological Society of America
    National Assn. of Environmental Professionals
    Nat. Asn. of Professional Forestry Schools & Coll.
    National Association of University Fisheries and Wildlife Programs
    New Jersey Marine Science Consortium
    New Mexico Academy of Sciences
    New York Botanical Garden
    New York Zoological Society
    The Ohio Academy of Science
    Organization for Flora Neotropica
    Pacific Institute for Studies in Development, Environment and Security
    Pennsylvania Academy of Science
    Rhode Island Natural History Survey
    Rural Sociological Society
    Society for Conservation Biology
    Society for Ecological Restoration
    Society for Economic Botany
    Society for Industrial Microbiology
    Society for Integrative and Comparative Biology
    Society for the Study of Amphibians and Reptiles
    Society for the Study of Evolution
    Soil Science Society
    Soil and Water Conservation Society
    Special Libraries Association
    Union of Concerned Scientists
    US Federation for Culture Collections T
    he Wildlife Society
    Wilson Ornithological Society
    Washington Academy of Science
                               universities (255)
    The University of Akron
    The University of Alabama System
    Alabama A&M University
    University of Alaska Southeast
    Alfred University
    Allegheny College
    The American University
    Amherst College
    Antioch College
    University of Arizona
    University of Arkansas--Pine Bluff
    Arkansas State University
    College of the Atlantic
    Auburn University at Montgomery
    Barber-Scotia College
    Bard College
    Barry University
    Baylor University
    Benedict College
    Bennett College
    Bennington College
    Bethune-Cookman College
    Boise State University
    Boston University
    Bowdoin College
    Bowling Green State University
    Brookhaven College
    Bucknell University
    University of California--Davis
    University of California--Santa Barbara
    University of California--Santa Cruz
    California State University--Fresno
    California State University--Los Angeles
    California State University--Sacramento
    California Polytechnic--San Luis Obispo
    Case Western Reserve University
    University of Central Florida
    Central Missouri State University
    University of Charleston
    City University of New York
    Claflin College
    Clark University
    Clark Atlanta University
    Clemson University
    Cleveland State University
    Colby College
    Colgate University
    University of Colorado--Boulder
    University of Colorado--Denver
    Colorado College
    Colorado State University
    University of Connecticut
    Connecticut College
    Connecticut State University System
    Delaware State University
    University of Denver
    Dickinson College
    Dillard University
    Duke University
    Duquesne University
    Earlham College
    East Carolina University
    East Tennessee State University
    Eastern College
    Eastern Connecticut State University
    Eckerd College
    Emory University
    Evergreen State College
    Fairleigh Dickinson University
    Fisk University
    University of Florida
    Florida Atlantic University
    Florida International University
    Florida Institute of Technology
    State University System of Florida
    Fordham University
    Franklin & Marshall College
    Frostberg State University
    Furman University
    Georgetown University
    University of Georgia
    Georgia Southern University
    Georgia State University
    Grinnell College
    Hamilton College
    Hampden-Sydney College
    Hampshire College
    University of Hartford
    Hartnell College
    Hartwick College
    Haverford College
    University of Hawaii
    Hobart and William Smith Colleges
    University of Houston
    Howard University
    University of Idaho
    University of Illinois (system)
    Indiana University
    Indiana University of Pennsylvania
    Indiana State University
    Iowa State University
    Jackson State University
    Johnson C. Smith University
    Kalamazoo College
    Kansas State University
    Kent State University
    Kentucky State University
    Lane College
    Lewis and Clark College
    Lincoln University
    Livingston University
    Louisiana State University
    University of Louisville
    Loyola College in Maryland
    Loyola University New Orleans
    Macalester College
    University of Maine
    Mankato State University
    Marquette University
    University of Maryland (system)
    University of Massachusetts (system)
    University of Memphis
    University of Miami
    Miami University (of Ohio)
    Michigan State University
    Michigan Technological University
    Millersville University
    University of Minnesota--Duluth
    University of Minnesota--Twin Cities
    University of Missouri--Columbia
    University of Missouri--Kansas City
    University of Missouri--Rolla
    University of Missouri--St. Louis
    University of Montana
    Montclair State University
    Morris College
    Mount Holyoke College
    Mount Union College
    Muhlenberg College
    University of Nebraska--Lincoln
    University of Nevada--Las Vegas
    University of Nevada--Reno
    University of New England
    University of New Hampshire
    New Jersey Institute of Technology
    University of New Mexico
    New Mexico Institute of Mining and Technology
    New Mexico State University
    State University of New York--Binghamton
    State University of New York--Buffalo
    State University of New York--Plattsburgh
    State University of New York--Stony Brook
    Nicholls State University
    University of North Carolina--Chapel Hill
    University of North Carolina--Charlotte
    University of North Carolina--Greensboro
    North Carolina A&T State University
    North Carolina State University
    North Dakota State University
    Northeastern University
    Northern Arizona University
    Northern Kentucky University
    University of North Texas
    NOVA Southeastern University
    Oakwood College
    Ohio University
    Ohio State University
    University of Oklahoma
    Oklahoma State University
    University of Oregon
    Oregon State University
    Oregon State System of Higher Education
    Pace University
    Paine College
    Pennsylvania State University
    University of Pittsburgh
    University of Portland
    Portland State University
    Prescott College
    Purdue University
    Radford University
    University of Rhode Island
    Rice University
    University of Richmond
    Ripon College
    Rochester Institute of Technology
    Rust College
    Rutgers University
    Saint Augustine College
    Saint Mary's College--Notre Dame, Indiana
    Salem-Teikyo University
    Salish Kootenai College
    University of San Diego
    San Diego State University
    University of San Francisco
    San Francisco State University
    Santa Clara University
    The School for Field Studies
    Smith College
    University of the South
    University of South Carolina--Aiken
    University of South Carolina--Columbia
    South Carolina State University
    University of South Dakota
    South Dakota School of Mines and Technology
    South Dakota State University
    University of South Florida
    University of Southern California
    University of Southern Mississippi
    Southern Illinois University
    Southern University--Baton Rouge
    Southwest Missouri State University
    Southwestern University
    Spelman College
    Stillman College
    Swarthmore College
    Syracuse University
    University of Tennessee--Knoxville
    Tennessee State University
    Texas College
    Texas A&M University System
    Texas Southern University
    Texas Tech University
    Texas Woman's University
    University of Toledo
    Towson University
    Tufts University
    University of Tulsa
    Tuskegee University
    University of Utah
    Valparaiso University
    Vassar College
    University of Vermont
    Virginia Commonwealth University
    Virginia Polytechnic Institute and State University
    Washburn University
    Washington State University
    State University of West Georgia
    West Virginia University
    Western Kentucky University
    Western Michigan University
    Western Washington University
    Wichita State University
    Wilberforce University
    Wiley College
    Willamette University
    College of William & Mary
    Williams College
    University of Wisconsin--Green Bay
    University of Wisconsin--Madison
    University of Wisconsin--Milwaukee
    University of Wisconsin--Stevens Point
    University of Wyoming
    Yale University
                                     ______

       Prepared Statement of the Lovelace Respiratory Research Institute
        It is requested that the U.S. Environmental Protection Agency (EPA)
    continue to support the National Environmental Respiratory Center for
    the purpose of conducting research, providing information and research
    resources, and facilitating interdisciplinary communication concerning
    the respiratory health risks of combined exposures to multiple air
    pollutants and pollutant mixtures. Funds for continuation of the Center
    are requested in the fiscal year 2000 EPA appropriation.
             what is the national environmental respiratory center?
        The National Environmental Respiratory Center (NERC) was
    established through the fiscal year 1998 EPA appropriation to improve
    our understanding of the relationship between complex mixtures of
    environmental (outdoor) air pollutants and human health. Continuation
    funding was provided in the fiscal year 1999 EPA appropriation. The
    Center is operated by the independent, non-profit Lovelace Respiratory
    Research Institute (LRRI) in Albuquerque, New Mexico, and its research
    is conducted in the government-owned, now privatized, Inhalation
    Toxicology Research Institute facility, which is leased by Lovelace.
    The Center's principal activity is the conduct of research aimed at
    understanding the contributions of the many individual pollution
    mixture constituents to the respiratory health effects of real-world,
    complex pollutant mixtures. The Center's work is leveraged by making
    its unique studies and associated research resources available to
    investigators in other organizations for collaborations. The Center
    also maintains an internet site containing information on the Centers
    activities, bibliographic databases, and other information pertaining
    to air pollution mixtures issues and the mixtures currently under
    study.
                        why was the center established?
        Environmental air pollution research and regulations have focused
    largely on single pollutants and sources, one at a time, in a
    ``revolving door'' manner. People do not breathe only one pollutant, or
    pollutants from only one source, at a time. Congress, researchers,
    regulators, industry, and the public are increasingly aware that the
    ``single pollutant'' approach has reached the point of diminishing
    returns. Paradoxically, as levels of regulated pollutants fall due to
    existing controls, the uncertainty EPA faces in estimating and
    controlling the remaining health effects of environmental air pollution
    is growing. As exemplified by the current quandary concerning
    particulate matter, it is becoming increasingly difficult to assign
    causality to single pollutants or pollutant classes independent of the
    effects of co-pollutants. The nation faces a difficult dilemma in
    judging whether or not health impacts are attributed to the correct air
    contaminants, or combinations of contaminants, and the appropriateness
    and cost-effectiveness of further reductions in specific man-made
    pollutant emissions. Until NERC was established, there was no
    substantive, coherent research program aimed specifically at developing
    a foundation of information that could serve as a basis for considering
    alternate approaches to understanding and managing the relationship
    between air quality and health. NERC was created to complement other
    efforts by meeting key unmet research needs critical to placing the
    contributions of individual air contaminants in their proper
    perspective.
        NERC is one of two current initiatives directly exploring the roles
    of the myriad pollutant species in the health effects of the mixtures
    which people actually breathe. The expansion of EPA's air monitoring
    program driven by concerns for fine particulate matter (PM2.5) includes
    establishing a limited number of ``super sites'' which will provide
    research-grade data on both particles and co-pollutants. This
    information will provide much more detail on the types and amounts of
    the various particles, vapors, and gases to which populations are
    exposed. The intent is that new population studies will be conducted in
    the vicinity of the super sites to take advantage of the more detailed
    air pollution data. Although this will provide important new
    information, it will still be difficult to assess (and impossible to
    control) the personal exposures of specific individuals. Also, the
    measurements that can be made in population studies can not provide the
    level of detailed information on health responses that can be obtained
    in laboratory studies. NERC provides key components of the
    complementary laboratory effort that are not provided by any other
    center or research program.
                            what does the center do?
        The operating strategy for NERC and the specific research being
    conducted were recommended by the Center's External Scientific Advisory
    Committee (ESAC). The members of this broad-based Committee have
    diverse backgrounds and views, and are both veterans and experts in the
    air pollution research, regulatory, compliance, and advocacy arenas.
    LRRI has vested a large measure of the responsibility for developing
    the Center's agenda in this Committee.
                     external scientific advisory committee
    Morton Lippmann, PhD, Chair, New York University
    Jonathan Samet, MD, MS, Johns Hopkins University
    Michael Bird, MSc, PhD, DABT, C.Chem, FRSC, Exxon Biomedical Sciences,
            Inc.
    John Vandenberg, PhD, U.S. Environmental Protection Agency
    Bill Bunn, MD, JD, MPH, Navistar
    Ron White, MST, American Lung Association
    Glen Cass, PhD, California Institute of Technology
    Ron Wyzga, MS, ScD, Electric Power Research Institute
    The center's research program
        The NERC research strategy is focused on conducting a multi-year
    series of integrated studies planned in advance with the aim of filling
    specific information gaps. This strategy differs from the common
    research center approach of providing core resources and conducting an
    annual internal competition for investigator-initiated studies. The
    more structured strategy recommended by the Center's External
    Scientific Advisory Committee allows the resources provided by multiple
    sponsors to be focused in a goal-directed manner to resolve key
    portions of the very complex issues surrounding the health effects of
    pollution mixtures.
        The initial multi-year set of studies will employ a consistent set
    of respiratory health assays to determine the effects of several
    complex, real-world, man-made air pollution mixtures. The exposure
    atmospheres were selected so that their similarities and differences
    can be used as tools to determine the roles of individual constituents,
    families of constituents, and combinations of constituents in driving
    the various health effects of the total mixture. As shown in the table
    below, the 11 mixtures will include diesel (old and new technology) and
    gasoline (on-road catalyst and off-road non-catalyst) engine exhaust,
    wood smoke (hardwood and softwood), cooking fumes (meat and vegetable),
    tobacco smoke, paved road dust, and coal-fired power plant emissions.
    These atmospheres will be analyzed in much greater detail than has been
    typical of toxicology studies, in order to relate health responses to
    their hundreds of individual constituents and dozens of classes of
    constituents.
        Laboratory health response assays comprising five general
    categories of respiratory effects will be evaluated for each
    atmosphere, including irritation/inflammation, allergic responses/
    asthma, respiratory defenses, lung and heart function, and cancer.
    Several different laboratory health models and assays will be used to
    encompass these effects which, in turn, encompass the key types of
    health responses attributed to environmental air pollution.

                                           INITIAL MULTI-YEAR RESEARCH MATRIX
    ----------------------------------------------------------------------------------------------------------------
                                                              Irritation    Allergies               Heart
                                                                  and           and     Defenses  and  Lung   Cancer
                                                             inflammation     asthma               Function
    ----------------------------------------------------------------------------------------------------------------
    Diesel exhaust (old, new).............................               +          +          +          +        +
    Gasoline exh. (catalyst, non-cat.)....................               +          +          +          +        +
    Paved road dust.......................................               +          +          +          +        +
    Wood smoke (hardwood, soft)...........................               +          +          +          +        +
    Tobacco smoke.........................................               +          +          +          +        +
    Cooking fumes (veg,, meat)............................               +          +          +          +        +
    Coal power plant (secondary)..........................               +          +          +          +        +
    ----------------------------------------------------------------------------------------------------------------

        The matrix of data on health response vs. atmosphere composition
    across the different pollution atmospheres will have considerable value
    of three general types. First, and most importantly, the data will
    allow taking advantage of the similarities and differences among the
    compositions of the atmospheres to determine the individual
    constituents, classes of constituents, and combinations of different
    constituents that bear the strongest association with the different
    health outcomes. This is the fundamental goal of the Center.
        Second, an integrated, contemporary set of health data will be
    generated for each atmosphere. For some of the atmospheres, no such
    data exist, and for others, no data using contemporary assays exist.
    Third, generating the data using identical study designs will provide
    direct, head-to-head inter-comparisons among the man-made pollutant
    atmospheres, which current data to not provide.
        This initial series of studies will provide a foundation of
    information on which studies of the causal roles of other air
    contaminants can be designed. There are innumerable atmospheric
    reaction products, pollens, molds, endotoxins, infectious agents and
    other natural and man-made environmental air contaminants whose
    potential effects, or interactions with other pollutants, need to be
    understood and placed in context. In addition, there are many possible
    adverse interactions between environmental air pollutants and other
    exposures in the workplace and home that may contribute to the health
    effects associated with outdoor air pollution. As results from the
    initial series of studies are obtained and evaluated, issues to the
    addressed by following research will be identified and prioritized.
    Other center functions
        An explicit goal of the Center is to leverage its resources to
    serve broadly as a research resource to university investigators.
    Collaborative participation in Center research is encouraged and
    facilitated. NERC resources are made available to other investigators
    for the conduct of complementary studies in a cost-effective manner on
    a non-interference basis. This way, many hypotheses can be tested in
    addition to those addressed directly by Center investigators. Special
    emphasis is placed on providing collaborative opportunities to EPA
    intramural scientists to complement the Agency's in-house capabilities
    and studies. It is expected that NERC will also provide many
    collaborative opportunities and information resources to the newly-
    established EPA academic particle research centers; indeed, NERC
    scientists were asked to participate in collaborative and advisory
    roles by three of the five successful center applicants.
        The development of an internet-based resource of information
    relevant to Center activities and air pollution mixtures issues is an
    important component of the Center's strategy. This resource is accessed
    via the Center's web site (www.nercenter.org), and consists of
    information on the goals and activities of the Center, opportunities
    for collaboration and other research resources, and bibliographic
    databases on the composition and health effects of the pollutant
    mixtures used in Center studies.
       what are the center's accomplishments to date and current status?
        Accomplishments during fiscal year 1998 included: (1) establishing
    the external advisory committee; (2) submitting an application to EPA;
    (3) internal and external review of the application by EPA and approval
    of the Center as proposed; (4) meeting with the committee and
    developing the Center's strategy; selection by the committee and
    initiation of five pilot projects necessary to finalize design of the
    core research protocols; (5) developing budgets for the first and
    second years; (6) submitting a detailed work plan to EPA; (7)
    contacting and briefing a wide range of non-EPA federal, state, and
    non-government potential sponsors; and (8) establishing the internet
    site and beginning work on the information database.
        With funding in the fiscal year 1999 EPA appropriation, work on
    five pilot studies is well underway. These projects are address issues
    of current concern and are thus valuable as individual studies, but
    they are also producing information on experimental techniques that
    will be useful for designing the protocols for the core Center research
    program. The studies are examining: (1) airway and lung irritation from
    wood smoke; (2) the role of fine particles in the development of
    asthma; (3) toxic interactions between ozone and fine particles; (4)
    the effects of particle-borne metals on the heart; and (5) the
    development of statistical approaches to estimating risks from multiple
    pollutants.
        The Center's internet site has already been developed into a
    considerable resource. Approximately 22,000 citations from the
    scientific literature, Federal Register, and technical reports have
    been entered into the information database. Several other research
    organizations have been briefed on collaborative opportunities.
        A major task to be completed by the end of CY 1999 will be planning
    the details of the experimental design for the core research. This is
    being done together with external experts. Workshops are being
    organized in which Lovelace scientists and external scientists and
    technical experts will discuss alternatives and resolve many of the
    details of the core research protocols, including the generation of
    atmospheres, analyses of the atmospheres, exposure concentrations,
    health assays, statistical design, etc.
                  what support is being sought for the center?
        The funds appropriated for fiscal year 1998 and 1999 are spent or
    committed for ongoing work. A preliminary multi-year budget has been
    developed for the work recommended by the External Scientific
    Committee, and the results indicate that approximately $24 million over
    a six-year period will be required to accomplish the Center's work plan
    for the initial matrix of studies and analysis of the results. Thus,
    the planned activity will require approximately twice the level of
    annual funding provided in the EPA appropriations for fiscal years
    1998-1999.
        A strong effort is underway to obtain non-EPA funds for the Center.
    Since the Center's long-term strategy was developed nine months ago,
    significant discussions (multiple telephone conversations, transmittal
    of written materials, scheduling of briefings) have been held with a
    continuously-expanding list of organizations. To date, 58 companies,
    trade associations, and state and federal agencies concerning their
    potential support of the Center.
        Although non-EPA financial support is beginning to develop, it is
    too early to estimate the level of non-federal funding that is likely
    to be raised. Recommendations have been made internally within numerous
    organizations in several industry sectors, and five organizations have
    already made contributions.
        Lovelace respectfully requests that a minimum of $2 million be
    designated for the NERC in the fiscal year 2000 EPA appropriation, to
    be used as core support for the Center's third year of operation. This
    funding is essential to ensure continuation of the Center and
    maintenance of its progress while complementary support other
    stakeholders is developed and EPA considers incorporation of the Center
    as an integral component of its air pollution research portfolio.
                                     ______

    Prepared Statement of the Center for Cognition, Learning, Emotion, and
                         Memory at New York University
        Thank you, Mr. Chairman. My name is Peter Lennie, and I am speaking
    on behalf of New York University as its Dean for Science. I appreciate
    the opportunity to submit testimony to the Subcommittee today to
    discuss a scientific research project which is not only an important
    priority for New York University, but which we believe will advance the
    national interest through enhanced scientific understanding of brain
    function and development.
        Our project addresses the programmatic priorities of this
    subcommittee in supporting fundamental, university-based scientific
    research and enlisting that research to serve the national welfare. We
    thank the Subcommittee for taking the time to consider and give its
    support to the important research being conducted in the brain
    sciences--an area of great strength at New York University. We are
    proud to report that New York University was previously approved for
    funding by the Environmental Protection Agency (1992), and that its
    performance in using the funds to strengthen the infrastructure for
    neural science was reviewed highly. EPA funds were used to renovate
    training and research facilities, modernize mechanical infrastructure
    systems, and purchase multi-use equipment, thereby accelerating
    scientific advances and new applications and preparing the next
    generation of scientists. We at NYU firmly believe that a federal
    investment in mind and brain studies repays itself many times over.
        In line with the Subcommittee's interests, New York University is
    undertaking to establish a Center for Cognition, Learning, Emotion and
    Memory (CLEM). This Center will draw on the University's strengths in
    the fields of neural science, biology, chemistry, psychology, computer
    science, and linguistics to push the frontiers of our understanding of
    how the brain develops, functions and malfunctions. In addition, as a
    major training institute, the Center will help prepare the next
    generation of interdisciplinary brain scientists.
        A major thrust of the work to be carried out in the Center is
    research on the learning process, including the underlying cognitive
    processes that affect attention, memory, information processing, skills
    acquisition, and retention, as well as their implications for
    strategies that can rationalize and optimize training, learning and
    performance. Of special interest to those studying learning and memory
    systems is neural ``plasticity,'' the change in the nervous system that
    occurs when we remember new things or learn new skills. Understanding
    neural plasticity is essential to understanding and improving the
    flexibility of human behavior. The fundamental biomedical and
    behavioral research in this area will advance basic science and have
    important practical implications in many sectors, including education,
    job training, and technology development.
        To establish this Center, New York University is seeking $10.5
    million over five years to support and expand the research programs of
    existing faculty, attract additional faculty and graduate and
    postgraduate trainees, and provide the technical resources and
    personnel support that will allow us to create a premier, world class
    scientific enterprise. Individual researchers in the science programs
    at NYU compete for investigational support through traditional routes,
    very successfully. However, these traditional funding sources do not
    address the specific need for establishment of a new cross-disciplinary
    area of scientific study, particularly one that transcends biomedicine,
    psychology, education, computer science, cognitive science, and
    linguistics. Nor do they provide the extensive funding necessary for
    faculty and student support and personnel and technical resources.
    Support from the Subcommittee on VA-HUD and Independent Agencies would
    enable us to meet these needs, and to build on the potential New York
    University has to develop a new understanding of the brain and new ways
    of using that knowledge for improving the national welfare.
                       research advances and applications
        Advances in Biomedical Research.--Research conducted in our Center
    will by its nature address neural disorders, including disorders of
    emotional systems and the loss of memory through aging or disease. At
    NYU, pioneering research into the neurobiology of fear is generating
    important information about the brain systems that malfunction in, for
    example, anxiety, phobias, panic attacks, and post-traumatic stress
    disorders. The brain's fear system is involved in many human emotional
    disorders, and malfunctions in emotional systems commonly characterize
    serious psychiatric disorders. Research into the neural mechanisms of
    fear will help us understand the source of emotions, how they are
    triggered by circumstance, why these emotional conditions are so hard
    to control, and how they can undermine our capacity to learn.
    Ultimately, our research will generate clues for prevention and
    treatment of emotional disorders, focusing perhaps on the ways in which
    unconscious neural circuitry can, in effect, be altered or inhibited.
        Job Training.--Research into the fundamental processes of cognition
    and learning, emotion and memory will help address the persisting
    challenge the nation faces in training veterans and other new recruits
    to the labor force and in retraining workers dislocated from downsized
    industries. Understanding how the brain functions and how we learn is
    crucial to vocational rehabilitation, a primary concern for veterans.
    The more we know about how people acquire, process, and retain
    information, the better training programs can be designed and targeted
    for specific skills and for workers with diverse backgrounds. For
    example, CLEM research can clarify how adult learners use different
    learning styles, how training personnel can accommodate those styles,
    and how educational technology and simulated learning environments can
    be harnessed to improve motivation and increase retention.
        Education.--Research into the learning process as it relates to
    attention and retention holds important implications for early
    childhood development. Understanding how, when and under what
    conditions learning proceeds can have practical applications for
    parents, caregivers and educators. In the midst of a national debate on
    education reform, thousands of educational innovations are being
    considered without the advantage of a fundamental understanding of the
    learning process. CLEM researchers, coupled with educational
    psychologists and their expertise in normal childhood development, can
    contribute substantially to national efforts to enhance early childhood
    education, and improve teaching and learning in elementary and
    secondary schools. At NYU, one locus for the development of these
    practical applications is the Center for Digital Multimedia (a New York
    State Center for Advanced Technology). The Center brings together
    teaching experts, laboratory scientists, and software designers to
    explore how interactive multimedia technologies enhance training,
    develop prototype teaching models, and facilitate computer-human
    communication through graphics, speech and vision.
        Technology.--The fundamental research being conducted at NYU in
    learning, intelligence, and information processing in biological
    systems can contribute significant new understanding of computer and
    communication technologies for the future. Research at the interface
    between computer science, vision science, and learning research builds
    on the recognition that vision impacts all areas of cognition, and that
    computer vision studies the processing of images and thus, in its own
    way, addresses cognitive issues. At NYU, vision psychologists and
    computer vision researchers are working together to investigate the
    neural bases of object and pattern recognition, depth perception, and
    motion perception, and their computer analogs in data imaging,
    processing, and retrieval.
        Environment.--Improved understanding of the structure, function,
    and development of the nervous system is the first link in the chain
    leading from scientific discovery to a better understanding of human
    health to effective regulatory and management actions in the realm of
    environmental protection. At NYU, research into neural development and
    function can help to explain how environmental factors alter or
    influence these processes.
                      feasibility: institutional strengths
        New York University is well positioned to create and operate a
    major multidisciplinary research and training center. There is
    commitment to the CLEM project at the highest level of the University
    administration, established frameworks for interdisciplinary
    collaboration, strengths in neurobiological, psychological and
    computational sciences, and international standing in the scientific
    community. The nation's largest private university, with 13 schools and
    over 49,000 students, NYU is a leading center of scholarship, teaching
    and research. It is one of 29 private institutions constituting the
    distinguished Association of American Universities, and is consistently
    among the top U.S. universities in funds received from foundations and
    federal sources.
        As the core of a decade-long multi-million dollar science
    development plan, NYU created a premier neuroscience and cognitive
    psychology program that encompasses a pre-eminent faculty and generates
    substantial external funding from federal and state agencies as well as
    the private sector. These investigations have attracted millions of
    federal dollars from the NIH, the NSF and the EPA. In addition, NYU has
    received major funding from the most prestigious private foundations
    supporting the sciences. This includes the Howard Hughes Medical
    Institute (HHMI)--the foundation most active in support of the life
    sciences. (NYU is now home to no fewer than six HHMI Investigators,
    with corresponding funding from the Institute.) The HHMI also has
    awarded NYU two major grants, each exceeding $1 million, from its
    Undergraduate Biological Science Initiative Program, as well as a major
    facility improvement grant. The W. M. Keck Foundation also awarded two
    grants, each exceeding $1 million, for facility and program development
    in the neural and cognitive sciences; one grant funded the renovation
    of a major new laboratory in emotional memory studies. The Alfred M.
    Sloan Foundation similarly awarded two major grants totaling $2 million
    to found the Sloan Center for Theoretical Visual Neuroscience--one of
    five institutions chosen to implement the Foundation's national
    initiative in theoretical neurobiology. Neural science faculty have, as
    individuals, won prestigious awards, including HHMI Investigator, NSF
    Presidential Faculty Fellow, NIH Merit Awardee, McKnight Foundation
    Scholar in Neuroscience, and MacArthur ``Genius'' Fellow.
        Neural science at NYU is particularly well known for its
    fundamental studies of neural systems, particularly vision (including
    studies of visual processing pathways, perception, and information
    processing) and audition (including studies of auditory regions of the
    nervous system). These various studies of mind and brain employ a full
    range of techniques; they coordinate anatomical, neurophysiological,
    biochemical, and behavioral experiments; and they are conducted in
    various model systems up through humans, and computer modeling and
    simulations.
        With these strengths, NYU is particularly well placed to create a
    distinctive center that will capitalize on expertise in physiology,
    neuroanatomy, and behavioral studies and build on active studies that
    range from the molecular foundations of development and learning to the
    mental coding and representations of memory.
        While other academic institutions are also studying the brain, NYU
    has special strengths in important emerging research directions. NYU is
    at the frontier of studies in the neuroanatomy and physiology of
    emotion, a new area of exploration that complements studies of how
    thoughts, and memories emerge from brain processes. Work recently
    conducted at NYU and elsewhere has established the biological basis of
    emotions and the patterns by which they are expressed within the neural
    circuits of the brain and by the actions of the body. The new studies
    have found that there are multiple systems in the brain, each having
    evolved for different functional purposes, and each producing different
    emotions. Work being conducted at NYU also suggests that the neural
    circuits supporting the expression of emotions are highly conserved
    through evolution. They persist, unconsciously, in our daily behavior,
    and shape our reactions to events well before we rationally and
    consciously process the event. Scientists at NYU are using behavioral
    testing, physiological recording of neural activity, and
    neuroanatomical tract tracing to ask, what are the neuroanatomical
    pathways for the formation of emotions and emotional memories? How do
    we learn and remember emotions? These studies have crucial applications
    for personnel training, job performance and mental health, and address
    such questions as: How can emotions, such as fear, facilitate or
    undermine learning and performance? Do emotionally stressful situations
    affect our ability to remember facts, retrieve information, perceive
    events and objects? How can we better diagnose and treat emotional
    disorders?
        In a second area, NYU is internationally know for its vision
    studies. At NYU, these follow an integrated systems approach that has
    been shown to be highly successful in unraveling this complex system.
    The interest in vision, a key input to learning, is associated with
    focused studies of the learning process, particularly, the interaction
    with memory and behavior. NYU vision scientists are studying form,
    color and depth perception; visual identification; the varieties of
    visual memory; and the relationship of vision and perception to
    decision and action. Studies ask: How does vision develop? How does the
    brain encode and analyze visual scenes? What are the neural mechanisms
    that lead to the visual perception of objects and patterns? How do we
    perceive spaces, depth, and color? How does the brain move from vision
    and perception to planning and action?
        NYU's special strengths also lie in the infrastructure it has
    established to promote multidisciplinary brain research that
    incorporates experimental, theoretical, and computational components.
    As an example, the Sloan Center for Theoretical Visual Neuroscience
    fosters joint research that harnesses the tremendous recent advances in
    computational speed, size and memory to effectively revolutionize the
    power of quantitative analysis to address fundamental problems in
    neurobiological systems. The Center houses faculty with joint
    appointments in neural science (Arts and Science) and mathematics
    (Courant Institute of Mathematical Sciences), supports neural science
    trainees with backgrounds in the physical and mathematical sciences,
    and fosters a range of multidisciplinary projects which include:
    analysis of neural and network dynamics of the visual cortex; the
    nonlinear dynamics of the thalamus and other neural structures;
    analysis of the visual perception of occluding objects; brain imaging
    and adult brain plasticity.
        CLEM will bring the University's many strengths in these areas more
    fully to bear on the challenges and opportunities that
    multidisciplinary studies present. The Center will provide an
    organizational identity, core resources, and common focus for the
    university's efforts. For students, it will provide an educational
    forum to apply knowledge gained in one discipline to problems in other
    disciplines. For researchers, the Center's synergistic linkages between
    basic science departments, mathematical and computational units, and
    biomedical departments will encourage intellectual cross fertilization
    and will permit the consolidation of individual efforts in
    multidisciplinary but conceptually coordinated efforts. For colleagues
    in the fields of technology, education, and medicine, the Center will
    facilitate connections with life scientists and enhance the translation
    of research knowledge into commercial and educational applications and
    health care.
        CLEM will be an interdisciplinary unit linking faculty, students,
    programs and resources from several schools of New York University.
    These are the Faculty of Arts and Science, the Courant Institute,
    School of Education, and School of Medicine, including its Skirball
    Institute of Biomolecular Medicine and the associated Kline Institute
    Center for Advanced Brain Imaging. To be housed at the University's
    Washington Square campus within the Faculty of Arts and Science, CLEM
    will coordinate laboratory research and training in fundamental
    neurobiological, psychological, and computational studies of the
    nervous system. The enhanced research and training that will be
    possible will attract public and private funding above and beyond the
    substantial funds, honors and recognition already awarded to the
    University's researchers, and will support the center's continued
    growth and development.
        Mr. Chairman, I thank you for the opportunity to submit this
    testimony.
                                     ______

    Prepared Statement of the Integrated Petroleum Environmental Consortium
                                     (IPEC)
        It is proposed that the U.S. Environmental Protection Agency
    continue to support a focused, university-based program, the Integrated
    Petroleum Environmental Consortium (IPEC), with the goal of increasing
    the competitiveness of the domestic petroleum industry through a
    reduction in the cost of compliance with U.S. environmental
    regulations. Continued Federal support of $2 million is specifically
    requested as part of the fiscal year 2000 appropriation for the
    Environmental Protection Agency through the Science and Technology
    account or other source the Subcommittee may determine to be
    appropriate.
        Mr. Chairman, on behalf of the Integrated Petroleum Environmental
    Consortium (IPEC), I would like to take this opportunity to thank you
    for providing $1.5 million in funding for IPEC in the fiscal year 1998
    and fiscal year 1999 appropriations bills for the Environmental
    Protection Agency (EPA). Under your leadership both houses of Congress
    and the final appropriations bills included initial funding for this
    Consortium. Specifically this funding was provided for the development
    of cost-effective environmental technology and technology transfer for
    the domestic petroleum industry. With initial funding under the Science
    and Technology account of EPA, IPEC is implementing a comprehensive
    mechanism (Center) to advance the consortium's research expertise in
    environmental technology. IPEC's operating practices and linkages to
    the independent sector are ensuring that real problems in the domestic
    petroleum industry are addressed with real, workable solutions. The
    consortium includes the University of Tulsa, the University of
    Oklahoma, Oklahoma State University, and the University of Arkansas.
        We are pleased to report that, as envisioned and proposed by the
    Consortium, State-level matching funds have been obtained to support
    IPEC, creating a true Federal-State partnership in this critical area.
    In fiscal year 1998 and fiscal year 1999, IPEC received $375,000 in
    matching funds from the Oklahoma State Reagents for Higher Education. A
    similar amount has been pledged by the Reagents as matching funds for a
    fiscal year 2000 appropriation.
        Since December, 1997 IPEC has worked closely with the EPA to meet
    all internal requirements for funding of research centers. These
    efforts have resulted in an excellent working relationship with the
    Environmental Engineering Division of the EPA National Center for
    Environmental Research and Quality Assurance with IPEC's grant from EPA
    (fiscal year 1998 appropriation) finalized September 2, 1998.
        IPEC proceeded with its proposal solicitation and review process
    while final arrangements were made with the EPA. As a result we were
    ready to fund projects as soon as the grant was made. I am happy to
    report that IPEC has thus far funded eight research projects that
    promise to help ease the regulatory burden on the domestic petroleum
    industry. These funded projects include: the use of plants to clean
    contaminated soils; the natural biodegradation of gasoline by
    microorganisms in the absence of oxygen; the beneficial use of
    petroleum wastes as road materials; the control of the formation of
    toxic hydrogen sulfide in oil wells; the development of simple sampling
    devices to replace expensive live organisms to assess toxicity in
    contaminated soils; the treatment and disposal of naturally occurring
    radioactive material (NORM) in oil production equipment; and the
    remediation of brine-impacted soils. These projects were first reviewed
    and approved by our industrial advisory board (dominated by independent
    producers) as relevant to our mission of increasing the competitiveness
    of the domestic petroleum industry and finally reviewed and approved by
    our science advisory committee on the basis of scientific quality.
        IPEC has provided $761,685 in funding for these projects. However,
    another $631,480 in funding for these projects have been secured by the
    investigators as matching funds from industry and industry
    organizations such as the Gas Research Institute, the American
    Petroleum Institute and the Petroleum Environmental Research Forum.
    This is over and above the matching funds provided by the Oklahoma
    State Reagents for Higher Education. IPEC has pledged to Congress to
    work for a 1:1 match of federal dollars. As you can see IPEC is living
    up to that promise! IPEC is well on its way to becoming a true public/
    private partnership.
            the continuing crisis in the domestic petroleum industry
        The crisis in the domestic petroleum industry that we described in
    testimony in the last session of Congress has only gotten worse as the
    price of crude oil continues to fall. The independent producers are
    producing from mature fields left behind by the majors. Although there
    is a significant resource base in these fields, this is the most
    difficult and the most costly oil to produce. The independent producer
    has only one source of revenue--the sale of oil and gas. There is no
    vertical depth to his business. With the price of oil this low the
    independent producer is extremely vulnerable to the costs of
    environmental compliance. This latest drop in oil prices will no doubt
    result in another wave of business closures, plugged and abandoned
    wells, and reduced new-well completions. The problem is so acute that
    the Governor of Oklahoma formed an emergency task force to determine
    what the state can do to help Oklahoma producers survive the current
    decline in prices. Based on recommendations from this task force the
    Oklahoma legislature passed new legislation in a special session to
    link the gross production tax to the price of oil. However, legislators
    and independent producers alike know that this measure only delays the
    inevitable if the price of oil remains depressed at current levels. A
    similar price crash in the 1980s triggered a prolonged statewide
    recession. Clearly this trend is not in the best interest of the U.S.
    in terms of energy self-sufficiency or national security. We are
    turning over control of our cost of production, in terms of energy
    costs, to foreign interests. If domestic exploration and production and
    refining are to continue to play a strategic role in meeting U.S.
    energy needs, the domestic petroleum producer will continue to require
    access to cost-effective technology for pollution prevention, waste
    treatment and remediation in exploration and production (E&P) and
    refining.
                   ipec's response to critical research needs
        IPEC is well on its way to fulfilling its pledge to you of
    responsiveness to the needs of domestic petroleum industry and fiscal
    responsibility. IPEC is continually probing our industrial advisory
    board for new ways to assist the industry and continually seeking out
    cost-effective technical solutions to these problems through an
    aggressive solicitation and review process. With the current price of
    oil these solutions are all the more critical.
        IPEC will continue to work with the domestic petroleum industry to
    provide solutions to those environmental problems that represent the
    greatest challenge to the competitiveness of the industry. Specifically
    in fiscal year 2000 IPEC will continue to work with our Industrial
    Advisory Board to address the remaining critical research needs they
    have identified as well as address new needs that develop. These
    research needs include the following:
        (1) Bioremediation and other remediation technologies.--reducing
    toxicity of hydrocarbon-contaminated soils; development of rapid, on-
    site remediation technologies; control of salt migration in the
    subsurface; developing methodologies for phytoremediation.
        (2) Risk Assessment.--development of cost-effective ecological risk
    assessment methods for petroleum impacted sites; development of cost-
    effective and relevant terrestrial (animal/plant) bioassays for use in
    ecological risk/impact assessment; development of field methods for
    ecological risk assessment; development of methods to evaluate actual
    and future environmental risk of petroleum impacted soils; determining
    the correlation between ecological risk assessment and human health
    risk assessment; determining the impact of intrinsic bioremediation on
    risk-based closures; development of risk-based guidelines for handling,
    disposal and storage of NORM-contaminated solids, pipe, and equipment.
        (3) Measurement Technology.--development of cost-effective methods
    (direct and indirect) for measuring the amount and extent of petroleum
    hydrocarbon sources in unsaturated and saturated soils; development of
    useful and easy to implement field and analytical methods and protocols
    for demonstrating intrinsic bioremediation; validating current models
    for predicting flash emissions of hydrocarbons in E&P operations.
        (4) Process Technologies.--control or treatment of flash gas
    emissions from stock tanks; use, treatment or disposal of oil tank
    bottoms; development of cost-effective methods for capture, recycling/
    destruction of volatile organic compound emissions from hydrocarbon
    processing and storage tanks; development of improved water treatment
    methods--particularly those methods; development of methods to for
    treatment of hydrogen sulfide in the reservoir.
        (5) Management and Decision Tools.--development of methods to
    predict plume migration of salt water from pits; development of methods
    to calculate the full life cycle cost of material and waste handling in
    the petroleum industry; development of proper pit closure methods using
    a clay or compacted soil cap; development of improved methods for
    disposal of drilling wastes; development of methods to distinguish
    between historical oil field pollution and recent, current and/or
    ongoing pollution.
        In addition to working with our Industrial Advisory Board, IPEC
    will continue in fiscal year 2000 to build linkages with organizations
    that provide services to the domestic petroleum industry. IPEC is
    working with the leadership of these organizations to develop a synergy
    between their efforts and those of IPEC. These organizations form the
    IPEC Affiliates Group and include the National Petroleum Technology
    Office (NPTO) of the U.S. Department of Energy, the Interstate Oil and
    Gas Compact Commission (IOGCC), the Petroleum Environmental Research
    Forum (PERF) the Oklahoma Energy Resources Board (OERB), the Oklahoma
    Independent Petroleum Association (OIPA), the Gas Research Institute
    (GRI), the Office of the Oklahoma Secretary of Energy, the Osage Agency
    of the Bureau of Indian Affairs and the Oil Producers of Arkansas
    (OPA). Recently, Governor Frank Keating of Oklahoma named the IPEC
    Director to the Environmental and Safety Committee of the IOGCC.
        Since 1994 IPEC has organized and conducted the International
    Petroleum Environmental Conference. Dr. Kerry Sublette, Director of
    IPEC, has served as chair of these conferences. This conference is
    quickly becoming the premier conference of its kind in the U.S. and
    represents the flagship of technology transfer for IPEC. The annual
    International Petroleum Environmental conference serves as IPEC's
    technology transfer flagship. In October, 1998 IPEC held the 5th
    International Petroleum Environmental Conference in Albuquerque, NM.
    There were over 350 in attendance from all facets of the oil and gas
    industry including independent and major producers, service industry
    representatives, and state and federal regulators. The program for the
    5th conference featured several plenary lectures, over 150 technical
    presentations, exhibits, a poster session and a special symposium on
    the fate of oxygenates from gasoline in the environment. Co-sponsors of
    the conference included the Interstate Oil and Gas Compact Commission,
    the Railroad Commission of Texas, the Texas Independent Producers and
    Royalty Owners Association, the Gas Research Institute, the Oklahoma
    Independent Petroleum Association, the Oklahoma Energy Resources Board,
    the EPA Office of Research & Development, and the National Petroleum
    Technology Office of the U.S. Dept. of Energy. At the request of the
    IPEC Industrial Advisory Board, IPEC sponsored the participation of ten
    state regulators from Oklahoma and Arkansas in the conference. The IPEC
    Science Advisory Committee also held its first formal meeting in
    conjunction with the conference. The next conference is planned for
    November, 1999 in Houston, TX.
                                funding of ipec
        IPEC is seeking appropriations of $2 million for fiscal year 2000
    and the succeeding fiscal years 2001 and 2002 through the Environmental
    Protection Agency. The consortium will be responsible for at least a 50
    percent match of federal appropriations with private sector and state
    support over a five-year period. The Consortium will be subject to
    annual review to ensure the effective production of data, regulatory
    assessments, and technology development meeting the stated goals of the
    Consortium.
                                     ______

          Prepared Statement of the Rochester Institute of Technology
        Mr. Chairman, and members of the Subcommittee, on behalf of the
    Rochester Institute of Technology, in Rochester, New York, thank you
    for this opportunity to share with you some information about RIT's
    National Center for Remanufacturing and Resource Recovery. This Center,
    which is located in our Center for Integrated Manufacturing Studies, is
    doing important research and technology transfer in a field that is of
    critical interest to our national economy from the standpoint of
    environmental protection, energy conservation and global
    competitiveness. I would like to provide the Subcommittee with some
    background on the technology of remanufacturing, and explain why we
    believe it will be of interest to you, and in particular to the
    Environmental Protection Agency, which is within this Subcommittee's
    jurisdiction.
        As you know, millions of consumer and industrial products are
    produced and disposed of every year, comprising a large part of the
    over 160 million tons of municipal solid waste Americans generate per
    year. Many of these products end up in overburdened landfills.
    Recycling offers an opportunity to recover the raw material contained
    in these discarded goods. But, even if goods are recycled, the energy,
    labor, scrap material, and money put into making the component parts
    are lost. There exists another, better alternative for many products--
    Remanufacturing. Remanufacturing is the process of restoring retired or
    dysfunctional durable goods to a ``like new'' condition. By restoring
    end-of-life durable products for reuse, remanufacturing prevents waste
    generation and the pollution, energy and raw material consumption that
    would be required to make a new product from scratch. For example,
    sixty percent of the energy required to manufacture a new automotive
    part can be saved by remanufacturing an old one, and in the process,
    greenhouse gas emissions are significantly reduced.
        Remanufacturing makes good sense for the nation's economy too.
    Purchasing a remanufactured product can cost consumers 50 to 70 percent
    less than a new product. Companies benefit from avoiding hefty solid
    waste disposal costs. As a labor-intensive industry, remanufacturing
    also provides opportunities for employment and training. A survey of
    remanufacturing companies found that there are over 73,000 independent
    remanufacturing companies in the U.S. These companies employ nearly
    500,000 people and have annual sales of over $53 billion per year. Many
    remanufacturing firms hire unskilled workers or workers with
    disabilities, providing these individuals with job experience and
    skills.
        Remanufacturing is a powerful example of how the goals of
    environmental protection and economic growth can go hand-in-hand.
    Remanufacturing is the process of recovering the component parts of
    end-of-life products, restoring them to a ``like-new'' condition, and
    returning those parts or products to service. Remanufactured products
    may be completely refurbished and returned to service as the same type
    of product, broken into components and utilized as after-market items,
    or dismantled into components and sold as parts in new and different
    applications.
        Remanufacturing is pollution prevention and resource conservation
    in action. It is well known that preventing--rather than controlling--
    pollution is a cost-effective way to eliminate or minimize risks to
    humans and the environment. By restoring end-of-life durable products
    for reuse, remanufacturing prevents pollution and energy consumption
    from raw material extraction and manufacturing processes that would be
    required to make a new product from scratch.
        Studies have shown that remanufactured engines require 50 percent
    of the energy and only 67 percent of the labor necessary to produce new
    engines. These savings for the manufacturer translate to savings for
    the consumer--rebuilt equipment is on average 40-60 percent less
    expensive than new equipment. Thus, consumers can have superior quality
    products at a low price and be ``green'' at the same time. More
    importantly, remanufacturing shows that the ability to produce a
    product at a substantial profit and the ability to produce
    environmentally sound products are not mutually exclusive.
        New product manufacturing creates 87 percent of the waste produced
    in the U.S. Because remanufacturing recovers the value added during the
    initial manufacture of a product, it vastly reduces the energy
    consumption and waste associated with the manufacturing process. For
    example, the original manufacture of a product may require 6 times as
    much energy as the remanufacture of the same product. The recovery of
    natural resources is equally impressive. Remanufactured products
    usually consist of 80-90 percent used components which means that
    between eight to nine pounds of old material is recovered for every
    pound of new material employed in the remanufacturing process. In a
    specific illustration, remanufactured automobile starters annually save
    about 8 million gallons of crude oil, 52,000 tons of iron ore, and
    6,000 tons of copper. Energy saved annually by remanufacturing
    worldwide equals the electricity generated by 5 nuclear power plants or
    10.7 million barrels of oil.
        On the consumer side, Kodak's single-use camera remanufacturing
    initiative salvaged parts and materials from 100 million single-use
    cameras as of May 1996, resulting in the diversion of 14 million pounds
    of waste from entering the waste stream. Of the total new cameras
    shipped in any given month,77 percent are now returned for
    remanufacturing and Kodak is able to reuse about 85 percent of the
    parts.
        Climate change and solid waste prevention are two environmental
    issues with an important underlying link. When products are reused,
    less energy is needed to extract, transport, and process raw materials.
    Using end-of-life products to make new products generally requires less
    energy than manufacturing from virgin materials. Consuming less energy
    leads to less greenhouse gas emissions being released into the
    atmosphere. By reducing the quantity of products that are thrown away,
    there is a reduction in greenhouse gas emissions associated with
    material decomposition in landfills and in incineration.
        The U.S. Environmental Protection Agency has been encouraging waste
    reduction as one of many ways to mitigate global climate change.
    Expanding the agency's activities in this area by supporting research
    and development in remanufacturing would add significantly to the
    impact of the agencies' efforts.
        Pollution prevention has become the guiding principle of EPA's
    efforts to protect the environment. The passage of the Pollution
    Prevention Act established the new policy ``that pollution should be
    prevented or reduced at the source whenever possible.'' Past
    environmental protection policies emphasized the treatment of waste
    products rather than improving the manufacturing processes that
    produced them. The cost of complying with federally mandated pollution-
    control and clean-up programs has grown from $26 billion in the 1970's
    to $115 billion in 1990's. Despite the fact that more and more of our
    GNP is expended on environmental remediation, our landfills are filling
    rapidly and solid waste management is becoming a central concern of
    state and local governments.
        Efforts to regulate the amount of solid waste associated with
    manufacturing are quickly becoming a reality for businesses seeking to
    do business in Europe. The European Community has adopted legislation
    dictating that no more than 15 percent of a scrap automobile may go to
    a landfill by the year 2002. This ratio is to drop to 5 percent by the
    year 2015. They will also soon require that manufacturers and
    distributors of consumer electronics products take back and recycle or
    dispose of used electronic equipment. Canada has expressed interest in
    similar legislation and in 1991 MITI, Japan's international trade
    ministry, issued regulations promoting the use of recycled materials
    and the recycling of durable goods themselves. Currently recycling
    techniques are only capable of reducing disposable waste to about 25
    percent and, will be unable to meet the new stricter international
    standards. American industry will have to comply with these regulations
    if it wishes to sell products in these markets. Remanufacturing is more
    energy efficient than recycling and offers American industry a
    potential competitive advantage in serving these markets.
        Notwithstanding all of its advantages, there are some obstacles to
    remanufacturing. Traditionally manufacturers have only taken into
    account the stages of product life cycle dealing with product design,
    manufacture, and service. Now that the retirement phase of a product
    has become a major area of interest in protecting the environment and
    increasing economic growth, the life-cycle has been expanded to include
    processes such as reuse, remanufacture and material recycle. Most
    products have been designed with disposal rather than remanufacturing
    as the end of the product life-cycle. Where design specifications are
    not available, these products must be ``reverse engineered''. These
    products are more difficult to remanufacture than those which were
    designed and produced with remanufacture in mind.
        On one level remanufacturing is not a new phenomenon. Remanufacture
    of automotive parts has been around for more than 60 years and more
    recently the copier and printer industry has offered the consumer the
    environmentally sound alternative of purchasing Remanufactured toner
    cartridges. Today, without accounting for the activities of original
    equipment manufacturers (OEMS) and the Department of Defense, there are
    more than 73,000 remanufacturing establishments in the U.S. with annual
    gross sales in excess of $53 billion. Despite the importance of this
    sector of the economy, it has gained little recognition. One reason for
    this invisibility is the diversity of its product sectors. The second
    reason is that nearly all of the firms are small to medium-sized
    independent companies. Only a few of the major OEMs have
    remanufacturing divisions. Eastman Kodak and Xerox are notable in the
    photographic and xerographic fields, Caterpillar, Detroit Diesel, and
    Cummins in diesel engines, and Copeland in refrigeration compressors.
        With the exception of the Department of Defense and the original
    equipment manufacturers noted previously, the majority of small or
    medium size remanufacturers do not have, nor can they afford to
    support, an internal engineering and applied research capability. Much
    research, education, and support for industry will be required to make
    designing new products for remanufacture a standard practice in
    industry.
        Remanufacturing is in many cases the most economically and
    environmentally sound method of dealing with end-of-life products. The
    remanufacture of goods promotes the avoidance of waste and prevents
    needless use of energy. Remanufacture prevents the loss of non-
    renewable resources due to disposal and avoids the use of further non-
    renewable resources to replace discarded products. Remanufacturing can
    help to bring this society one step closer to a sustainable, closed-
    loop relationship between industry and the environment.
    Funding Request for Fiscal Year 2000
        For these reasons, RIT is proposing that the EPA provide support
    for the National Center for Remanufacturing and Resource Recovery. The
    EPA funding support, which will complement and leverage financial
    support from the State of New York and industry, will allow the
    National Center to develop and implement a host of remanufacturing
    research programs geared toward helping U.S. manufacturers both large
    and small learn how to make environmentally conscious products. The
    National Center will help EPA take the nation's efforts to recycle to a
    new and higher level--Remanufacturing.
        The National Center's programs will help EPA's Science and
    Technology programs address one of the most pressing areas--
    environmental pollution at the source--by working directly with U.S.
    manufacturers on using remanufacturing techniques and processes to make
    needed environmental strides in manufacturing. EPA's Science and
    Technology program mission is to promote long-term basic and short-term
    applied research in a wide range of environmental and health concerns
    and to provide the scientific knowledge and technologies to prevent
    pollution. RIT's National Center for Remanufacturing will help EPA
    accomplish its short-term applied research mission and have a dramatic
    effect over time in reducing the pollution caused by U.S. manufacturers
    and their products.
        The Rochester Institute of Technology is requesting EPA support of
    $3,000,000 in fiscal year 2000 for support of activities of the
    National Center for Remanufacturing & Resource Recovery. These funds
    would be used in the manner described in Attachment ``A.'' Part of the
    funding would be used for one-time costs to purchase major equipment
    items in support of the research plan. It is anticipated that the
    ongoing program costs of the Center will be approximately $3,000,000
    per year. RIT will seek $3,000,000 per year for 4 additional years for
    environmental remanufacturing program costs from the federal
    government. Attachment ``B'' is an outline of the goals of the National
    Center for Remanufacturing and Resource Recovery.
        RIT believes that by funding the National Center for
    Remanufacturing and Resource Recovery (NCRRR), EPA will further its
    mission. The National Center for Remanufacturing and Resource Recovery
    (NCRRR) is nationally recognized as having leading expertise in a
    variety of technical aspects of remanufacturing. This environmental
    remanufacturing research program is needed to raise the visibility of
    this emerging area of manufacturing and provide a place for industry,
    academia and government agencies such as EPA to come together to
    research and apply current and new Remanufacturing processes to real
    manufacturing situations.
        The center is housed in a completed 157,000 square foot
    manufacturing laboratory--the Center for Integrated Manufacturing
    Studies--which is the perfect home for a national remanufacturing
    effort. This one of a kind facility, with its five large flexible
    research bays, is expressly designed to have the capability to provide
    industry and academic researchers with the ability to conduct full-
    scale testing of remanufacturing processes using state-of-the-art
    equipment.
        The center is part of a technological university--RIT--which has a
    long and distinguished history of service to large, medium and small
    manufacturers through applied manufacturing research. In addition to
    this strong capabilities in Industrial, Manufacturing, and Mechanical
    Engineering, Packaging Science, Economics and Business, RIT has, in
    recent years, brought to bear on manufacturing problems, pragmatic
    solutions to meeting the technological and workforce needs in
    industries related to microelectronics engineering, imaging
    technologies and software engineering. RIT's Center for Integrated
    Manufacturing Studies (CIMS) brings to the National Center for
    Remanufacturing support labs in: simulation, reverse engineering,
    design for manufacturing and assembly, computer aided design and
    manufacturing, and ergonomics. CIMS also has state-of-the-art
    capabilities in technology transfer and distance learning.
        NCRRR has established itself as a leading R&D center for the
    remanufacturing industry. The university created a Remanufacturing
    Database System for the nation, which will serve as a base for sharing
    findings with industry nationally and assisting individual companies in
    keeping abreast of advances in remanufacturing, government programs and
    regulations. RIT has also set up an Internet site for remanufacturing
    research.
        By supporting the critical R&D needs of this economically and
    environmentally important industry, the EPA will enhance the industry's
    competitive posture; quality of goods; energy, natural resource, and
    environmental profile; save and, perhaps, create jobs in what has been
    a declining U.S. manufacturing sector.
        Mr. Chairman, we have developed a multi-phase research program for
    the work that the National Center for Remanufacturing and Resource
    Recovery would like to initiate with the Environmental Protection
    Agency. Appendix A provides a summary description of this program, and
    the timeline and funding that would be needed to implement this plan.
    Our request for fiscal year 1999-2000 is $3,000,000 to begin the first
    phase of this research program.
        Thank you again, Mr. Chairman, for the opportunity to provide this
    testimony to the Subcommittee. If you or your colleagues have any
    questions about this project, please feel free to call and we will
    respond promptly to your requests.
     Attachment A.--National Center for Remanufacturing & Resource Recovery
                       research plan, timeline and budget
        The National Center for Remanufacturing and Resource Recovery
    (NCRRR) is focused on leading the remanufacturing industry into the
    21st Century. The five-year goal of the center is to become a self-
    sustaining national resource for applied research that will provide
    technical solutions to real-life problems for remanufacturers.
    Phase I Development and dissemination of life-cycle and design for
            remanufacturing tools to promote sustainable remanufacturing
        Currently, there is not a good method for transferring knowledge
    obtained through the remanufacturing process back to the product
    designers so that new products are designed for remanufacturability.
    There is also limited availability of design tools for the evaluation
    of the life cycle costs of remanufacturing.
        In this phase of the project, NCRRR will develop guidelines,
    metrics, and tools to promote design for remanufacturing and
    incorporation of life-cycle considerations into remanufacturing.
    Specifically, activities will include development and dissemination of:
    Product assessment methods and tools; Life cycle costing methods and
    tools; Economic recovery analysis techniques; Technology assessment
    techniques; and Disassembly and teardown analysis methods and tools.
    Phase II Remanufacturing Technology Advancement
        In a recent vision document crafted by the remanufacturing industry
    (``Remanufacturing Industry, Vision for 2020''), strong emphasis was
    placed on the need for targeted research and development to enable the
    remanufacturing industry to keep up with rapid technology changes and
    demands for quality products. NCRRR proposes to develop and conduct a
    focused R&D program to meet the technological needs of the industry.
        Research areas will include: design for remanufacturing; reverse
    logistics; structural and material analysis; intelligent testing and
    diagnostics; reverse engineering; design capture; life cycle costing;
    failure mode analysis; and cleaning technologies. The goal of this
    research is to develop and disseminate tools and techniques that will
    lead to improved design and manufacturing processes.
        Signature analysis, a technique for intelligent testing and
    diagnostics, was singled out in the vision document as a critical area
    in need of development. NCRRR has an established program in this area
    and will utilize funding under this grant to expand its activities to
    create and transfer practical industry-specific tools for predicting
    the useful life of electrical and electronic components.
    Phase III Assessment of Pollution Prevention Opportunities in the
            Remanufacturing Industry
        Over a year ago, NCRRR established a Clean Technology Team to
    develop and promote remanufacturing technologies and methods that use
    little or no hazardous material, generate little or no waste, and are
    safe for workers, the public and the environment. To date, the team has
    been very active in providing direct assistance, technology
    demonstrations, and R&D in environmentally preferable surface cleaning
    technologies. With funds under this grant, the team will expand its
    activities in the following areas: Reduced specification of hazardous
    materials in product and process design; Paint stripping; Processes to
    restore the physical attributes of components; Painting or other
    surface refinishing operations; Packaging; and Disposition of wastes.
        In this phase NCRRR will identify pollution prevention
    opportunities in these areas for the remanufacturing industry. In
    particular, NCRRR will focus its work on identifying operations in the
    industry that tend to utilize persistent, bioaccumlative, and toxic
    chemicals (PBT chemicals) and opportunities for substituting non-
    hazardous processes. These opportunities will be documented in a
    handbook for remanufacturers and will form the basis of subsequent work
    under this grant.
    Phase IV Direct Assistance to Remanufacturers
        In this phase, NCRRR will develop a program of direct assistance to
    remanufacturers aimed at implementing pollution prevention techniques
    and, in particular, reducing the use of PBT chemicals. Direct
    assistance will take several forms, including: site visits to
    remanufacturers to conduct pollution prevention assessments, with a
    focus on PBT use; development of recommendations on alternatives to
    PBTs; assistance with implementation of alternative technologies and
    methods; and assessments in NCRRR's Surface Cleaning Testing and
    Demonstration Facility to assist companies in finding alternatives to
    PBTs used in surface cleaning.
    Phase V Technology Transfer
        NCRRR will develop and carry out a technology transfer program
    aimed at disseminating information to remanufacturers on state-of-the-
    art clean manufacturing techniques, equipment, and chemistries that can
    be used as alternatives to those processes using PBT chemicals.
    Emphasis will be placed on those technologies that are both effective
    and are environmentally conscious, i.e., non-toxic, non-hazardous and
    resource-conserving.
        Information will be disseminated in a number of ways, including:
    Developing and disseminating reports, case studies, fact sheets, and
    other printed informational materials; Providing up-to-date information
    on PBT alternatives on NCRRR's internet web-site; Conducting hands-on
    technology demonstration workshops; and Referring companies exploring
    new, non-PBT environmentally conscious cleaning technologies to
    companies already employing them.
        NCRRR would conduct this work in close collaboration with key
    industry trade associations representing the remanufacturing industry,
    including the Remanufacturing Industries Council International (RICI);
    Automotive Parts Rebuilders Association (APRA); and the Engine
    Rebuilders Association (AERA).
        At the conclusion of this project, NCRRR will have a database and a
    set of information products that it can use to continue its work on
    pollution prevention/PBT-use reduction. In addition, this information
    would be made available to other organizations, such as industry trade
    associations, state and federal agencies, and pollution prevention
    technical assistance organizations.
    [GRAPHIC] [TIFF OMITTED] TNOND.000

                                     ______

        Prepared Statement of the Northwest Indian Fisheries Commission
        Mr. Chairman, and Honorable Members of the Committee, I am Billy
    Frank, Jr., Chairman of the Northwest Indian Fisheries Commission
    (NWIFC) and on behalf of the tribes in Washington State I would like to
    thank you for the opportunity to offer written testimony concerning the
    Environmental Protection Agency's (EPA) fiscal year 2000
    appropriations.
        We are specifically requesting that programmatic funding levels to
    the Northwest tribes be included in EPA's budget under Section
    104(b)(3) of the Clean Water Act. The purpose of our request is to
    continue implementation of the model Coordinated Tribal Water Quality
    Program for twenty-six participating tribes and tribal organizations in
    Washington State for fiscal year 2000. Strong congressional support for
    the implementation of this tribal initiative began in 1990 and is
    present today.
        However, we are losing ground in the implementation of these
    efforts. Erosion of base level funding is jeopardizing the federal
    government's long-term investment of this efficient and effective
    tribal water quality protection program. Support for this model tribal
    initiative is timely in as much as it implements the goals and
    objectives of the President's Clean Water Action Plan. It is an
    existing program that centers around watershed-based water quality
    protection by building partnerships and fostering inter-jurisdictional
    cooperation. All are critical components to protecting and restoring
    our Northwest salmon.
        We respectfully request Congress to either:
        (1) Appropriate $3.10 million into the EPA's funding base
        Under Section 104(b)(3) of the Clean Water Act, Section 319 of the
    Clean Water Act, or within EPA's Assessment and Watershed Program,
    appropriate $3.10 million into EPA's funding base for twenty-six (26)
    participating tribes and tribal organizations in Washington State to
    fully implement the model cooperative tribal water resource program for
    environmental protection; or,
        (2) Direct the Agency to utilize $3.10 million in existing agency
    funding
        From existing Section 104(b)(3) of the Clean Water Act, Section 319
    of the Clean Water Act, or EPA's Assessment and Watershed Program
    funds, provide $3.10 million for twenty-six (26) tribes and tribal
    organizations in Washington State to continue implementation of the
    model cooperative tribal water resource program for environmental
    protection.
        Justification for this funding request is based on:
        1. legal rights and obligations for the federal government to
    protect the treaty-reserved rights of the tribes,
        2. the United State's trust responsibility to protect the health
    and environment of the tribes on a government-to-government basis;
        3. cost effectiveness by utilizing a cooperative intergovernmental
    strategy to accomplish National clean water goals; and,
        4. minimize conflict between multiple jurisdictions who manage
    water quality.
        To assist the Committee members, I would like to summarize
    background relevant to our request.
                                   background
        The NWIFC request is on behalf of our nineteen (19) member treaty
    fishing tribes and the Hoh, Chehalis and Shoalwater Bay Tribes in
    western Washington, and the Yakama Indian Nation, Colville
    Confederated, Spokane, and Kalispel Tribes in eastern Washington. This
    request is to continue implementing the model Coordinated Tribal Water
    Quality Program that began in 1990.
        Washington State has been blessed with bountiful rivers and
    streams. Five species of Pacific salmon and three species of anadromous
    trout utilize Washington State's streams during the fresh water stages
    of their life cycles. Historically, there were ample supplies of fish
    for ceremonial, subsistence, commercial and recreation purposes. Old
    growth conifer removal, riparian zone impacts, farming activities, and
    channelization of the streams has reduced the productive capacity of
    these streams to extremely low levels. Currently, there are Puget Sound
    salmon stocks listed under the Endangered Species Act.
        In 1979, the United States Supreme Court re-affirmed the treaty
    tribes' right to harvest half of the harvestable number of anadromous
    fish passing through tribal usual and accustomed areas. In 1980, the
    Federal District Court held that the United States and the State of
    Washington must not permit degradation of fish habitat which would
    diminish the treaty harvest right, including point and non-point
    pollution sources. The Federal courts have recognized that protection
    of water quality and other attributes of fish habitat are necessary to
    secure the Constitutionally protected rights of the tribes to harvest
    fish.
        The sovereign authorities of the Tribes and the legal principles
    enunciated in United States v. Washington along with other Federal
    court decisions support the basis upon which the tribes are involved
    with on and off-reservation environmental issues. As a result of
    Federal court decisions, the State of Washington has recognized the
    tribes as ``co-managers'' of the fish resource and water quality in our
    state. As co-managers in Washington, the tribes must have the resources
    to adequately participate in environmental protection programs.
        The Environmental Protection Agency's (EPA) Indian policy (1984) of
    working with Federally recognized tribes on a government-to-government
    basis concerns more than 375 Indian tribes in the lower 48 states
    controlling over 52 million acres of land base. In our state, tribal
    reservations make up approximately six percent (6 percent) of the State
    of Washington. Our tribes also have retained treaty rights not ceded to
    the United States. These usual and accustomed fishing grounds include
    most of the State of Washington. The combined area of Indian
    reservations nationally is larger than all of New England, yet EPA now
    devotes only a tiny fraction of its personnel and funds to
    environmental protection for the tribes.
        This is clearly a discriminatory prioritization of Federal funds.
    On a national level, tribal reservations represent three percent (3
    percent) of the land base of this nation. Although the EPA has worked
    closely with the states to implement adequate environmental programs,
    until recently, little had been done to accomplish the same for the
    tribal governments. Indian tribes are over two decades behind the
    states both in resources received from the EPA and in technical
    assistance provided by the EPA in developing tribal water program
    offices. A ``front end'' investment will promote cooperation and
    increased tribal involvement in environmental protection as has been
    the case between the EPA and state governments for the past 20 years.
    The Coordinated Tribal Water Quality Program is already enabling
    cooperative inter-jurisdictional partnerships.
        We recognize, support and appreciate the successful efforts that
    have been made to improve EPA Indian Programs and tribal funding. Our
    request for Section 104(b)(3) funding is intended to stabilize existing
    program implementation activities. Another possibility may be within
    Section 319 of the Clean Water Act. However because of the legislated
    formula, the doubling of Section 319 monies proposed nationally for
    water quality protection efforts in fiscal year 2000, translates into
    only $600,000 (one-third of 1 percent restriction) for tribal programs.
    This means 535 tribal governments must compete for a very small pool of
    tribal nonpoint source pollution management program funds. Clearly, a
    means must be found to support the long-term funding of tribal programs
    that seek to protect tribal treaty rights such as ours, or the efforts
    being made by EPA will not be successful.
                               tribal/state roles
        Beginning in 1990, the State of Washington has supported tribal
    involvement in environmental protection both off and on-reservation.
    The state is committed to work with the tribes on a government-to-
    government basis as ``co-managers'' of the water resource in the
    implementation of this program. The Federally recognized Indian tribes
    in Washington have developed a process with state, local government
    officials, and representatives of agriculture, industry, and
    environmental communities to address water resource issues on a
    government-to-government basis. The results of these discussions have
    outlined a cooperative process between the tribes, state agencies and
    programs, and local units of governments in areas of environmental
    protection. This process was highlighted as a case study example to
    countries around the world at the 1992 United Nations Conference on
    Environment and Economic Development in South America.
        The Coordinated Tribal Water Quality Program, an EPA/Tribal
    partnership, has generated successful models of state/tribal inter-
    jurisdictional cooperation. Examples of these models are: the Tribal
    Water Quality Standards Template encouraging inter-governmental
    uniformity and coordination of water quality management; and, the
    Cooperative Management of the Clean Water Act Sec. 303(d) Program,
    enabling state/tribal government-to-government process throughout the
    CWA Sec. 303(d) listing and implementation processes.
        The tribes must be part of the solutions to prevent and control
    water pollution in Washington State. The tribes must participate in
    these activities to protect their governmental interests and treaty
    fishing rights. In this time of existing and pending listings of salmon
    stocks under the Endangered Species Act, neither we, nor the resources,
    can afford to lose programs integral to our inter-governmental
    cooperative watershed program. The Coordinated Tribal Water Quality
    Program is part of protecting our nation's environmental heritage.
                                   conclusion
        For seven years, Congress has recognized and supported the
    Coordinated Tribal Water Quality Program by appropriating funding to
    maintain its operations. Last year, Congress recognized the program
    without specifying monies. Our understanding of this change in
    Congressional action was due to the increased General Assistance
    Program/Indian Set aside and the expectation that the Coordinated
    Tribal Water Quality Program would be maintained with a portion of
    those monies. This has not occurred. The General Assistance Program
    monies are designated for capacity building--the Coordinated Tribal
    Water Quality Program is an existing and successful tribal initiative
    requiring stabilized implementation funding. This model program
    demonstrates how tribes can participate in environmental programs
    working with EPA to realize its long-range objective of including
    tribal governments as partners in decision-making and program
    management of tribal lands and resources.
        We appreciate the difficulty Congress is facing in making decisions
    for this next fiscal year. In the case of the EPA, Congress and the
    Administration will probably direct EPA resources to address those
    areas of highest risk to human health and the environment. Therefore,
    we want to reiterate that tribal reservations and protection of their
    treaty resources have not been adequately addressed for the past twenty
    (20) years and this, also, represents the highest of risks to this
    nation. To do otherwise would represent environmental genocide to
    Native Americans.
        Sufficient and permanent funding is necessary to continue the
    tribal cooperative program. Certainty of funding is necessary for the
    tribes to hire permanent and professional staff to implement this
    program. Without an ongoing investment by Congress much of the good
    that has been accomplished to date will be lost.
        Please consider our request for $3.10 million for the Washington
    State Coordinated Tribal Water Quality Program. Once again, thank you
    for the opportunity to provide written testimony. Thank you also for
    your assistance in helping to develop a national model program of how
    tribal governments can address environmental protection in a
    cooperative watershed approach with state and local governments.
        Thanks to this committee, we are making significant progress. This
    initiative is being supported at all levels of our governments. We hope
    you and the Committee will continue to look favorably on our request.
                                     ______

         Prepared Statement of the National Grain and Feed Association
        Mr. Chairman, members of the Subcommittee, the National Grain and
    Feed Association (NGFA) appreciates the opportunity to present its
    views on a very important issue to U.S. agriculture. Specifically, the
    U.S. Environmental Protection Agency (EPA) has proposed new safety
    measures for aluminum and magnesium phosphide that threaten the
    competitive position and economic vitality of many U.S. producers,
    grain handlers, exporters, millers and processors. This is a critical
    issue because aluminum and magnesium phosphides are the last remaining
    cost-effective fumigants available to U.S. agriculture. As such, these
    products play a vital role in U.S. agriculture's ability to provide a
    high quality, nutritious and affordable food and feed supply to
    domestic and foreign customers.
        While this EPA proposal remains subject to revisions, the industry
    is alarmed by the total impracticality and extensiveness of the
    proposed regulations, which we believe have no scientific
    justification. We will work through the rulemaking process with EPA.
    However, we have been having dialogue with EPA since the fall of 1998--
    well before the Agency announced its formal proposals on aluminum and
    magnesium phosphide--and, thus far, EPA has not budged from its
    original unjustified position. It is for this reason that our industry
    has grave concerns about EPA's intentions and direction in the
    regulation of these highly important fumigants, and seeks with this
    testimony to raise concerns with members of Congress.
        The NGFA consists of 1,000 grain, feed and processing companies
    that operate 5,000 facilities that store, handle, merchandise, mill,
    process and export more than two-thirds of all U.S. grains and
    oilseeds. About 70 percent of NGFA member firms are small businesses--
    country elevators and feed mills. Also affiliated with the NGFA are 36
    state and regional grain and feed associations.
                                   background
        Aluminum and magnesium phosphides are used for indoor fumigation of
    raw agricultural commodities, animal feeds, and processed food
    commodities to control insects, and outdoor fumigation of burrows to
    control rodent and moles. Aluminum and magnesium phosphides react with
    atmospheric moisture to produce phosphine gas.
        Once an infestation begins, fumigation is the only viable and cost-
    effective treatment of large amounts of stored agricultural products.
    Fumigation is particularly important in many Southern areas and during
    periods of warm weather because warmer temperatures favor increased
    insect activity. These fumigants are also used to meet domestic milling
    and regulatory requirements for insect control. Furthermore, aluminum
    and magnesium phosphides are often required to meet contract
    specifications of foreign customers.
        Thus, loss of aluminum and magnesium phosphide could jeopardize the
    production and maintenance of high quality agricultural products in
    some regions and during storage in warmer times of the year.
    Furthermore, loss of aluminum and magnesium phosphide could undermine a
    large percentage of U.S. exports of agricultural products, including
    wheat, corn and many processed products.
        Importantly, methyl bromide, the only other remaining agricultural
    fumigant now in commercial use, is scheduled for cancellation in a few
    years under provisions of the Clean Air Act. Other types of
    insecticides, although useful in a total pest control program, are not
    effective substitutes for fumigants. In addition, many insecticides are
    being reviewed under provisions of the Food Quality Protection Act. If
    use of these chemicals is restricted or canceled, the importance of
    aluminum and magnesium phosphides will intensify.
                             overview of epa's rmms
        On December 23, 1999, the EPA proposed a series of new safety
    measures called Risk Mitigation Measures (RMMs)--which must be used
    when fumigating products with aluminum and magnesium phosphide--as part
    of the re-registration of these fumigants. Specifically, the 1988
    amendments to the Federal Insecticide, Fungicide and Rodenticide Act
    (FIFRA) required EPA to accelerate re-registration of all products with
    active ingredients registered prior to November 1, 1984. Aluminum
    phosphide was first registered in the United States in 1958. Magnesium
    phosphide was first registered in the United States in 1976.
        During the re-registration process, EPA concluded that aluminum and
    magnesium phosphide do not present any food safety or ecological
    concerns. On the other hand, EPA found that there might be health
    concerns from acute exposure to aluminum and magnesium phosphide.
        The NGFA has carefully evaluated EPA's proposed RMMs to determine
    what, if any, changes are warranted in current label safety
    requirements. To assist in this evaluation, a survey of NGFA members
    was conducted to obtain information on their utilization of aluminum
    and magnesium phosphide and the potential impact of EPA's proposed
    RMMs. Based upon this analysis, we believe that the overall impact of
    EPA's proposed RMMs would be to effectively preclude the future use of
    the last remaining fumigants available to protect the quality of U.S.
    agricultural commodities, processed products and finished products
    during storage and transit. Specifically, the NGFA believes that EPA's
    RMMs are unworkable, too restrictive and will not provide any
    meaningful safety or health benefits. We are particularly concerned
    with the following proposed RMMs:
    Lower the Maximum Exposure Limit to 0.03 ppm
        The EPA proposes to lower the maximum exposure limit to 0.03 ppm.
    This level is significantly more protective than the permissible
    exposure limit set by the Occupational Safety and Health Administration
    (OSHA) and the current limits approved by EPA for aluminum and
    magnesium phosphide.
        We believe EPA's proposed 0.03 ppm exposure limit is overly
    restrictive and will not provide any meaningful health or safety
    benefits. EPA's proposed 0.03-ppm limit could significantly increase
    costs and the burden placed on applicators when fumigating with
    aluminum and magnesium phosphide. For example, lowering the exposure
    standard to 0.03 ppm will dramatically increase the chances that the
    exposure limit will be violated during routine fumigation operations
    and significantly increase the time needed to properly aerate a
    fumigated commodity.
        In addition, questions remain over the ability of current
    technology to accurately measure or consistently verify that phosphine
    gas concentrations are at or below the proposed 0.03-ppm exposure
    limit. Without access to reliable and cost-effective measuring
    technology, fumigation with aluminum and magnesium phosphide would
    become more difficult and aeration could be unnecessarily prolonged.
    Prohibit fumigation within 500 feet of a residential area. Require
            notification of residents and businesses within 750 feet of a
            fumigated structure
        The EPA is proposing to prohibit fumigation with aluminum and
    magnesium phosphide within 500 feet of a residential area. The Agency
    is also proposing to require notification of residents and businesses
    with 750 feet of a fumigated structure so that they ``can make
    decisions regarding temporarily leaving their property during
    fumigation.''
        We do not believe either proposal is based upon sound science. EPA
    has not shown that fumigation with aluminum and magnesium phosphide
    following current label directions will expose the public to harmful
    levels of phosphine gas. Furthermore, the 500-foot ban could eliminate
    fumigation in nearly 70 percent of current storage structures and
    fumigation of rail cars, barges, and ocean-going vessels. In addition,
    the 750-foot notification proposal could unnecessarily generate undue
    public alarm with the safe application of aluminum and magnesium
    phosphide.
        EPA points to a series of phosphine poisoning incidents to justify
    their public health concerns when fumigating with aluminum and
    magnesium phosphide. However, an analysis of these incidents reveals
    that most alleged poisoning incidents resulted from failure to follow
    current label directions or illegal use of these chemicals. Even the
    Agency admits that evidence of an alleged death from exposure to
    phosphine is weak and unlikely to support a definite or even probable
    cause-and-effect relationship.
        The NGFA supports RMMs that adequately protect the safety and
    health of applicators, nearby workers and the public. In this regard,
    the safety record of aluminum and magnesium phosphide has been
    excellent with current label directions providing an appropriate level
    of safety. We also believe that RMMs must be based upon clear and
    convincing evidence of risk. RMMs should avoid raising undue public
    alarm over unsubstantiated or negligible risks and limit the use of
    anecdotal information in which the cause-and-effect relationship is not
    well established. Misuse should be addressed through label warnings.
    Provide 24-hour pre-notification of local emergency responders
        The EPA proposes that applicators notify local emergency responders
    at least 24 hours in advance of fumigation. Under current label
    directions, those applying aluminum and magnesium phosphide already
    annually provide comprehensive safety and health information on these
    fumigants to local officials. We believe that current requirements are
    adequate because aluminum and magnesium phosphide's excellent safety
    record when following label directions make it highly unlikely that
    local emergency responders will be required to respond to a poisoning
    incident. The 24-hour pre-notification would also be infeasible when
    loading rail cars.
    Require additional monitoring and leak testing of fumigated structures
        The EPA would require monitoring throughout fumigated structures,
    vessels and vehicles prior to unloading or disturbing fumigated
    products and leak testing of fumigated areas. We believe EPA's
    monitoring proposal is virtually impossible to achieve in most grain
    storage structures and vessels. We also believe EPA's leak testing
    procedures are unrealistic and not needed. Both situations are
    adequately addressed in current label directions.
                                   conclusion
        The NGFA supports re-registration of aluminum and magnesium
    phosphide with general re-affirmation of current label directions. We
    believe that EPA's concerns would be better served by focusing on
    training and education of applicators and effective enforcement of
    current label directions.
        We also believe that RMMs for aluminum and magnesium phosphide must
    be based upon sound science and reliable information; be clearly
    demonstrated as necessary to protect human health; be economically and
    operationally reasonable, and permit the continued routine use of these
    cost-effective and safe fumigants.
        Thank you for allowing us to present our views on this important
    issue to U.S. agriculture. We will be contacting you in a few weeks to
    determine how we may work together to ensure that EPAs' final RMMs for
    aluminum and magnesium phosphide are reasonable, necessary and
    appropriate to the actual risks posed by these fumigants when following
    current label directions.
                                     ______

     Prepared Statement of the State and Territorial Air Pollution Program
       Administrators and the Association of Local Air Pollution Control
                                   Officials
        The State and Territorial Air Pollution Program Administrators
    (STAPPA) and the Association of Local Air Pollution Control Officials
    (ALAPCO) appreciate this opportunity to provide testimony regarding the
    fiscal year 2000 proposed budget for the U.S. Environmental Protection
    Agency, particularly regarding grants to state and local air pollution
    control agencies under Sections 103 and 105 of the Clean Air Act. The
    President's request for fiscal year 2000 includes an increase of $3.2
    million for state and local air grants, under both Sections 103 and
    105, for a total of approximately $198.7 million. While STAPPA and
    ALAPCO are pleased that the President's budget acknowledges the need
    for additional funds, we believe this proposed budget leaves state and
    local air agencies with serious funding gaps that will make it
    difficult for us to continue to fulfill our responsibilities under the
    Clean Air Act. Accordingly, STAPPA and ALAPCO request an increase of
    $30 million above the President's request for fiscal year 2000, which
    we will discuss in greater detail below.
        STAPPA and ALAPCO are the national associations of state and local
    air pollution control agencies in the 54 states and territories and
    over 150 major metropolitan areas across the nation. Under the Clean
    Air Act, state and local air quality officials have the primary
    responsibility for ensuring healthful air quality for our citizens.
    These agencies must carry out numerous activities to implement federal,
    state and local clean air requirements. These include programs to
    address particulate matter, ground-level ozone, toxic air pollution,
    acid rain and other types of air pollutants, many of which cause
    significant adverse health effects, including cancer, severe
    respiratory ailments and premature death. Air agencies must address new
    initiatives that focus on emerging problems, as well as carry out the
    core elements of our programs, which serve as the backbone of our
    nation's clean air effort.
                 state and local air grants should be increased
        The President's budget request for fiscal year 2000 calls for an
    increase of $3.2 million in grants for state and local air pollution
    control agencies, bringing the total amount requested to $198.7
    million. While we are grateful for the proposed additional funds and,
    perhaps even more so, for the recognition implicit in the increase that
    state and local air grants ought to be augmented, we believe the
    proposal is not nearly adequate to address our nation's environmental
    needs.
        State and local air pollution control agencies face a serious
    shortfall in federal grants. This deficit is due to the fact that
    federal funding under Section 105 of the Clean Air Act has declined by
    over $36 million since fiscal year 1995, while our responsibilities and
    the cost of state and local programs under the Clean Air Act have
    increased dramatically. These responsibilities include both new
    initiatives to address emerging issues, as well as ongoing activities
    to preserve the gains and improvements in air quality that we have
    already made.
        As we reported to you last year, in the spring of 1997, the U.S.
    Environmental Protection Agency (EPA) and members of STAPPA and ALAPCO
    undertook a four-month, intensive study to identify and estimate the
    costs related to activities that should be funded with state and local
    air grants under Section 105 of the Clean Air Act. The calculations of
    additional need addressed both the deficiencies in existing programs
    and the support needed for new initiatives. The EPA/STAPPA/ALAPCO
    analysis determined that to operate a good, but not perfect, program, a
    total increase of $98 million in federal grants to state and local air
    agencies under Section 105 of the Clean Air Act would be necessary
    (this amount did not address grants for the fine particulate matter
    monitoring effort under Section 103).
        Among the many activities the study identified as being in need of
    additional funds were compliance assistance programs, especially for
    small businesses; development, replacement and/or upgrading of monitors
    (apart from fine particulate matter monitoring); collection of emission
    and pollutant data, especially related to emissions of toxic air
    pollutants; minor source inspections and permits; training;
    implementation of ozone strategies; implementation of strategies to
    address toxic air emissions in urban areas; and multi-state approaches
    to regional air quality problems. Last year we provided you and your
    staff with more detailed data about this study. We would be happy to
    provide you with this information again, if you wish.
        In spite of the fact that EPA participated in this study and
    recognized the need for additional funding, to date the agency has not
    requested the grant increases that this study indicates are necessary.
        State and local air agencies would very much appreciate receiving
    the entire $98 million increase in fiscal year 2000. However, we
    recognize that this is unlikely, especially in view of the very
    difficult task facing Congress in distributing finite resources to many
    worthy programs. We believe, therefore, that it is reasonable for the
    increase to be phased in over a three-year period. Since the
    President's proposed budget calls for a $3 million increase, we request
    that you appropriate an additional $30 million above the
    Administration's request, increasing the total amount for state and
    local air grants to $228.7 million in fiscal year 2000. The balance of
    the increase--$66 million--could then be added in fiscal year 2001 and
    fiscal year 2002.
                           clean air partnership fund
        The President's budget request includes $200 million for the Clean
    Air Partnership Fund, which will provide grants to form partnerships
    among the private sector, the federal government and state or local
    agencies for a variety of activities that will improve air quality. The
    fund is intended to promote multi-pollutant strategies, demonstration
    projects, innovative initiatives, technological advances and locally
    managed and self-supporting activities, among other things, that will
    integrate control strategies to reduce multiple pollutants most
    efficiently. The Clean Air Partnership is designed to leverage state,
    local and private funds, which will enhance its ability to accomplish
    its goal of improving air quality.
        STAPPA and ALAPCO are pleased that the Administration's request
    includes these additional funds for the Clean Air Partnership. The
    proposal will provide state and local agencies with excellent
    opportunities to develop multi-pollutant control strategies aimed at
    reducing air pollution in a cost-effective manner. We believe that the
    harmonization of various clean air goals, such as the reduction of
    greenhouse gases through criteria pollutant control programs, for
    example, is critical and we applaud EPA for promoting such activities.
    We plan to work closely with EPA as it develops this program more
    fully.
        In light of our support for the Clean Air Partnership, we urge
    Congress to include in its appropriation to EPA the $200 million that
    the President requested for the program. These funds should be in
    addition to those federal grants (discussed earlier) that assist state
    and local air pollution control agencies in fulfilling their
    responsibilities. While the partnership is a laudable new program,
    there are still many other critical activities that we can carry out
    only through federal grants provided under Section 105 and other
    authorities of the Clean Air Act. The partnership program is not
    intended to be a substitute for those ongoing grant programs, nor does
    it address the enormous budget shortfall we discussed earlier in this
    testimony.
                                  epa's budget
        In order for state and local agencies to successfully obtain and
    maintain healthful air quality for our citizens, we need adequate
    federal funding. In addition to that, however, it is also critical that
    EPA's own budget be sufficient to allow the agency to meet all of its
    responsibilities. Without the tools, programs and rules the agency is
    charged with developing, state and local agencies will be unable to
    implement important federal air quality requirements. Therefore, we
    request that you provide EPA with sufficient funding to meet its
    obligations, even increasing funding above the President's budget
    request, where necessary.
        For example, EPA for several years has been inappropriately
    earmarking state and local air grants for activities that the agency
    should be carrying out with its own budget. One such activity is
    training. Funding training activities is clearly a federal
    responsibility, yet EPA has been using state and local grant funds for
    these purposes for many years. Another example is the Emission
    Inventory Improvement Program, which will develop essential tools for
    collecting and reporting emissions data. EPA has used Section 105
    grants, rather than its own budget, to fund this program. While these
    programs are critical, EPA should be supporting them with its own
    budget, rather than shifting the financial burden to state and local
    agencies. If EPA's own budget were increased in these areas, the agency
    would not feel compelled to commandeer state and local funds for these
    programs.
        Another example of the inadequacy of the President's request is the
    reduction of $1 million within EPA's own budget from air toxics rule
    development projects. These funds are being diverted to support
    characterization of the air toxics problem. While we agree it is
    critical to have a better understanding of toxic air pollution, this
    activity should not come at the expense of toxics rule development. We
    maintain that both these activities warrant adequate funding. In fact,
    underfunding rule development will actually cause funds to be wasted.
    If EPA does not meet the deadline for development of Maximum Achievable
    Control Technology standards, which is very possible, particularly if
    the agency does not have sufficient funding, state and local agencies
    will be required to develop the rules themselves on a case-by-case
    basis (pursuant to Section 112[j] of the Clean Air Act). Such a
    scenario would be inefficient and overly burdensome and costly for
    state and local agencies. Therefore, providing EPA with adequate funds
    will save resources in the long run.
        In other similar examples, EPA's budget calls for a reduction of
    $10 million for characterizing the composition of PM2.5
    particles using chemical speciation studies, a reduction of $1.3
    million from emissions characterization for mobile sources modeling,
    and $8.9 million from visibility-related programs, including regional
    approaches to haze. We are concerned that these large reductions will
    not allow the agency to develop all the necessary programs and tools
    that state and local agencies require to fulfill their responsibilities
    and hope that EPA's budget can be made adequate to allow the agency to
    do its best work.
                                   conclusion
        Although we are pleased that the President's request calls for an
    additional $3 million for state and local air grants, we believe the
    increase should be much higher. Specifically, we request an increase of
    $30 million above the President's request for fiscal year 2000, raising
    the total for state and local air agency grants to $228.7 million.
        We support the Clean Air Partnership Fund and urge Congress to
    include funding for this program in the fiscal year 2000 appropriation.
    We do not believe this program is a substitute for state and local
    operational air grants under the Clean Air Act, however, and the
    adoption of the partnership should not adversely affect appropriations
    for our current activities.
        Finally, if state and local air agencies are to succeed in
    protecting air quality, we believe EPA must be adequately funded so it
    can fulfill its responsibilities.
        Thank you very much for this opportunity to provide you with our
    testimony. Please contact us if you have questions or require any
    additional information.
                                     ______

           Prepared Statement of the American Water Works Association
                                  introduction
        AWWA appreciates the opportunity to present its view on the
    Environmental Protection Agency (EPA) budget for fiscal year 2000. AWWA
    and its members are dedicated to providing safe, reliable drinking
    water to the American people.
        Founded in 1881, AWWA is the world's largest and oldest scientific
    and educational association representing drinking water supply
    professionals. The association's 56,000 plus members are comprised of
    administrators, utility operators, professional engineers, contractors,
    manufacturers, scientists, professors and health professionals. The
    association's membership includes over 3,800 utilities which provides
    over 80 percent of the nation's drinking water.
        AWWA utility members are regulated under the Safe Drinking Water
    Act (SDWA) and other statutes. AWWA believes few environmental
    activities are more important to the health of this country than
    assuring the protection of water supply sources, and the treatment,
    distribution and consumption of a safe and healthful adequate supply of
    drinking water. We strongly support adequate levels of funding for
    EPA's drinking water, ground water protection and clean water pollution
    prevention programs.
                                request overview
        Adequate funding for drinking water research and for capitalization
    of the Drinking Water State Revolving Fund (DWSRF) are the two major
    areas of concern to AWWA in the EPA fiscal year 2000 budget request.
    AWWA believes that the fiscal year 2000 EPA budget request for
    capitalizing the drinking water state revolving fund and for drinking
    water research may not be adequate to meet the needs of the drinking
    water program. It should be noted that these programs, particularly
    drinking water health effects research, involve areas where relatively
    small funding increases offer significantly great public health,
    environmental and economic benefits to the nation's population. In the
    fiscal year 2000 EPA budget, AWWA recommends that the following funding
    be specifically appropriated for the indicated purpose:
      --For the drinking water state revolving fund: $1,000,000,000 (as
            authorized in the SDWA).
      --For drinking water research: $41,400,000 (as requested in the
            President's fiscal year 2000 Budget). Specifically designate
            funding for drinking water research and health effects research
            in the appropriation.
      --For the AWWA Research Foundation (AWWARF) drinking water research:
            $4,000,000 including $1,000,000 for arsenic in drinking water
            research.
      --For research on treatment technologies relating to perchlorate, to
            be conducted through the East Valley Water District,
            California: $2,000,000.
      --For public water system supervision (PWSS) grants to states:
            $100,000,000 (as authorized in the SDWA).
      --For the EPA drinking water program as indicated below:
        --Drinking Water Regulatory Development: $43.9 million (as
                requested in The President's fiscal year 2000 Budget).
        --Drinking Water Implementation Initiatives: $31.8 million (as
                requested in The President's fiscal year 2000 Budget).
        --Drinking Water Consumer Awareness: $1.5 million (as requested in
                The President's fiscal year 2000 Budget).
      --For the EPA Clean Water Action Plan: Appropriate the additional
            $25.8 million in support of this plan as requested in The
            President's fiscal year 2000 Budget.
                  drinking water state revolving fund (dwsrf)
        AWWA believes that the fiscal year 2000 EPA budget request for
    capitalizing the newly authorized DWSRF may not be adequate to meet the
    nation's drinking water needs. The SDWA Amendments of 1996 authorized
    for the DWSRF $599,000,000 for fiscal year 1994 and $1,000,000,000 for
    fiscal years 1995 through 2003. The SDWA further authorizes that
    authorized funds not appropriated in a fiscal year may be appropriated
    in subsequent fiscal years until fiscal year 2004. Through fiscal year
    1999, Congress has appropriated approximately $2.4 billion--a shortfall
    of $3.2 billion from funds authorized for the DWSRF.
        According to the EPA Drinking Water Infrastructure Needs Survey
    released on January 31, 1997, $12.1 billion is needed in the immediate
    future to protect drinking water supplies. Of this amount, $10.2
    billion, or 84 percent, is needed to protect water from microbial
    contaminants which can produce immediate illness or death. Over the
    next 20 years EPA reports that $138.4 billion will be needed to upgrade
    the infrastructure of the nation's water utilities and we believe that
    the figure in the next needs survey will be much greater.
        AWWA appreciates that the Administration's DWSRF budget request is
    $50 million above the fiscal year 1999 appropriation and that both
    Congress and EPA have been incrementally increasing the appropriation
    each year; however, given the enormous need and that funding for the
    DWSRF is already behind a continued strong commitment to appropriate
    the authorized funding level is necessary. We urge Congress to
    appropriate at least the $1 billion authorized for the DWSRF in fiscal
    year 2000.
        Although it represents only a fraction of the need, the amount
    recommended by AWWA for the DWSRF will be a start and provide a source
    of much needed loans for financial disadvantaged communities which
    cannot obtain financing through other means. The federal funds will
    leverage state resources by ultimately becoming a revolving fund that
    would no longer require federal funding. The DWSRF would partially fund
    the unfunded mandates of the SDWA.
        Recommended Action in the Fiscal Year 2000 Budget.--Appropriate at
    least $1,000,000,000 for capitalization grants for the drinking water
    state revolving fund as authorized in the SDWA.
                        drinking water research funding
        AWWA does not believe that the fiscal year 2000 EPA budget request
    for drinking water research is clear and it may not be adequate to meet
    the needs of the drinking water program. The EPA budget request is
    displayed by goals rather than program elements so it is difficult to
    determine how the program elements will be funded. The budget display
    shows an apparent overall decrease in research spending by the EPA
    Office of Research and Development. In testimony before the Senate
    Environment and Public Works Committee in March 1999, EPA testified
    that there was no funding gap for drinking water research for fiscal
    year 2000. Yet the research for regulations which are scheduled to be
    promulgated within the next few years does not appear to be completed
    and little or no research has been initiated on the contaminants for
    the next scheduled group of contaminants on the contaminate candidate
    list (CCL) which could mean that research will not be completed in time
    to affect the decisions on those regulations. We are prepared to work
    closely with EPA and other stakeholders to resolve any future research
    resourcing gaps beginning with the fiscal year 2001 budget process but
    this year's budget cycle process has past.
        Over the past several years, public water suppliers have worked
    together with EPA and the Congress to secure increased research funding
    for the nation's drinking water program. We believe that through this
    cooperative effort needed increases in research dollars have been
    obtained for drinking water over the past few years after several years
    of steady decline. However, we are now uncertain how EPA is allocating
    the appropriation for drinking water related research. We are uncertain
    as to what portion of the agency's appropriations will be allocated for
    conducting health effects research on drinking water contaminants such
    as cryptosporidium, disinfection byproducts and arsenic. AWWA supports
    spending at least $10 million for health effects research on these and
    other contaminants on an annual basis. Because the fiscal year 2000 EPA
    budget request and future research plans are unclear, we believe that
    EPA should provide a research plan (with full stakeholder involvement)
    on how the agency intends to do the necessary research in a timely
    manner to affect the key regulatory decisions involved in promulgating
    drinking water regulations for not only for the existing listed
    contaminants but also for new contaminant candidates. It is time for
    research strategic planning and execution within the drinking water
    program to become a public process subject to public scrutiny.
        The use of good science as the foundation of the new drinking water
    standard-setting process under the SDWA amendments of 1996 will require
    extensive drinking water research--particularly health effects
    research. Funding for drinking water research is becoming more of a
    critical issue. The 1996 SDWA Amendments require EPA to develop
    comprehensive research plans for Microbial/Disinfection By-Products (M/
    DBP) and arsenic as well as other contaminants. An estimated total of
    over $100 million is needed for the combined arsenic and M/DBP
    regulatory research plans alone and this figure does not include other
    needed drinking water research on radon, a whole array of other
    radionuclides, groundwater contamination, children's health issues,
    endocrine disruptors, and other new contaminants that will require
    additional occurrence, treatment, and health effects research based on
    EPA's Contaminant Identification Method.
        In August 2001--just 27 months from now--EPA will select at least
    five contaminants from the Contaminant Candidate List (CCL) and
    determine whether to regulate them. This process will be repeated every
    five years. To determine whether to regulate a contaminant and
    establish a maximum contaminate level (MCL) or another regulatory
    approach, EPA will need good health effects research. Recognizing the
    serious burden this regulatory mandate presents, the drinking water
    community has offered its time, resources and expertise to work with
    EPA to develop a research plan for the contaminants on the CCL. We have
    volunteered to cooperatively sponsor a workshop to produce a
    coordinated report and research strategy. If EPA agrees to our offer,
    and all indications are that they will, we anticipate returning to this
    Subcommittee with EPA to jointly recommend appropriate drinking water
    research funding levels for the next fiscal year.
        Given that drinking water research has long been underfunded and
    the enormous need for immediate research to meet the deadlines of the
    SDWA amendments of 1996, AWWA urges Congress to appropriate at least
    $41,400,000 for drinking water research and specifically ``earmark'' it
    in the appropriation. Continued underfunding drinking water research
    will result in either delayed regulations or regulations promulgated
    without the necessary research.
        Recommended Action in the Fiscal Year 2000 Budget.--Appropriate at
    least $41,400,000 for drinking water research (as requested in the
    President's fiscal year 2000 Budget). Specifically designate funding
    for drinking water research and health effects research in the
    appropriation.
                            awwa research foundation
        In a separate statement, the AWWA Research Foundation (AWWARF), (an
    organization independent of AWWA), requested that $6 million in
    drinking water research funds be designated specifically for AWWARF for
    drinking water research which includes $1 million for arsenic research
    and $2,000,000 for perchlorate treatment research. AWWARF and public
    water suppliers will match the unallocated $3,000,000 portion of the
    grant dollar-for-dollar. AWWA strongly believes that this kind of
    local/federal research partnership is a wise and cost effective use of
    public funds and the only way to secure science based drinking water
    regulations in these difficult budgetary times. The AWWARF funds are
    being used to support priority drinking water research needs including
    disinfection by-products and cryptosporidium as well as arsenic.
        The regulation of arsenic, which occurs naturally at low levels in
    some drinking water supplies, presents a unique regulatory situation.
    While the effects of arsenic at levels in excess of those typically
    found naturally in the nation's water supplies are well studied, there
    is a lack of data and serious scientific debate on the effects of the
    naturally occurring low levels of arsenic in drinking water.
        Recommended Action in the Fiscal Year 2000 Budget.--Appropriate
    $4,000,000 specifically designated for the American Water Works
    Association Research Foundation, including $1,000,000 for arsenic
    research.
                         perchlorate treatment research
        In separate statements, AWWARF and others requested $2,000,000 for
    research technologies to remove perchlorate (a rocket fuel component)
    from drinking water supplies. The research is to be conducted through
    the East Valley Water District in San Bernadino, California. AWWARF is
    managing the previous research funds provided by the subcommittee for
    the East Valley Water District. AWWA believes that perchlorate
    contamination of drinking water may be of concern in other parts of the
    country and that this research will allow early corrective action.
    There is no known treatment to remove perchlorate from drinking water
    so this research is crucial for public water systems, especially those
    communities which have lost their entire drinking water supply because
    of the presence of perchlorate contamination in the water.
        Recommended Action in the Fiscal Year 2000 Budget.--Appropriate
    $2,000,000 for research on treatment technologies relating to
    perchlorate within the Crafton-Redlands Plume, to be conducted through
    the East Valley Water District, California.
                     public water system supervision grants
        To comply with the SDWA, Congress intended that EPA develop
    drinking water regulations and that the states implement and administer
    the program to ensure compliance with and enforcement of its
    provisions. Implementation, administration, compliance and enforcement
    activities are collectively known as ``primacy'' requirements and
    federal grants to the states are known as Public Water System
    Supervision (PWSS) grants. The massive demands on states arising from
    the SDWA have become increasingly apparent because of the dramatic
    increase in the number of regulated contaminants over the past few
    years.
        As each regulation is added, state resource shortfalls become more
    acute. Additional regulations are scheduled to be promulgated over the
    next few years and the SDWA Amendments of 1996 added new
    responsibilities for the states such as source water assessments, a
    consumer confidence report program and alternative monitoring programs.
    The SDWA authorizes a federal share of up to 75 percent, but federal
    funding has approximated only 35 percent. The difference between state
    and federal shares of the program has become so great that, according
    to the Association of State Drinking Water Administrators (ASDWA),
    states are concerned that without the infusion of additional resources,
    they may be unable to successfully meet these requirements and will be
    forced to prioritize future workload efforts. ASDWA has stated that
    even with he infusion of funds from the Drinking Water State Revolving
    fund set-asides, the current PWSS funding level is inadequate to
    accomplish Congressional goals for comprehensive national public
    drinking water system oversight. Should this occur, public health
    protection will suffer a major setback.
        EPA's budget request for fiscal year 2000 would not raise PWSS
    funding for states from its present level of $90,000,000. We strongly
    urge Congress to appropriate the $100,000,000 authorized for PWSS
    grants to states as the minimum necessary.
        Recommended Action in the Fiscal Year 2000 Budget.--Appropriate
    $100,000,000 for Public Water System Supervision (PWSS) grants to
    states.
                           epa drinking water program
        EPA's drinking water program took on greatly increased
    responsibilities in the 1996 SDWA amendments. These responsibilities
    included developing a new regulatory process requiring additional
    science and risk analysis for regulations, create a contaminant
    occurrence data base and methodology to select contaminants for
    regulation, promulgate microbial and disinfectant/disinfection by-
    products regulations, identify new treatment technologies for small
    systems, administer the newly created drinking water state revolving
    fund, and develop regulations and guidelines for consumer confidence
    reports, operator certification programs, source water assessment and
    monitoring relief.
        In satisfying these requirements, EPA has involved the public in
    the regulatory process to an extent not equalled by another federal
    agency and stands as a model for federal rule making. EPA has involved
    private citizens, scientists, drinking water professionals, medical
    professionals, public health officials, economists, and environmental
    and consumer advocacy representatives, as well as other experts in
    providing recommendations and how to carry out these new regulatory
    responsibilities. EPA and the Office of Drinking Water and Ground Water
    are to be commended for taking this new approach which should result in
    better regulations that protect public health.
        The President's fiscal year 2000 Budget requested the following
    funding for the EPA drinking water program: $43.9 million for Drinking
    Water Regulatory Development; $31.8 million for Drinking Water
    Implementation Initiatives; and $1.5 million for Drinking Water
    Consumer Awareness. Because of its exemplary approach to reforming the
    regulatory process, the EPA drinking water program budget request
    should not be cut to meet overall federal budget constraints. AWWA
    believes that funding the EPA drinking water program is vital to
    continue this new regulatory approach and urges Congress to appropriate
    the funds requested in The President's fiscal year 2000 for the
    drinking water program to continue to implement the new provisions of
    the SDWA.
        Recommended Action in the Fiscal Year 2000 Budget.--Appropriate
    funding for the EPA drinking water program as requested in The
    President's fiscal year 2000 Budget including:
        --Drinking Water Regulatory Development: $43,900,000.
        --Drinking Water Implementation Initiatives: $31,800,000.
        --Drinking Water Consumer Awareness: $1,500,000.
                            clean water action plan
        The protection of drinking water source supplies is one of the key
    elements in providing safe drinking water to the American people. It is
    safer and cheaper to prevent the contamination of drinking water
    supplies than to undertake expensive efforts to treat it after it has
    become contaminated. The Clean Water Action plan focuses on source
    water protection for safe drinking water, preventing polluted runoff,
    promoting a state-led watershed approach to restore and sustain
    watershed health and assisting states with reducing nonpoint source
    pollution by expanding state grant assistance. The agency is requesting
    an additional $25.8 million to build on the foundation of last year's
    appropriation and the existing clean water program. AWWA urges the
    Congress to fund to the maximum extent possible, EPA initiatives to
    address source water protection for safe drinking water. However, AWWA
    does not support the reduction in other clean water programs such as
    the Clean Water Act State Revolving Fund to fund this initiative and
    hopes that funding for this action plan in other agencies will be
    supported by members of this subcommittee when considering other
    appropriations in full committee deliberations.
        Recommended Action in the Fiscal Year 2000 Budget.--Appropriate the
    additional $25.8 million in support of the EPA Clean Water Action Plan
    as requested in The President's fiscal year 2000 Budget without
    decreasing support to other clean water or drinking water programs.
        This concludes the AWWA statement on the fiscal year 2000 EPA
    budget. We would be pleased to answer any questions or provide
    additional material for the subcommittee.
                                     ______

                   Prepared Statement of Texas A&M University
        Mr. Chairman and members of the Committee, I am Ed Hiler, Vice
    Chancellor for Agriculture and Life Sciences in the Texas A&M
    University System. I appreciate the opportunity to appear before you
    today, to describe a few exciting research projects we have underway,
    and to ask for your support for continued federal funding. New
    technology is the life blood of American agriculture. With the 1996
    Farm Bill and resulting phase down in federal farm programs, it is
    imperative that research continues providing a technological
    underpinning for agriculture. Today, I will describe several examples
    of how we can provide this underpinning.
     environmental services of rice lands in arkansas, louisiana, and texas
        Privately-held rice lands provide a variety of ecological services,
    but they can also have adverse environmental impacts. Public benefits
    include wildlife habitat, water filtration through wetlands, and flood
    protection. Adverse impacts can include degradation of soil organic
    matter, salinization, sedimentation, agricultural chemical losses, and
    groundwater depletion. Elimination of Federal agricultural commodity
    price support programs is reducing acreage in some parts of the Rice
    Belt and increasing it in others--with the unintended result of
    decreasing ecological services in some regions and increasing adverse
    environmental impacts in others. Scientists from the Texas A&M
    University System, the University of Arkansas, Louisiana State
    University, and USDA-ARS will examine environmental benefits and costs
    of alternative rice production technologies and how we might strengthen
    communities and increase the environmental and economic benefits of
    rice culture. We are requesting funding of $1,000,000 for this project
    for fiscal year 2000.
       consortium for agricultural soils mitigation of greenhouse gases
                                    (casmgs)
        American farmers can benefit from international agreements to
    reduce greenhouse gas emissions, but only if reductions produced by
    agriculture can be counted toward national goals. For American
    agriculture to benefit a scientifically defensible method is needed to
    calculate reductions in greenhouse gas emissions that result from
    improved conservation practices. A consortium (including Colorado State
    University, Iowa State University, Pacific Northwest National
    Laboratory, Montana State University, The Ohio State University, and
    the University of Nebraska) seeks funds to assess the economic and
    environmental consequences of agricultural and environmental programs
    and technologies designed to reduce greenhouse gas emissions.
    Assessments in fiscal year 2000 will include the impacts of possible
    government programs and conservation technologies on carbon dioxide and
    nitrous oxide emissions and/or absorption in agricultural soils. We are
    requesting $10,000,000 for support of this program in fiscal year 2000.
          protecting our land and water resources in the 21st century
        Droughts, floods, environmental concerns and ever-tighter
    agricultural profit margins make it imperative that we manage our land
    and water resources in the best possible way. High quality information
    about both environmental and economic impacts is needed to inform
    decision makers. Environmental issues that need to be considered
    include the risks of water and air quality degradation, soil erosion,
    and emission of greenhouse gases. For over a decade, researchers in The
    Texas A&M University System Agriculture Program, in cooperation with
    scientists from USDA, EPA, and other federal and state agencies and
    private industry, have developed several computer-based decision aids
    to help assess the environmental and economic impacts of land
    management decisions throughout the nation. The objectives of this
    initiative are to: (1) combine these decision tools into an integrated,
    easily used, computer-based package; (2) implement a program to train
    and transfer the package to agency personnel and other land managers;
    and (3) improve the package based on feedback from the private sector
    and governmental agencies. We are requesting $2,000,000 for support of
    this program in fiscal year 2000.
               centers for excellence in environmental operations
        Dramatic growth in the Border Zone, between Texas and California,
    has stressed the existing water supply, irrigation, and waste water
    infrastructure to the limit. The most critical resource for continued
    growth in trade and manufacturing within the zone is plentiful, good
    quality water. The objective of this four-state (Texas, New Mexico,
    Arizona, and California) initiative is to provide effective training
    programs to increase water plant efficiency, protect public health from
    biological hazards, reduce water pollution, improve irrigation
    efficiency, eliminate waste and demonstrate new technology for water
    and waste water treatment. We are requesting $5,000,000 for the Texas
    Engineering Extension Service to support of this project in fiscal year
    2000.
    texas institute for applied environmental research (tiaer) at tarleton
                                state university
        The TIAER is assisting the agriculture and environmental
    communities and agencies nationwide to resolve environmental concerns
    associated with agriculture. It is currently working with EPA, USDA,
    state agencies, and other universities to develop conceptual
    approaches, including the planned intervention! micro-watershed
    approach'' to deal with the impacts of agriculture on water quality. It
    is also developing modeling tools to analyze the economic and
    environmental impacts of policy alternatives for several watersheds in
    Texas and Iowa. We are requesting $750,000 for Tarleton State
    University to continue support for this program in fiscal year 2000.
                                     ______

     Prepared Statement of the County Sanitation Districts of Los Angeles
                                     County
        We would like to thank you for the opportunity to submit testimony
    to the Subcommittee in support of federal funding in fiscal year 2000
    for an exciting research program focused on strengthening scientific
    understanding of the efficiency and sustainability of Soil Aquifer
    Treatment (SAT) for indirect potable reuse of highly treated recycled
    water. This research, which is taking place in California and Arizona,
    has national implications for enhancing sustainable development of
    communities by augmenting and protecting valuable groundwater supplies
    with recycled water. Over $5 million in cash and in-kind services has
    already been committed to the investigation by various research
    sponsors and participants. In addition, Congress has appropriated $1.9
    million over the last two fiscal years to support the project. We are
    seeking an additional $1 million in fiscal year 2000 to continue this
    important research.
        The Soil Aquifer Treatment Project is designed to provide the data
    necessary to support the rational design and operation of SAT systems,
    to predict water quality improvements provided by SAT, and to answer
    important public health questions. The County Sanitation Districts of
    Los Angeles County, which serves over five million people in 78 cities
    in Los Angeles County, California, and Arizona State University are the
    project managers for the research in cooperation with the University of
    Arizona, the University of Colorado, Stanford University and the U.S.
    Geological Survey. We are joined in support of this funding by the
    Cities of Phoenix, Glendale, Mesa, Scottsdale, Tempe, and Tucson,
    Arizona; the Water Reclamation District of Southern California; the Los
    Angeles Department of Water and Power; the City of Riverside,
    California; the Bureau of Reclamation; and the American Water Works
    Association Research Foundation.
        As the arid West continues to develop and as sources for additional
    water supplies become more and more scarce, an increasingly important
    source of water for agricultural and urban use is recycled water. This
    water has the potential to alleviate water shortages and to provide
    important augmentation to existing sources. Soil Aquifer Treatment,
    which is currently in use in California and Arizona, is one technology
    that has the potential to economically supplement traditional treatment
    and storage systems for existing and future potable water supplies.
    This study will be of value not only in the West but in a number of
    other areas around the country where groundwater recharge is used to
    supplement potable water supplies, to control sea water intrusion in
    coastal groundwater aquifers, to control land subsidence caused by
    declining groundwater levels, to raise groundwater levels to reduce the
    cost of groundwater pumping, and to provide a means of treating
    wastewater prior to discharge. Most notably, the states of Florida,
    Massachusetts, Nebraska, Michigan, New Hampshire, New Jersey, New York,
    South Dakota, Texas, and Wisconsin, who already operate groundwater
    recharge facilities, will benefit from this research. This research
    will also benefit aquifer storage and recovery systems located in
    eleven other states.
        Further, our investigations of SAT will help address the public
    health issues that all water suppliers in the nation face, such as
    source water protection and disinfection practices. The questions that
    will be answered by our study will be instrumental to the
    identification, characterization, and treatment of compounds in our
    nation's water supply so that we may better protect the health of our
    citizens.
                             the need for the study
        While groundwater recharge using recycled water has been used in
    the United States for several decades and has been the subject of a
    number of studies, the scientific and technical community's ability to
    fully address a number of complex public health questions has been
    limited by the nature of existing testing and study methodologies. The
    funds approved by Congress in fiscal year 1998 and fiscal year 1999
    have enabled a higher standard of research on SAT by expanding the
    project's monitoring and analytical capabilities and will thus help
    enhance scientific understanding of the various biological, physical,
    and chemical processes in SAT that modify and improve the
    characteristics of recycled water. Funds have been used in part to
    follow up on research recommendations from the National Research
    Council's (NRC) Water Science and Technology Board study on the
    viability of augmenting potable supplies with recycled water. This work
    addresses critical areas of research identified by NRC as necessary to
    address the myriad of unknowns concerning SAT and the indirect use of
    recycled water for potable water supply including the fate and
    significance of disinfection byproducts, organics, and microbial
    pathogens.
        Currently the SAT Project is in its second year of study, and
    valuable information has been developed to better understand the impact
    of SAT on water quality in terms of chemical and microbial pollutants,
    identifying monitoring criteria for viruses and other pathogens, and
    increasing public knowledge and awareness of SAT. Fiscal year 2000
    funds will be used to address key drinking water quality issues related
    to the importance of the municipal wastewater source in determining
    water quality, the use of tiered chemistry testing and toxicity tests,
    including endocrine disruptor assays, to further characterize organic
    pollutants in water before and after SAT, and expanded microbiological
    assessments for viruses and emerging pathogens.
        The results of our investigation will help us to better understand
    the complex nature of recycled water and SAT so that we may take
    advantage of the benefits offered by indirect potable reuse based on
    groundwater recharge such as: Additional water quality improvements;
    seasonal or longer-term storage without evaporative losses; protection
    of water resources against recontamination (with coliforms and
    parasites) by birds, mammals, and even humans; and prevention of algae
    growth and associated water-quality problems such as algae-derived
    taste and odor.
                                  sat defined
        Soil Aquifer Treatment can best be described as a groundwater
    recharge method using recycled water. SAT relies on percolation of the
    recycled water through soil and groundwater transport to further
    improve water quality prior to reuse.
      --Soil percolation encompasses several processes that occur as water
            seeps downward through the soil under the influence of gravity
            to enter the groundwater system. The soil acts as a filter to
            improve the characteristics of the recycled water through
            physical, chemical, and microbiological processes.
      --Groundwater transport: After reaching the underlying aquifer,
            groundwater moves slowly to extraction wells. During transport,
            further water quality benefits are realized through a number of
            physical, chemical, and biological processes.
                         purpose and goal of the study
        The SAT Project is the first research program to focus broadly on
    SAT as a system. Its goals are to provide the data necessary to support
    the engineered design and operation of SAT systems, and to address
    factors that are of interest to health regulators for the development
    of regulations governing groundwater recharge projects.
        Specific objectives of the project are to:
      --characterize processes that contribute to organic chemical,
            nitrogen and pathogen removal and transformation during
            transport through the soil percolation zone and underlying
            groundwater aquifer;
      --investigate and model relationships among above-ground treatment,
            wetlands polishing, and SAT;
      --identify monitoring criteria that will provide proper assurances
            regarding the elimination of viruses and other pathogens;
      --produce a framework or model within which SAT systems can be
            designed and operated to meet regulatory criteria.
      --compare the effectiveness of SAT to other technologies; and
      --increase public knowledge and awareness of SAT.
        The effectiveness of SAT will be investigated and systematically
    analyzed to determine the efficacy of the protective barriers inherent
    in SAT systems: the interface at the soil-water boundary of the
    infiltration surface; soil percolation; and groundwater transport. The
    water quality benefits derived from the treatment in each barrier will
    be evaluated based on the reductions achieved in levels of organic
    carbon, nitrogen, and pathogens.
        Field investigations and data gathering are being performed at six
    full- or pilot-scale recharge sites in California and Arizona. These
    sites offer a range of different effluent qualities and physical
    conditions such as depth to groundwater, soil and sediment type, etc.
    Laboratory work is also being conducted to analyze the data and develop
    the applicable models. These facilities are located in Phoenix, Mesa,
    and Tucson, Arizona; and Riverside, Los Angeles, and Los Angeles
    County. Some of the more unique research elements include use of
    genetic techniques to isolate and identify viruses; analytical
    methodologies capable of identifying over 90 percent of the materials
    comprising the organic makeup of groundwater and recycled water; unique
    tracers to track the movement of recycled water as it infiltrates the
    groundwater; and a public education/outreach component to disseminate
    the results of the study.
        On behalf of the many public agencies, cities, and universities
    that are participating in this exciting and promising research project,
    we would like to thank the Subcommittee once again for the opportunity
    to submit this statement and for your previous support for this
    project. Soil Aquifer Treatment has great potential to alleviate the
    coming critical water shortages in the arid western United States and
    provide valuable information on a national level for source water
    protection and supply. We thank you again for your commitment to this
    project over the last two fiscal years and ask you for your renewed
    support to continue the research on this important project.
                                     ______

       Prepared Statement of the North American Lake Management Society.
        On Behalf of the North American Lake Management Society I
    respectfully ask the Senate VA-HUD Appropriations Sub-Committee to
    provide $20 million in funding for the Clean Lakes Program, Section 314
    of the Clean Water Act. This program was a uniquely effective, cost
    efficient federal program that provided seed money to state lake
    programs and to local communities for lake protection and improvement
    projects on public lakes.
        Our nation's lakes need serious attention. The National Water
    Quality Inventory 1996 Report to Congress indicates that 16 percent of
    assessed rivers and streams and 35 percent of assessed lake acres are
    not safe for fish consumption; 20 percent of assessed rivers and
    streams and 25 percent of lake acres are not safe for recreational
    activities (e.g. swimming); and 16 percent of assessed rivers and
    streams and 8 percent of lake acres are not meeting drinking water
    uses.
        Last year, funds for the Nonpoint Pollution Program (Section 319)
    were doubled, and a Senate Colloquy was added to the budget language
    establishing congressional intent that Clean Lakes Program elements be
    adequately funded through 319. THIS HAS NOT WORKED.
        The 314 program, as now combined with the 319 program, has been
    dwarfed by, and its priorities lost in, the much larger 319 program.
    The EPA has not taken action to assure that states have financial
    assistance targeted to support their lake management programs. Lake
    projects have faired poorly in the competition for Section 319 funding
    because 319 Program guidelines have tended to weed out 314 program
    priorities that they were not designed to cover. Also, funding
    decisions at the state level are made by the 319 program coordinators,
    who for the most part have chosen not to share their program money with
    another state agency. The two programs worked well in partnership, but
    the marriage has been a failure.
        Here is what we have lost:
      --Water Quality Assessment Grants, which states used to assess the
            condition of their lakes and reservoirs. These grants also
            supported volunteer monitoring programs that foster long term
            community interest and involvement in the health and well being
            of both lakes and lake watersheds.
      --Diagnostic and Feasibility Studies were designed to identify the
            causes of problems found by the assessment grants, and look for
            innovative, cost effective ways to repair the damage done to
            lakes , their ecosystems, and their watersheds.
      --Demonstration and Restoration Projects.--These greatly furthered
            the science of lake rehabilitation. Often, the kinds of
            research done in lakes, such as the use of aquatic weevils to
            control nuisance exotic plant growth, do not fit well under
            Nonpoint (Section 319) Program guidance. The Nonpoint program
            worked in partnership with the Clean Lakes Program at this
            stage of a project to address problems coming from the
            watershed.
      --Post Restoration Monitoring.--To evaluate the effectiveness of the
            program, and guide the improvement of future projects.
        As the only organization dedicated to building citizen/professional
    partnerships for applied lake management, NALMS is uniquely positioned
    to have our ear to the ground on this matter. Last year we provided you
    with a survey of state lake program managers and professionals that
    indicated a severe cutback in funding for Section 314 Clean Lakes
    Program elements under the umbrella of the 319 program. 37 of 49 state
    lake program managers responded that their state lake programs were
    severely cut, and they strongly recommended a return to separate Clean
    Lakes Program funding. A complete copy of these comments is available
    on our web site, www.nalms.org, under the Government Affairs Committee
    homepage. A quick update survey conducted this January indicates the
    situation is no better in most states, and has even deteriorated since
    last year.
        Support is now building to pump new life into the Clean Lakes
    Program:
      --The Sport Fishing and Boating Partnership Council has recommended
            that the EPA fund the Section 314 Clean Lakes Program. Agencies
            and organization that contributed to this recommendation are:
            B.A.S.S, Inc., National Marine Manufacturers Association,
            Outdoor Technologies Group, U.S. Fish and Wildlife Service,
            State Fish and Wildlife Agencies, International Association of
            Fish and Wildlife Agencies, American Sportfishing Association,
            BOAT/U.S., American Fisheries Society, American Rivers Trout
            Unlimited, Penzoil Products Company, Grady-White Boats.
      --The Congressional Great Lakes Task Force has recognized this
            problem and has sent a letter to the OMB and the EPA asking
            that they request separate funding for the Section 314 Clean
            Lakes Program.
      --The Council of State Governments' newsletter, ECOS, recently ran a
            front page article titled: ``States to EPA: Bring Back Clean
            Lakes!'' The last paragraph reads: ``Will EPA respond to these
            concerns by reinstating a special-focus approach for lakes? The
            precedent is certainly there--a review of discrete programs
            managed by the agency runs the gamut from brownfields to print
            shops. The decision to lump lakes with other water resources
            apparently needs another look.''
      --The National Recreation Lakes Study Commission, in their March 1999
            Draft Recommendations includes the following language: ``The
            Environmental Protection Agency's (EPA) current watershed-based
            approach to protecting and enhancing our Nation's waters places
            inadequate emphasis on lakes. EPA has not provided funding for
            Section 314 (the Clean Lakes Program) of the Clean Water Act in
            the past five years. EPA's recently issued ``Guidance on Use of
            Clean Water Act and Safe Drinking Water Act Authorities to
            Address Management Needs for Lakes and Reservoirs'' encourages
            EPA Regional authorities and the States to ``recognize the
            importance of lakes and reservoirs as key elements of the
            aquatic ecosystem. However, this guidance does not provide
            resources for the full range of activities that were formerly
            authorized under the Clean Lakes Program''.
        Lakes and reservoirs are the jewels of a watershed. They are the
    focus of public perceptions of water quality. They are also the
    settling basins for pollutants from the rest of the watershed. Because
    people love lakes, communities are willing to look upstream and to the
    watershed for ways to protect or clean up their lakes. But beyond the
    watershed, the Clean Lakes Program focused on the whole lake ecosystem.
    Degraded lake habitats, wetland loss, nuisance exotic species, and
    fishery imbalances are problems the Clean Lakes Program helped
    communities address. These problems are not traditionally covered under
    319 project guidelines.
        We believe that lakes are certainly as deserving of special program
    focus as are our wetland, estuaries, and coastal zones. Clean Lakes
    Program projects have been very cost effective and have been
    particularly successful in leveraging federal dollars with state and
    local funds. The program has been a model of partnership building
    between federal, state, and local levels; and between water quality,
    fish and wildlife managers.
        NALMS believes that we need a separate Clean Lakes Program to
    refocus attention on the special needs of our lakes and reservoirs. We
    need to provide separate, adequate and consistent funding and guidance,
    which will allow the Clean Lakes Program to grow to better meet the
    needs of the states and their lake communities.
        On behalf of the North American Lake Management Society, we
    respectfully ask that Congress make a commitment to bringing the Clean
    Lakes Program back to life with a $20 million dollar appropriation for
    the coming fiscal year.
                                     ______

           Prepared Statement of the Western Coalition of Arid States
        The Western Coalition of Arid States (WESTCAS) is pleased to submit
    comments for the record, regarding programs contained in the U.S.
    Environmental Protection Agency's (EPA) fiscal year 2000 budget for
    your Subcommittee's hearing record.
        WESTCAS is an organization of cities, towns, water and wastewater
    districts and associate agencies from the states of Arizona,
    California, Colorado, Idaho, Nevada, New Mexico, Oregon and Texas who
    are dedicated to environmentally conscientious planning of water
    resources and development of water quality standards for the unique
    ecosystems of the arid West. Of particular interest to WESTCAS and its
    member agencies are the federal programs that can further our goals
    through partnerships and scientifically sound regulation and guidance
    concerning our most precious resource--water.
                             state revolving funds
        WESTCAS urges you to provide the $1 billion per year authorized
    under the Safe Drinking Water Act for the Drinking Water State
    Revolving Fund for fiscal year 2000. Many surface and ground waters do
    not meet water quality standards. Communities face greater challenges
    in trying to provide their citizens safe potable water meeting all of
    the regulatory requirements. As more research is completed in the
    treatment of microbes and disinfectant and disinfection byproducts,
    communities will be faced with even greater costs to meet requirements.
    We also would urge you not to fund the Operator Certification Program
    for the Drinking Water State Revolving Fund which reduces funds
    available for loans to communities by $30 million. We join with the
    Association of State Drinking Water Administrators in expressing
    concern that EPA has not asked for new funding for state primacy
    programs and that the Drinking Water State Revolving Fund ``may become
    the primary funding mechanism of `convenience' with the serious risk of
    eroding the corpus of an already limited fund.''
        WESTCAS urges a higher level of funding than proposed by the
    administration for the Clean Water State Revolving Fund. The
    administration proposes to reduce funding by $550 million and to
    authorize states to set aside 20 percent of the fiscal year 2000
    allocation for grants for nonpoint source projects. We support funding
    for nonpoint source and estuary projects. Nonpoint source projects are
    critical to watersheds attaining the designated beneficial uses of
    water bodies, however more funding is needed in the total program in
    order for the objectives we all are striving for--restoration of our
    watersheds--to be accomplished.
                                research funding
        Scientifically sound research is essential for effective drinking
    water and clean water quality programs. WESTCAS urges full support of
    funding for the various research projects undertaken in a timely manner
    to implement regulations required pursuant to the Safe Drinking Water
    Act and the Clean Water Act. We support the increased funding requested
    for Human Health Risk Assessment and recommend increased funding for
    Detection of Emerging Risk Issues and Drinking Water Research. A full
    understanding of microbial contaminants and disinfectant/disinfection
    byproducts is extremely important for the American people.
        WESTCAS requests that EPA devote sufficient resources to implement
    in a timely way the agreed to provisions under the settlement documents
    in the WESTCAS Whole Effluent Toxicity (WET) litigation. We want to
    insure that the WET testing required in NPDES programs and WET testing
    to evaluate sediment quality is not used inappropriately to predict
    impairment of water quality when it isn't valid. EPA had targeted $.5
    million for the ongoing program in fiscal year 1999 and it cannot be
    tracked in the fiscal year 2000 budget request.
    american water works association research foundation (awwarf) and water
                     environment research foundation (werf)
        WESTCAS urges partnering with both AWWARF and WERF for drinking
    water research and clean water research funds. These programs offer an
    opportunity to leverage EPA's research program and improve the time of
    completion of critical projects dealing with arsenic, radon,
    perchlorate, and many others.
            drinking water--public water systems supervision grants
        WESTCAS urges a review of funding for the Public Water Systems
    Supervision Grants. Funding for this program has not increased, and
    with the new requirements placed upon the states for consumer
    confidence reports, operator certification and other regulations, it
    would seem that the existing level of funding is not adequate for the
    states.
        We thank you for this opportunity to offer our comments on the
    fiscal year 2000 appropriations for the EPA. If we can answer any
    questions or provide additional information, please contact Peter
    Carlson, WESTCAS' Legislative Representative in Washington, D.C. at
    (202) 429-4344.
                                     ______

     Prepared Statement of the Metropolitan Water Reclamation District of
                                Greater Chicago
        I am Terrence J. O'Brien, President of the Metropolitan Water
    Reclamation District of Greater Chicago, and on behalf of the Water
    Reclamation District, I want to thank the Subcommittee for this
    opportunity to present our priority for fiscal year 2000, and express
    our appreciation for your support of our requests over the years. The
    Metropolitan Water Reclamation District (District) is the sponsor for
    the federally approved combined sewer overflow (CSO) project, the
    Tunnel and Reservoir Plan (TARP), in Chicago, Illinois. Specifically,
    we are asking that $10 million be included to continue construction of
    this project in the Subcommittee's VA, HUD and Independent Agencies
    Appropriations Bill for fiscal year 2000. The following outlines the
    project and the need for the requested funding.
                                  introduction
        The District was established in 1889 and has the responsibility for
    sewage treatment, and is also the lead agency in providing sponsorship
    for flood control and stormwater management in Cook County, Illinois.
    In fact, the District was established in response to an epidemic, which
    killed 90,000 people in 1885. By 1900, the District had reversed the
    flows of the Chicago and Calumet Rivers to carry combined sewage away
    from Lake Michigan, the area's main water supply. The District has been
    involved with major engineering feats since its inception.
        In an effort to meet the water quality goals of the Clean Water
    Act, to prevent backflows into Lake Michigan, and to provide an outlet
    for floodwaters, the District designed the innovative TARP. The TARP
    tunnels, which were judged by the Environmental Protection Agency (EPA)
    on two occasions as the most cost-effective plan available to meet the
    enforceable provisions of the Clean Water Act, are a combined sewer
    overflow elimination system. The TARP reservoirs, also under
    construction, will provide flood control relief to hundreds of
    thousands of residents and businesses in the Chicagoland area.
                           tunnel and reservoir plan
        The TARP is an intricate system of drop shafts, tunnels and pumping
    stations which will capture combined sewer overflows from a service
    area of 375 square miles. Chicago will remove three times the amount of
    CSO pollution as Boston's projected removal--for approximately the same
    cost. The remaining Calumet tunnel system will provide 3.1 million
    pounds of biological oxygen demand (BOD) removal versus Boston's one
    million pounds of BOD removal per year. In fact, Chicago's CSO
    pollution problems are worse than the combination of Boston, New York,
    and San Francisco's pollution problems. The Chicago Metropolitan Area's
    annual BOD loading is 43 million pounds per year. This contrasts with
    the combination of Boston, New York and San Francisco's combined annual
    BOD loading of 35 million pounds.
        A good portion of the remainder of the TARP system is to be built
    in the southeast side of Chicago and the southern suburbs (Calumet
    system), a low-income, highly neglected and highly polluted area. This
    community suffers from tremendous land, air and water pollution--
    literally a dumping ground for multimedia pollution ranging from
    chemical waste to serious water pollution.
        Due to the enormous risk to the community, the District as the
    local sponsor cannot afford to leave the citizens vulnerable.
    Therefore, it is imperative that this work must continue. Because the
    construction industry is already doing work in the area, the climate is
    favorable for proceeding with this work at this time, producing
    significant cost savings. What we are seeking, then, is funding to
    advance federal work.
        We have a proven and cost-effective program. In fact, we have
    estimated that TARP's cost is about a quarter of the cost of separating
    the area's existing combined sewer systems into separate sewage and
    stormwater systems. Upon reanalysis, the EPA has consistently found the
    TARP program to be the most cost-effective solution that will reduce
    the impacts by the greatest degree to meet the enforceable requirements
    of the Act, with the least amount of dollars. The project, while
    relating most specifically to the 52 tributary municipalities in
    northeastern Illinois, is also beneficial to our downstream communities
    such as Joliet and Peoria. These benefits occur because of the capture
    of wastewater in the tunnels during the storm periods and by treatment
    of the discharge before being released in to the waterways.
        Since its inception, TARP has not only abated flooding and
    pollution in the Chicagoland area, but has helped to preserve the
    integrity of Lake Michigan. In the years prior to TARP, a major storm
    in the area would cause local sewers and interceptors to surcharge
    resulting in CSO spills into the Chicagoland waterways. Since these
    waterways have a limited capacity, major storms have caused them to
    reach dangerously high levels resulting in massive sewer back-ups into
    basements and causing multi-million dollar damage to property. To
    relieve the high levels in the waterways during major storms, the gates
    at Wilmette, O'Brien, and the Chicago River would be opened and the
    excess CSOs would be allowed to backflow into Lake Michigan. Since the
    implementation of TARP, some backflows to Lake Michigan have been
    eliminated. After completion of both phases of TARP, all backflows into
    Lake Michigan will be eliminated.
        Since implementation of TARP, 358 billion gallons of CSOs have been
    captured by TARP that otherwise would have reached waterways. After the
    completion of both phases of TARP, 99 percent of the CSO pollution will
    be eliminated. The elimination of CSOs will result in less water needed
    for flushing of Chicago's waterway system, making it available as
    drinking water to communities in Cook, DuPage, Lake, and Will counties,
    which have been on a waiting list. Specifically, since 1977, these
    counties received an increase of 162 mgd, partially as a result of the
    reduction in District's discretionary diversion in 1980. Additional
    allotments of Lake Michigan water, beyond 1991, will be made to these
    communities, as more water becomes available from sources like direct
    diversion.
        With new allocations of lake water, communities that previously did
    not get to share lake water are in the process of building, or have
    already built, water mains to accommodate their new source of drinking
    water. The new source of drinking water will be a substitute for the
    poorer quality well water previously used by these communities. Partly
    due to TARP, it is estimated by IDOT that between 1981 and 2020, 283
    mgd (439 cfs) of Lake Michigan water would be added to domestic
    consumption. This translates to approximately 2 million people that
    previously did not receive lake water would be able to enjoy it. This
    new source of water supply will not only benefit its immediate
    receivers but will also result in an economic stimulus to the entire
    Chicagoland area, by providing a reliable source of good quality water
    supply.
        TARP was designed to give the Chicago metropolitan area the optimal
    environmental protection that could possibly be provided. More
    importantly, no other project was found to be as cost-effective. In
    addition, the beneficial use of the project is being enhanced by the
    addition of the flood control reservoirs now being designed and
    constructed by the Corps of Engineers, which will be connected to the
    tunnels for additional capture and storage of combined sewage during
    flood events. We believe TARP stands as a tribute to our nation's Clean
    Water goals and one that is being accomplished within the most
    economical constraints.
                                requested action
        The $10 million we are seeking in fiscal year 2000 funding in the
    Subcommittee's bill will help keep the local sponsor whole for the
    advance construction it plans to accomplish on the Torrence Avenue Leg
    for the Calumet System of the congressionally-authorized TARP project.
    While the TARP project was originally authorized at 75 percent federal
    funding, the District as local sponsor has been contributing at least
    50 percent of the total project cost. We greatly appreciate the
    Subcommittee's endorsement of our request over the years to advance the
    construction of this work. This fiscal year 2000 work will go a long
    way to address serious water quality, stormwater and safety problems.
    It will have a tremendously beneficial impact on a community, which
    suffers from water pollution and significant flooding problems. The EPA
    has approved the facilities plan for the overall TARP project and
    design has been completed. The EPA has identified this particular
    segment of work as the next critical section of the plan to be
    constructed based on significant water quality benefits.
        Once on-line, the Torrence Avenue Leg of the Calumet System will
    capture 2.0 billion gallons of CSOs per year and will protect 15.6
    square miles of the City of Chicago from raw sewage backup and
    flooding.
        We urgently request that this funding be included in the
    Subcommittee's bill for the construction of the Calumet System of the
    TARP project. We thank you in advance for your consideration of our
    request.
                                     ______

       Prepared Statement of the Metropolitan Water District of Southern
                                   California
     fiscal year 2000 appropriations for the u.s. environmental protection
                                     agency
        The Metropolitan Water District of Southern California (MWD) is
    pleased to submit comments for the record, regarding programs contained
    in the U.S. Environmental Protection Agency's (EPA) fiscal year 2000
    budget for your Subcommittee's hearing on April 29, 1999.
        MWD is responsible for meeting the supplemental water requirements
    of 16 million people living in the Southern California coastal plain
    and the economy which supports them. Our sources of water supply are
    the Colorado River and surface waters from Northern California. Of
    particular interest to MWD and our 27 member agencies are those federal
    programs that provide assistance and facilitate partnerships for
    addressing critical water resources issues.
        MWD is pleased that the President's budget requests increased
    funding for the Drinking Water State Revolving Fund (DWSRF) over the
    prior fiscal year. The proposed funding of $825 million, however, falls
    short of the $1 billion authorized by Congress, and we urge that you
    support funding at the authorized level. We also ask that, in addition
    to the $41.5 million request for safe drinking water research in the
    President's budget, you provide $6 million to be designated for
    research through the American Water Works Research Foundation (AWWARF)
    and East Valley Water District in San Bernardino, California for
    activities described below. Lastly, we ask that you fully support the
    President's proposed fiscal year 2000 budget for other EPA programs
    benefiting drinking water quality, including those which are part of
    the Clean Water Action Plan.
        While significant progress has been made in improving the quality
    of our nation's water, many surface and ground waters do not meet water
    quality standards. Further, as our understanding of the relationship
    between the contaminants found in our water supply and their effect on
    human health increases and detection methods are improved, new risks
    have been uncovered. Adequate protection of drinking water quality
    requires research to identify contaminant sources and effective control
    methods, financial assistance for implementation of end-of-the-pipe
    treatment and source water protection measures, and compliance
    monitoring to ensure existing laws and regulations are upheld.
                             state revolving funds
        In California, water suppliers have identified drinking water
    infrastructure projects totaling in excess of $7 billion that could
    benefit from low-cost DWSRF financing. Nationwide, community water
    systems estimate they must invest over $138 billion over the next 20
    years to ensure delivery of safe drinking water. Of this amount,
    approximately $12 billion is needed to meet current Safe Drinking Water
    Act (SDWA) requirements. Low-cost financing for projects which ensure
    safe drinking water supplies is critical for protecting the health of
    the more than 240 million Americans served by public water systems, and
    MWD strongly urges that you provide $1 billion, the amount authorized
    by Congress for fiscal year 2000. This amount, while greater than the
    amount requested in the President's budget, is still only a small
    fraction of the funding needed by drinking water suppliers to meet
    existing SDWA requirements.
        Significant investments are also needed to repair and replace aging
    municipal wastewater infrastructure and combined sewer systems. Low-
    cost financing is necessary to support substantial municipal water
    quality infrastructure needs over the next 20 years. Capital
    investments are also required to protect against non-point pollution
    sources, and for the first time, EPA has proposed allowing states to
    use up to 20 percent of their Clean Water Act State Revolving Fund
    (CWSRF) capitalization grants to fund such projects. The President has
    requested $800 million for fiscal year 2000 for the CWSRF to support
    these activities which are also vital for ensuring protection of
    drinking water sources. MWD asks that you support the President's
    budget request.
                            non-point source grants
        Another critical source of funding for source water protection
    projects is grants under the Clean Water Act's Section 319 Non-point
    Source Program (NPS). NPS grants are particularly important for smaller
    projects and projects where debt financing is unsuitable. Further, the
    NPS grant program is necessary to support the many watershed management
    activities fostered by the states. The President has requested $200
    million for NPS grants for fiscal year 2000, and MWD requests your
    support at the level in the President's budget.
        Other EPA grant programs which help maintain or improve water
    quality and need your support are the CWA Section 106 Control Agency
    Resource Supplemental Grants ($115.5 million), Wetlands Program
    Development Grants ($15.0 million), and the Water Quality Cooperative
    Agreements (WQCA; $19.0 million). Among other activities, section 106
    grants provide funding for monitoring, water quality planning, and
    development of Total Maximum Daily Loads for impaired water bodies. The
    wetlands grants program will enable EPA to meet its goal of a net gain
    of 100,000 acres of wetlands by the year 2005. Wetlands provide an
    important cleansing mechanism which can protect drinking water sources.
    WQCA provides funding to address water quality problems created by
    storm water, combined sewer overflows, and confined animal operations,
    all of which potentially threaten drinking water sources. Your support
    for the President's fiscal year 2000 budget request for the above
    programs will enable EPA to carry out its mission.
                            drinking water research
        Scientifically sound research provides the underpinnings for
    effective drinking water quality programs. EPA's fiscal year 2000
    budget, under its strategic goal of clean and safe water, includes
    $41.5 million for safe drinking water research. This research will
    focus on developing dose-response data for certain contaminants such as
    disinfection by-products (DBPs) and pathogens, filling data gaps for
    contaminants on the Candidate Contaminant List (CCL), and identifying
    cost-effective methods for removing pathogens while minimizing DBP
    formation. Although not specifically noted in EPA's Summary of the 2000
    Budget, we understand that funding will also be directed toward
    research on methyl tertiary-butyl ether (MTBE), an oxygenate added to
    some reformulated fuels to meet Clean Air Act requirements, and
    perchlorate.
        Dose-response data is critical for the proper characterization of
    potential acute risks of drinking water contaminants, yet reliable data
    is frequently absent. The CCL is the basis of potential new drinking
    water regulations, and accurate data is essential in order to determine
    whether new regulations are warranted. In California, MTBE has been
    found in some groundwater wells and drinking water reservoirs,
    resulting in objectionable taste and odor and potential health risks.
    Similarly, perchlorate has been detected in groundwater sources of
    drinking water, and nearly two dozen wells have been taken out of
    service state-wide as a result of concentrations which exceeded state
    action levels.
        Despite a very ambitious research agenda, we note that the
    President is requesting approximately $6 million less for drinking
    water research for fiscal year 2000 than appropriated for the prior
    fiscal year. We urge that you restore the $6 million through
    designation of $3 million for AWWARF for further research on drinking
    water contaminants such as DBPs and pathogens, $1 million for AWWARF
    for research on arsenic, and $2 million for the East Valley Water
    District in San Bernardino, California to continue research conducted
    through AWWARF on perchlorate. AWWARF and public water suppliers will
    provide 100 percent matching funds, and thus offer an opportunity to
    leverage EPA's research budget. We strongly urge that you support an
    appropriation of $47.5 million for safe drinking water research,
    designating $6 million of this amount as described above.
        MWD also requests your support for EPA's budget request of $56.2
    million for its Human Health Risk Assessment program. Under this
    program, EPA will develop approaches for more biologically defensible
    health assessments instead of relying on default assumptions which may
    be at variance with known mechanistic data. The program will also carry
    out research on sensitive sub-populations, particularly children and
    infants and will develop improved methods for measuring total exposure
    from multi-media sources and multi-pathways. This research will help
    bring better science to the risk assessment process used in the
    development of drinking water standards.
        EPA's 2000 budget includes $49.8 million for research on Emerging
    Risk Issues, including endocrine disruptors. Endocrine disruptors can
    cause adverse reproductive outcomes affecting both human and ecologic
    health. The Endocrine Disruptor Screening and Testing Advisory
    Committee (EDSTAC), a stakeholder group formed by EPA to develop
    screening and testing recommendations, has identified DBPs as one of
    the chemical classes which should be subject to early testing. DBPs are
    formed as part of the disinfection process for drinking water.
    Disinfection is necessary to protect against microbial disease and has
    been responsible for the virtual elimination of widespread outbreaks of
    waterborne disease in the U.S. MWD asks that you support the
    President's funding request for research on Human Health Risk
    Assessment and Emerging Risk Issues.
        drinking water--public water systems supervision program grants
        EPA's 2000 budget allocates $93.8 million for Public Water Systems
    Supervision Program grants. This funding is necessary for states with
    primary enforcement responsibilities to carry out their duties,
    including implementation of the 1996 SDWA regulations. Additional
    resources will be necessary to implement the changes resulting from the
    1996 SDWA amendments, and we ask that you support this funding level.
                              better america bonds
        The President's budget proposes to encourage the preservation of
    open space, protect water quality, and clean up Brownfields through a
    new, innovative Federal tax credit program. Under the Better America
    Bond Program, states and local governments would have the authority to
    issue bonds which provide Federal tax credits in lieu of interest
    payments by the issuing entity. This program would enable communities
    to acquire title to or purchase easements on environmentally sensitive
    and other land for purposes such as protecting water quality from
    polluted runoff. The President has requested bonding authority for the
    states of $1.9 billion for fiscal year 2000, and we ask that you
    support this request.
        We look forward to working with you and your Subcommittee. Please
    contact Brad Hiltscher, MWD's Legislative Representative in Washington,
    D.C. at (202) 296-3551, if we can answer any questions or provide
    additional information.
                                     ______

       Prepared Statement of The Mickey Leland National Urban Air Toxics
                                Research Center
        The Mickey Leland National Urban Air Toxics Research Center (the
    Leland Center or NUATRC), was established by Congress under Title III,
    Section 301(p) of the 1990 Clean Air Act Amendments as a non-profit,
    public/private research organization to sponsor research on the
    potential human health effects of the 188 listed air toxics. NUATRC
    initiates research that is critical to conducting meaningful risk
    assessments to help assure that air toxics regulations will be cost-
    effective and balanced. NUATRC has become a nationally-recognized
    leader in air toxics personal exposure research. This research, and the
    ability of the Leland Center to make significant contributions to the
    peer-reviewed science on air toxics, is becoming more vital with EPA's
    initiation of the Integrated Urban Air Toxics Strategy and Residual
    Risk programs.
        NUATRC has been operational for about six years and receives EPA
    assistance awards based upon Congressional appropriations. We use
    corresponding private sector funding to leverage these federal monies,
    with industrial firms being the major contributors. NUATRC has a small
    staff and utilizes an administrative services agreement with the
    University of Texas-Houston Health Science Center in the Houston
    Medical Center complex. This arrangement allows the Leland Center to
    take advantage of the world renowned scientific community at the
    University of Texas and the Texas Medical Center, as directed by
    Congress.
        This testimony provides an update on the Leland Center's current
    research and future directions. The NUATRC continues to focus its
    research in several key areas, which we believe will help close
    significant data gaps on the potential human health effects of air
    toxics. These areas are the following:
      --Human exposure to air toxics. Specifically, the relationship among
            outdoor, indoor and personal exposures to air toxics; the
            sources of those exposures; and the development of technology
            to better assess human exposure to air toxics.
      --Characterization of non-cancer health effects from air toxics
            exposures, primarily respiratory and immune system effects.
        Future research directions will include:
      --Assessment of potential links between personal exposures to air
            toxics and human health effects.
      --Examination of possible rapid response to emerging air toxics
            incidents.
      --Small grants for new and minority investigators for air toxics
            research.
    Strategic Research Directions
        NUATRC has continued to make significant progress in fulfilling its
    Congressional mandate. It has achieved national recognition within the
    scientific community, EPA and the corporate sector for its personal
    exposure research. The Leland Center has profited significantly from
    the work of its Board of Directors, appointed by Congress and the
    President, and its Scientific Advisory Panel. This Panel, composed of
    13 nationally-recognized scientists from the public, private, and
    academic sectors, develops the Center's peer-reviewed research program.
    This research is carried out at academic institutions and major
    research centers across the nation, under a scientifically rigorous
    award protocol.
        In pursuing its research directions, NUATRC interacts with other
    research organizations and public and private institutions to leverage
    both money and scientific expertise. We have interacted with the
    National Center for Health Statistics, the Health Effects Institute,
    the Center for Air Toxics Metal Research, EPA, MIT, and many
    corporations to assess critical research needs, to avoid duplication of
    effort, and to build upon previous research.
    Personal Exposure Research
        The National Research Council's (NRC) March 1998 report Research
    Priorities for Airborne Particulate Matter--Volume I states that
    research on personal exposure and the relationships among outdoor,
    indoor, and personal exposure is one of the nation's most critical
    research priority areas. The NRC Report underscores the NUATRC Board of
    Directors' decision several years ago to pursue this line of research.
    NUATRC took an early lead in fostering this type of research and is now
    a nationally-recognized leader in research on personal exposure to air
    toxics.
        As an initial effort, the Leland Center fostered the development of
    new, reliable, and cost-effective passive personal monitor that
    measures Volatile Organic Compounds (VOCs). NUATRC has two such major
    personal exposure research programs currently underway that are
    utilizing these personal monitors. These studies are being conduced by
    the Environmental & Occupational Health Sciences Institute (EOHSI) and
    Columbia University. Pilot studies for both projects were successfully
    completed in 1998 and the full studies are in progress in three major
    urban areas (Houston, Los Angeles, and New York City.) This research
    will characterize the personal exposures to VOCs, aldehydes, and metals
    on airborne particulate matter to which the individuals living in these
    areas are exposed. In addition, the work will examine how these
    exposures are influenced by outdoor and indoor sources, as well as the
    relative importance of mobile, point, and area emissions. These data
    will then be used in risk assessments to establish the most cost-
    effective means of reducing public health risks. Such research will
    help reduce a critical data gap in our understanding of the potential
    human health effects of air toxics and the relationships among personal
    exposures, emission sources and outdoor levels of air toxics.
    Participation in NHANES
        In addition to the EOHSI and Columbia studies, the Center began its
    collaboration with the Fourth National Health and Nutrition Examination
    Survey (NHANES), conducted by the National Center for Health Statistics
    for the Centers for Disease Control. In this collaborative study,
    personal exposures to selected air toxics will be measured using
    passive personal exposure monitors in 1,000 NHANES participants.
    Particulate Matter Methodology Development for Personal Exposure to Air
            Toxics
        In an analogous approach to that used in the development of the
    exposure monitors used to measure VOCs, NUATRC is encouraging the
    development of the next generation of monitors to measure personal
    exposure to fine particulate matter (PM2.5). The NRC reported that the
    development of new personal exposure samplers for measuring particulate
    matter constituents is ``critical'' as constituent analyses are the
    building blocks for other areas of research, particularly
    epidemiological research. NUATRC has recently released a Request for
    Proposal for the development of a new generation of particulate
    personal monitors. The research would come on line in early 2000. The
    development of a new PM2.5 monitor will facilitate large-scale studies
    on the potential effects of PM2.5 and its constituents, again providing
    critical information for air toxics risk assessments.
    Air Toxics Health Effects
        Measurement and analysis of personal exposures to air toxics is the
    critical first step in determining what health risks urban populations
    face from air toxics. The next step is to assess the potential link
    between those exposures and human health effects particularly those
    acute effects on the human respiratory and immune systems. While a
    great deal of research has been focused on determining the potential
    cancer causing effects of air toxics, relatively little effort has been
    devoted to determining the potential non-cancer effects, (e.g. human
    respiratory and immune systems). The importance of non-cancer health
    effects research has been underscored both by the NRC in its March 1998
    report and by EPA in its draft Integrated Urban Air Toxics Strategy.
        While current data suggest a possible adverse effect on the lungs
    and heart from exposure to PM, the reasons for such effects are not
    apparent. The current hypothesis is that toxic metals present on the PM
    contribute to adverse effects. The Center expects to fund two proposals
    for multi-year research projects on the potential health effects of
    particulate air toxics on human pulmonary and cardiovascular systems.
    The first study will test the hypothesis that the metals present on PM
    (and not the particles themselves) cause adverse respiratory and
    cardiovascular systems. Results from the study will provide insights
    into the relative toxicity to the respiratory and cardiovascular
    systems of different sizes of particulate matter, as well as the
    relative toxicity of the specific particulate metal species. The second
    study will explore the relationship between exposure to PM2.5 metals
    and human cardiopulmonary responses in both normal and chronic
    bronchitic populations. This study will help determine whether
    particulate metals cause adverse effects to the respiratory and
    cardiovascular systems of people without a pre-existing disease or that
    the metals exacerbate pre-existing conditions, like chronic bronchitis.
    Small Grants for New and Minority Investigators
        The Center is also supporting new and minority investigators in
    environmental health research. This New Investigator Award program is
    designed to facilitate community involvement in air toxics issues by
    encouraging younger researchers to explore critical air toxics
    environmental health issues in their immediate communities.
    NUATRC Exploratory Research Program
        NUATRC plans to support pilot study research on novel and important
    aspects of personal exposures to air toxics and the potential health
    effects of those toxics in urban populations. Such studies would
    include:
      --Identification and evaluation of health effects in susceptible
            populations, such as children.
      --Development of new techniques for assessing personal exposures.
      --Development of personal exposure models for use in air toxics risk
            assessment.
      --Determination of the mechanisms of action of air toxics in human
            cells.
        Research grants under this program would be open to all
    investigators and interdisciplinary collaboration would be encouraged.
    Rapid Response to Air Toxics Situations
        NUATRC is developing a program to enable it to respond rapidly to
    air toxics incidents, such as the smoke/haze situation that occurred in
    the spring of 1998 in Houston, Texas. Such incidents could present a
    unique opportunity to obtain scientific information about high air
    toxics personal exposure levels and/or related public health concerns.
    Information from such incidents could be incorporated into other
    national studies for linking high exposure levels of air toxics to
    potential health effects.
    Personal Exposure Symposium
        As previously stated, there is a critical need to characterize
    actual human exposures to air toxics and to assess the health
    consequences of those exposures. The purpose of a symposium on personal
    exposure research is to bring together key researchers in the field to
    highlight the current technology being used to assess personal
    exposures, major research initiatives and the development of a
    consensus regarding future research directions on personal exposure.
    Major academic researchers, EPA, state agencies, and the regulated
    corporate community will be invited to participate. We anticipate
    holding this symposium in Houston, Texas in the spring of 2000.
    NUATRC Administrative Costs
        NUATRC anticipates a moderate increase in its administrative budget
    in 2000. Due to the continuing expansion of the air toxics research
    programs discussed in this testimony, a 20 percent increase in
    administrative costs will allow a key addition to the scientific staff,
    specifically a full-time research director. This position is critical,
    as it includes managing the overall research programs, development of
    new programs, and interfacing with other research organizations and EPA
    to avoid duplication of effort and to build upon previous research.
        Even with this increase, the NUATRC's ratio of research
    expenditures to administrative costs remains considerably lower than
    comparable research institutions, at less than 25 percent. We are proud
    of this efficient use of government research monies, and continue to
    seek ways to further reduce this ratio.
                             appropriations request
        To carry out the existing and anticipated research programs, NUATRC
    respectively requests the Senate to appropriate $2.6 million to the EPA
    research budget for the Leland Center program. The following table
    carries those programs described above, with the approximate annual
    anticipated costs.

    Personal Exposure Research (EOSHI, Columbia)..................  $630,000
    Participation in NHANES.......................................   100,000
    PM Methodology Development....................................   260,000
    Air Toxics Health Effects.....................................   400,000
      --PM metals and respiratory/cardiovascular effects..........
    --PM metals and cardiovascular effects in brochitic population
    NUATRC Exploratory Research Grants............................   300,000
    New Investigator Awards Program...............................   200,000
    Rapid Response Program........................................    60,000
    Personal Exposure Symposium...................................    50,000
    NUATRC Administrative Cost--University of Texas...............   600,000
                        --------------------------------------------------------------
                        ____________________________________________________

              Total............................................... 2,600,000
    NUATRC Management
        NUATRC is governed by a nine-member Board of Directors composed of
    leading academic administrators and regulatory and private sector
    executives. The Board also oversees the activities of the Scientific
    Advisory Panel. This Panel, composed of thirteen scientists and
    physicians from private companies (DuPont, ICF Kaiser and Dow Chemical,
    EPA), academic institutions (Harvard, Brigham Young, and the
    Universities of Minnesota, Pittsburgh, and Washington), and the
    National Jewish Medical and Research Center, develops the NUATRC
    research program. This diverse group brings both different expertise as
    well as different perspectives to the development of NUATRC's research
    program. All NUATRCs research programs are rigorously peer-reviewed.
    Funding
        To date, NUATRC has relied on Congressional appropriations and
    support from the private sector. Corporate contributors have been
    consistent through the years and include Exxon, Phillips, Texaco, Rohm
    and Haas Company, Sun Company, and FMC Corporation. We are continually
    seeking new private sector partners to participate in NUATRC's research
    initiatives. In addition, we are soliciting support from both local and
    national philanthropic foundations. We have begun an intensive
    development effort to increase our private sector support.
    Conclusion
        NUATRC is most appreciative of the support that we have received
    from the U.S. Congress. We believe that NUATRC is advancing in the
    manner anticipated by Congress. From a fledging organization created by
    Congress in 1990, NUATRC has now become nationally-recognized for its
    research on personal exposures to air toxics. NUATRC will seek to
    advance research to help address the most critical scientific questions
    related to the potential human health effects of air toxics.
        We are gratified by the participation of EPA scientists in our
    Scientific Advisory Panel discussions, and the continued positive
    interactions with EPA's Offices of Research and Development and Air and
    Radiation concerning NUATRC's research. We want to assure that NUATRC's
    research is complementary to EPA's other research initiatives, i.e.,
    that there is no meaningful overlap in these programs. We believe that
    close scientific interactions and cooperation between these
    relationships with government and the corporate sector will help foster
    a consensus concerning the national debate over air toxics. Thank you
    for your attention to this request.
                                     ______

          Prepared Statement of the American Public Power Association
        The American Public Power Association (APPA) is the service
    organization representing the interests of the more than 2,000
    municipal and other state and locally owned utilities throughout the
    United States. Collectively, public power utilities deliver electric
    energy to one of every seven U.S. electric consumers (about 40 million
    people) serving some of the nation's largest cities. The majority of
    APPA's member systems are located in small and medium-sized communities
    in every state except Hawaii. We appreciate the opportunity to submit
    this statement concerning fiscal year 2000 appropriations for programs
    under this Subcommittee's jurisdiction.
           climate change action plan voluntary partnership programs
        APPA generally supports the fiscal year 2000 Budget request of $4
    billion to fund the Climate Change Technology Initiative. The
    Initiative consists of a package of tax incentives and investments in
    research and development to stimulate increased energy efficiency and
    encourage greater use of renewable energy sources. APPA is an
    aggressive advocate of federal support for energy research and
    development. While these programs do not directly provide benefits or
    incentives to public power systems, APPA supports them nevertheless
    because they will result in substantial improvements to the
    environment.
        Under the Initiative, the U.S. EPA will be directed to continue
    funding of the Energy Star, Green Lights and Landfill Methane Outreach
    programs. Public power systems have been active partners in these
    programs and other initiatives designed to improving efficiencies and
    lowering the cost of providing energy services to customers. We are
    particularly interested in the creation of a new $200 million ``clean
    air partnership fund.'' Under this, state and localities will be
    encouraged to leverage additional funds to finance efforts and projects
    to reduce greenhouse gas and other air pollutants.
    Green Lights Program
        The Green Lights program encourages use of energy efficient
    lighting to reduce energy costs, increase productivity, promote
    customer retention and protect the environment. Program partners agree
    to survey lighting in their facilities and to upgrade it, if cost-
    effective. Environmental benefits result from more efficient energy use
    and from reductions in emissions of carbon dioxide, sulfur dioxide and
    nitrogen dioxide, thus improving air quality. EPA provides program
    participants public recognition and technical support. Both large and
    small APPA member systems participate in this program including City
    Utilities of Springfield, MO; Concord Municipal Light Plant, MA; City
    of Georgetown, TX; Grant County Public Utility District, WA; Gray's
    Harbor County PUD, WA; Greenville Utilities Commission, NC; Indiana
    Municipal Power Authority, IN; Los Angeles Department of Water & Power,
    CA; Mason County PUD, WA; New York Power Authority, NY; Norwood
    Municipal Light Department, MA; Omaha Public Power District, NE;
    Orlando Utilities Commission, FL; Port Angeles City Light Department,
    WA; Puerto Rico Electric Power Authority, PR; Sacramento Municipal
    Utility District, CA; City of St. Charles Electric Utility, IL; Salt
    River Project, AZ; Virgin Islands Water & Power Authority, VI;
    Springfield Utility Board, OR, and Taunton Municipal Lighting Plant,
    MA.
    Energy Star Programs
        A number of EPA's Energy Star programs build on the successes of
    Green Lights. These important EPA programs are examples of successful
    public/nonpublic partnerships that promote the use of profitable,
    energy-efficient technologies as a way to increase profits and
    competitiveness while at the same time minimizing pollution. They
    include Energy Star Buildings, the Energy Star Transformer Program,
    Energy Star office equipment and the Residential Energy Star Program.
    APPA member systems participate in and support EPA's Energy Star
    efforts.
    Landfill Methane Outreach Program
        The Landfill Methane Outreach Program provides environmental
    benefits by encouraging utilities to make use of landfill gas as an
    energy source. Several APPA member systems participate in this program,
    including Illinois Municipal Electric Agency, IL; Jacksonville Electric
    Authority, FL; Emerald People's Utility District, OR; Los Angeles
    Department of Water and Power, CA, and Orlando Utilities Commission,
    FL. Utilities voluntarily agree to take advantage of the best
    opportunities to use landfill gas in generating power. EPA recognizes
    and publicizes the utility's efforts and provides technical assistance.
    One of the success stories cited by EPA occurred with APPA member
    system Emerald People's Utility District in Eugene, OR. This public
    power utility worked collaboratively with the State of Oregon, Lane
    County officials and a private investment company to develop a 3.4 MW
    plant at the Short Mountain Landfill. EPUD's general manager says
    landfill energy recovery is like ``turning straw into gold,'' providing
    additional revenue to EPUD as well as a fee to the county.
                     council on environmental quality (ceq)
        APPA supports the Administration's fiscal year 2000 budget request
    of $3,020,000 for the Council on Environmental Quality (CEQ). As units
    of local government APPA member utilities have a unique perspective on
    environmental regulation. Public power utilities and others from
    industry have experienced a general lack of consistency in federal
    environmental regulation. While additional layers of government should
    be avoided, a central overseer can perform a valuable function in
    preventing duplicative, unnecessary and inconsistent regulations. The
    council is responsible for ensuring that federal agencies perform their
    tasks in an efficient and coordinated manner. For these reasons, APPA
    supports the existence and continued operation of CEQ.
                                   superfund
        APPA member systems also support the Administration's request of
    $1.5 billion for Superfund cleanups. The Superfund Trust Fund as well
    as Superfund research programs are critical as we strive to improve air
    quality and our environment. The increased emphasis on expedited
    settlements and administrative relief, the Brownfields Initiative and
    more effective use of alternative dispute resolution by EPA are worthy
    goals.
        Again, APPA member systems appreciate your consideration of our
    views on priority appropriations issues for fiscal year 2000.
                                     ______

                Prepared Statement of Joseph M. DeSimone, Ph.D.
        Chairman Christopher ``Kit'' Bond; Ranking Member Senator Barbara
    Mikulski; and other distinguished members of the Subcommittee, I
    appreciate having the opportunity to share my comments about fiscal
    year 2000 funding priorities for the U.S. Environmental Protection
    Agency (EPA).
        My name is Joseph M. DeSimone, Ph.D., and I wear many hats. I am
    first and foremost an educator and researcher, as a professor of
    chemistry at the University of North Carolina at Chapel Hill and of
    chemical engineering at North Carolina State University. I am co-
    director of the Kenan Center for the Utilization of Liquid Carbon
    Dioxide in Manufacturing, a not-for-profit research organization
    sponsored by 16 corporations from around the world.
        With two of my former students, Timothy Romack, Ph.D. and James
    McClain, we developed carbon dioxide applications for cleaning in
    garment care, metal degreasing and textile processing. We founded
    Micell Technologies, Inc., in 1995 to commercialize these
    environmentally friendly cleaning systems. Located in Raleigh, North
    Carolina, we currently employ 32 people.
        I want to convey for the record how important Environmental
    Protection Agency and National Science Foundation (NSF) support has
    been to me and my partners in developing the carbon dioxide technology
    platform to foster sustainable economic development. Seed funding and
    technical guidance from the EPA's Green Chemistry program were
    instrumental to our early research findings, which led us to the
    creation of specialty detergent systems that would dissolve in carbon
    dioxide. Micell Technologies' Micare system--an alternative to
    traditional dry cleaning--eliminates the need for conventional dry
    cleaning solvents such as perchlorethylene (perc) which has been
    identified and regulated as a groundwater contaminant and a probable
    human carcinogen. Since our discovery and throughout our progress
    leading to commercialization, we have remained in close touch with EPA
    officials in the Green Chemistry and Design for the Environment (DfE)
    programs.
        On February 5, 1999, in Wilmington, North Carolina, we launched the
    first U.S. dry cleaning operation utilizing carbon dioxide, and the
    success to date of this breakthrough will lead the way for Micell to
    open many more environmentally friendly dry cleaning locations around
    the country this year.
        I am proud of this environmental success, but I want you and other
    legislators to share in that success because Micell's discovery was
    made possible in large part because of the federal seed funding I
    received from the EPA and NSF in the early lean years of my research.
    It is important for you to be aware of past successes and setbacks as
    this Subcommittee prepares its ``mark'' for fiscal year 2000
    programming.
        I encourage the Subcommittee to provide an additional $2 million,
    over and above the Administration's budget request, to the EPA for the
    DfE Garment and Textile Care Program. Since 1992, the DfE has worked
    with the nation's 30,000 commercial dry cleaners--one of the largest
    users of chemicals that come into contact with the public. It all
    started at an international roundtable on dry cleaning in which
    industry leaders and the EPA agreed that health and environmental
    issues surrounding the dry cleaning industry could be addressed most
    effectively through a voluntary, proactive approach. The Design for the
    Environment program has been a catalyst for positive, environmentally
    responsible change in the dry cleaning industry as EPA professionals
    have brought together a variety of stakeholders: Garment and textile
    designers; dry and wet cleaners; manufacturers; fiber producers;
    retailers; consumers; employees; government purchasing agents; industry
    trade groups; environmental and health interest groups; and even
    researchers.
        This leadership from the EPA has resulted in a life cycle approach
    that includes the identification of upstream industrial decisions and
    trends that impact garment care process choices.
        DfE accomplishes its mission by publishing the Cleaner Technologies
    Substitutes Assessment for Professional Fabricare Processes (CTSA)
    which is a technical report presenting relative cost, risk and
    performance information on existing and new cleaning technologies and
    substitute solvents. Comprehensive data from Micell's liquid carbon
    dioxide dry cleaning machine will be featured in the next updated CTSA
    publication.
        EPA--through the DfE program--also supports university research on
    various existing and new cleaning technologies, conducts training
    courses for garment care professionals on new technologies, develops
    case studies on new and existing cleaning processes, holds and attends
    conferences on an as needed basis, and publishes many fact-filled
    resource documents for its diverse audiences.
        Now that a viable liquid carbon dioxide cleaning system is
    commercially available, it is imperative that the DfE program work as
    vigorously with stakeholders as the agency has done to educate them
    about new wet cleaning technologies.
        As a result of enhanced awareness of available technological
    options, dry and wet cleaners can improve their operations and their
    bottom line while contributing to a safer workplace and a cleaner
    environment. The public--all taxpayers--deserve to understand the
    choices available to them in fabrics, cleaning processes and
    environmental protection.
        The NSF has been instrumental as well by supporting basic
    scientific inquiries into the CO2 technology platform. The NSF Young
    Investigator program and the Presidential Faculty Fellowship program
    through the Division of Materials Research supported my research at
    NSF. This funding allowed my early, not fully developed ideas to be
    explored at the start of my academic career in 1990 at the University
    of North Carolina at Chapel Hill. The results from this support led to
    numerous developments for improved polymer manufacturing and processing
    technologies to avoid the use of billions of pounds of organic solvents
    and even larger amounts of water that are currently used.
        I appreciate your consideration of my viewpoint, and I hope this
    Subcommittee will agree to appropriate more funding for both the EPA
    and the NSF as it relates to green chemistry and education initiatives.
    Thank you.
                                     ______

             Prepared Statement of the City of Miami Beach, Florida
        Mr. Chairman and Members of the subcommittee, my name is Neisen
    Kasdin, and I am the Mayor of the City of Miami Beach, Florida. I
    appreciate your allowing me the opportunity to submit testimony on a
    number of important initiatives for which the City of Miami Beach seeks
    federal assistance.
     north shore open space park /north beach recreational corridor project
        The City of Miami Beach, Florida, seeks your support for funding to
    create the North Beach Recreational Corridor Project, an
    environmentally sensitive recreational greenway which will interconnect
    a series of park facilities distributed throughout the City's
    residential North Beach District and to tie into a regional network of
    recreational trails/alternative transportation routes.
        The North Beach Recreational Corridor will provide a continuous
    route throughout the entire North Beach District interconnecting and
    improving public access to public parks, the beaches and other
    recreational, cultural and educational facilities.
        The main recreational destination along the corridor will be the
    City's North Shore Open Space Park. The 35 acre facility is the largest
    park in Miami Beach and is a highly treasured natural resource. Under
    the City's plan, great emphasis will be placed on the preservation and
    enhancement of the park's natural ecosystems which include the beach
    shoreline, a sand dune system and a native coastal hardwood hammock.
    New native vegetation plantings are proposed between the back dune and
    coastal hammock areas, linking the two habitats and creating a stronger
    dune community. Clear cutting of exotic nuisance plant species will
    strengthen native plantings and help create a visual link from land to
    sea. An expanded interpretive center is proposed to improve public
    access to the highly successful Sea Turtle Hatchery program and other
    nature education programs and activities. This unique combination of
    natural resources and public facilities will offer the community an
    ``environmental classroom'' that will be highly conducive to the
    exploration and understanding of the barrier island ecosystem
    indigenous to Miami Beach.
        In addition to the North Shore Open Space Park, the Corridor will
    also connect with the Altos Del Mar Park, Band Shell Park, Ocean
    Terrace Park, and the 64th Street Park facilities which offer a wide
    array of recreational and cultural amenities. The Corridor will also
    connect with eight beach access areas to enhance public access to the
    beaches and to encourage park-beach cross utilization. Seven regional
    parking facilities will also be connected to the recreation trail to
    help improve recreational facility access for our residents and
    visitors.
        The estimated cost of the project is $7.1 million. The City has
    secured $3.1 million from a Park Improvement Bond Program and an
    additional $840,000 in ISTEA Enhancement Funds. An appropriation of
    $3.2 million would provide the additional funds needed to allow this
    valuable regional recreational enhancement project to become a reality.
                           water sewer revitalization
    Description of the existing water system
        The City of Miami Beach owns, operates and maintains the potable
    water system serving customers within the corporate limits. The potable
    water facilities include a water distribution system extending
    throughout the city, five existing water booster pump stations, and
    four welded steel ground storage tanks. A sixth water booster pump
    station is planned for location on the MacArthur Causeway at Terminal
    Island. Two elevated water storage tanks are located in the south area
    of the City; however, both have been removed from service and at this
    time there are no plans for future use of these tanks. The city's
    potable water is supplied exclusively by the Miami-Dade Water and Sewer
    Department (WASD), the department of the County that oversees operation
    of the County's water and sewer system.
        Because the City of Miami Beach is a coastal barrier island
    surrounded by salt water, it was not practical or economical to develop
    its own water supply system. The least costly and highest quality water
    comes from the Biscayne Aquifer water supply wells located on the
    mainland and owned and operated by the County. The city maintains four
    large diameter metered supply interconnections with the County's
    distribution system.
        The water distribution system has approximately 180 miles of water
    mains ranging from 2 inches to 36 inches in diameter. The water
    distribution system currently serves approximately 11,123 retail
    customers. The water distribution system serves 1,008 fire hydrants and
    712 fire lines, and has 23,000 valves of various sizes. The system has
    11,601 service connections.
    Description of the existing wastewater system
        The City owns, operates and maintains the wastewater collection and
    transmission system serving customers within the corporate limits. All
    land usage must connect to the sanitary sewer system as a matter of
    City policy, and there are no septic tanks in operation within the
    City. The system consists of 152 miles of lines, including both gravity
    sewers and pressurized force mains, and 23 wastewater pump stations.
    The wastewater system currently serves approximately 9,641 retail
    customers.
        All wastewater generated within the City is sent to the WASD
    Central District wastewater treatment plant on Virginia Key for
    treatment and disposal. The 54-inch force main which conveys the
    wastewater to the plant is a subaqueous force main running from South
    Pointe under Government Cut to Virginia Key. This force main is owned
    and maintained by WASD. The County's wastewater collection,
    transmission and treatment system is divided into three districts
    referred to as the North, Central and South Districts, each served by
    its own wastewater treatment plant. In addition to Miami Beach, the
    Central District plant treats wastewater from the City of Miami as well
    as other communities and unincorporated areas within the Central
    District. The wastewater transmission system has the capability to
    transfer limited quantities of wastewater flows between districts.
    Five-year capital improvement program
        The City has developed a Five-Year Capital Improvement Program
    containing those projects needed in order to replace and upgrade
    components of the Water and Sewer Utility and to provide for the
    demands to be placed upon the Water and Sewer Utility by projected
    growth. In connection with the water system portion of the Five-Year
    Capital Improvement Program, all four of the Water and Sewer Utility's
    existing storage tanks will be replaced, all of the existing water
    booster pump stations will be renovated and upgraded and most of the
    water mains throughout the System will be either cleaned and lined or
    replaced and/or extended. The wastewater components of the Five-Year
    Capital Improvement Program emphasize will provide improvements to the
    wastewater pump stations, and to the gravity collection system to
    reduce the amount of infiltration and inflow into the wastewater
    system.
        The cost of the projects included within the Five-Year Capital
    Improvement Program is estimated at $105,208,000. The City expects to
    fund these improvements on a cash flow basis primarily from the
    proceeds of Series 1995 bonds and parity Bonds which are anticipated to
    be issued this year. This method of funding will provide most of the
    needed capital, but Federal assistance is still necessary to complete
    these much needed improvements. Therefore, the City of Miami Beach
    requests a 90 percent-10 percent local/Federal split in order to ensure
    that the City meets its goal. Therefore, we are requesting $10.1
    million to help up meet our goal of updating our system for the next
    millennium.
           indian creek waterway revitalization and greenway project
        The City of Miami Beach exists as a cluster of barrier islands,
    with the Atlantic Ocean on one side and the Biscayne Bay Marine Estuary
    on the other. The historic and scenic Indian Creek Waterway system
    snakes its way through this eight mile long chain of islands. Just
    after the turn of the century, these natural waterways were
    ``improved'' by dredging and the construction of seawalls to stabilize
    the shorelines and to allow the farmers who first settled the area,
    transport their produce out to Biscayne Bay and the Port of Miami.
    Indian Creek served as the main transportation corridor for the early
    settlers, and as the island community grew, it remained the spine that
    interconnected the public, commercial and residential areas throughout
    Miami Beach. Today, the shoreline development along Indian Creek runs
    the full gambit from large scale resort hotels to single family homes,
    but it is predominately comprised of low and moderate income, multi-
    family residential facilities.
        Over the years however, these once pristine waterways have fallen
    into decline. The waterway improvements so altered the shoreline
    ecosystem that the mangroves and other native plants have died-out or
    been overgrown by nuisance exotic species. The steel and concrete
    seawalls have crumbled and collapsed.
        The loss of native plant communities and the failure of the
    seawalls has resulted in substantial erosion of the shorelines and the
    undercutting of roadways and public and private structures. The erosion
    has also transported thousands of tons of sand and topsoil into the
    waterways. Silt and sediment from the eroding shorelines have smothered
    benthic marine life and clouded the water. In addition, the eroded
    shorelines allow rain water run-off to wash trash, debris, agricultural
    chemicals and other pollutants into the waterways.
        The loss of water quality and ecosystem destruction has killed-off
    or driven away the manatees, dolphins, baitfish and gamefish
    populations which used to be in abundance throughout Indian Creek. The
    loss of the native wetland plant communities from along the shorelines
    has also substantially reduced the available habitat for many key bird,
    reptile and animal species, including many migratory birds which
    utilize our area as winter nesting grounds.
        Through the Indian Creek Waterway Revitalization and Greenway
    Project, the City of Miami Beach proposes to create a Public-Private
    Partnership between the City, the Indian Creek Area Residents and
    Hoteliers, the State of Florida and the National Park Service to
    revitalize the Indian Creek Waterway and to restore its historic role
    as the backbone of Miami Beach.
        The crumbling seawalls will be replaced with an innovative ``living
    seawall'' system. This will entail the demolition of the old seawalls
    and the construction of a new walls comprised of carefully intermeshed
    boulders of different sizes. The slope and elevation of the new boulder
    walls will be designed to closely mimic the natural tidal creek
    shorelines which pre-existed the seawalls. Geotextile liners will be
    installed along the eroded shoreline areas behind the new boulder walls
    to prevent future erosion and then the shoreline will be refilled with
    rich topsoil. The entire shoreline will then be replanted with native
    coastal plant species.
        Once the shorelines have been stabilized, the upland areas will be
    developed to create a continuous public access corridor or Greenway.
    The Greenway would provide public pedestrian/bicyclist access along the
    entire length of the waterway with connections to residential area,
    resort areas, civic centers, the beaches and four other regional
    recreational trails/bike paths. Rest areas, vista areas and waterway
    access areas (fishing & canoe launching) will be interspersed
    throughout the greenway. Interpretive signage will also be incorporated
    into the project to educate residents and visitors about the historic
    landmarks and natural features along the greenway trail.
        Finally, a comprehensive program will be implemented to maintain
    the shoreline improvements and to foster the continuing restoration,
    enhancement and protection of the Indian Creek Waterway System.
        The City of Miami Beach requests an appropriation of $3.75 million
    to implement this important initiative.
                           coastal erosion initiative
    (Innovative beach erosion prevention and sand recycling system
            demonstration Project)
        Dade County, Florida has approximately 15 miles of sandy beaches.
    The Miami Beach Segment makes up 10.5 miles or 70 percent of that beach
    front area. The Miami Beach Segment is bounded to the north by Baker's
    Haulover inlet and to the south by Government Cut Inlet. The
    construction of these inlets, just after the turn of the century, left
    the Miami Beach Segment isolated between two complete barriers to
    along-shore sand migration. As a result, the Miami Beach Segment
    continuously loses sand through natural processes but can only regain
    sand through artificial means.
        In the years that followed the construction of the inlets, the
    Miami Beach shoreline steadily receded. By the mid-1970's the shoreline
    had receded more than 500 feet and most of the sandy beaches had been
    lost. Property owners were forced to build seawalls, bulkheads and
    other hardened structures to prevent the coastal infrastructure from
    being undercut by the encroaching tides.
        The City remains committed to identifying alternate sources of sand
    and expediting the evaluation of the environmental, physical and
    economic viability of the potential sources, to ensure that sufficient
    quantities of beach-quality sand are available to fulfill our future
    needs. However we have realized that continuing to pump sand on to our
    beaches without addressing the underlying causes of the erosion, will
    leave us in an endless cycle of needing more, increasingly expensive
    sand.
        If the erosion cycle can be successfully slowed, it would reduce
    the demand for additional sand and save millions of dollars in
    renourishment costs; not to mention the elimination of the
    environmental, public and legal challenges to renourishment projects.
    To achieve this goal, the City embarked upon a program to develop new
    technologies which will slow down and help prevent beach erosion
    processes. A Sediment Budget Analysis Report, prepared for Dade County,
    revealed the presence of several ``hot spot'' areas along our shoreline
    which accounted for the majority of the sand that has been lost.
    Analysis of the data also revealed the presence of an area of
    substantial sand accretion (accumulation) in a near shore area near the
    southern end of Miami Beach.
        The causative factors behind these hot spots have been linked to
    changes in the shape (compass orientation) of the coastline and benthic
    topographical anomalies in the near shore area. The worst of these hot
    spots exist within two half-mile long areas along our shoreline. These
    two hot spots have been shown to be responsible for the loss of almost
    200,000 cubic yards of sand each year. The hot spots also accelerate
    the erosion of the adjacent beaches for as much as a mile to the north,
    as the sand from the adjacent beaches slough down to fill the voids
    within the hot spots. With beach renourishment costs of about $14/cubic
    yard of sand, these hot spots are responsible for the loss of more than
    2.5 million dollars annually.
        After detailed examination of the available data and careful
    consideration of the possible alternatives, our coastal engineers have
    designed a series of detached headlands or breakwater-type structures
    which will significantly reduce the rate of erosion within these hot
    spot areas and help to stabilize large sections of our beach. The size
    and configuration of these headland structures have been carefully
    ``tuned'' to the specific conditions at each of the hot spot areas. Our
    coastal engineers estimate that the elimination of each hot spot will
    widen and stabilize approximately one mile of beach. It is believed
    that these benefits can be gained without significant negative impacts
    to the down drift beach areas or offshore reefs. Sea turtle nesting in
    the area will also be enhanced by the widening and stabilization of
    more than two miles of beach.
        The City of Miami Beach and Dade County have jointly initiated an
    emergency effort to develop and construct breakwater reef structure in
    the location of the two worst hot spots. Preliminary estimates indicate
    the breakwater structures will cost approximately $450,000 each. The
    required funding has already been appropriated for the project and
    construction is scheduled to begin in mid-1999.
        The City's master plan is to develop a series of erosion control
    breakwaters, positioned in key areas along the shoreline, to widen the
    beaches and slow the erosion process. Concurrent with the efforts to
    slow the beach erosion process, we plan to initiate a feasibility
    study/demonstration project to pursue an innovative and promising
    potential solution to our sand shortage problem. The Sediment Budget
    Analysis Report revealed the presence of a highly accretional near-
    shore area at the southern end of Miami Beach. The area is accreting
    sand at a rate of more than 200,000 cubic yards per year. Sand is
    accreting in the area because of the navigational Jetty that juts 1500
    yards out to sea, along the north side of the Government Cut Inlet, at
    the southern tip of Miami Beach. The jetty structure acts as a barrier,
    blocking the natural, southerly migration of the near shore sand lens,
    which causes the migrating sand to pile-up on the north side of the
    structure. As more and more sand piles-up, the sand lens builds and
    creeps offshore toward the end of the jetty. Because the seaward end of
    the jetty extends out to the first line of coral reefs which parallel
    our shoreline, the jetty and the reef line together form a 19trap'
    which prevents most of the sand from being able to move further south.
    This near-shore lens is continuing to build and will eventually 19over-
    top' the reef and smother living corals. If authorized, the City will
    seek to have the overfill accumulating at the southern end of the
    segment ``back passed'' or pumped back up to the eroded beaches at the
    northern end of our beach segment.
        Local government has already made a substantial investment in the
    development of this process. An appropriation of $6.5 million will
    allow the City to complete a thorough engineering analysis of the
    entire system, obtain the necessary Federal and State permits, and
    contract for the renourishment of a mile long section of beach
    utilizing back-passed sand. This project will serve as a demonstration
    of the effectiveness of the Sand Recycling System and the importance of
    regional sediment management.
                                     ______

     Prepared Statement of the Missouri Rural Water Association & National
                            Rural Water Association
        epa rural water technical assistance and ground water protection
        Thank you Chairman Bond and Members of the Committee. My name is
    Dennis Flanery. I represent the State of Missouri on the National Rural
    Water Association Board of Directors. I am very honored to represent
    all of Rural Water in front of you today.
        My message today is that we believe the funding for rural water
    technical assistance and small community groundwater protection is the
    most effective use of EPA funds you appropriate from the drinking water
    program. Each year this subcommittee approves hundreds of millions of
    dollars for the EPA to increase the regulatory burden on small towns.
    In turn, EPA increases the number and stringency of the regulations,
    passing billions in compliance costs onto our small towns.
        Much of this effort is misdirected because improving drinking water
    in small communities is more of a RESOURCE problem than a REGULATORY
    problem. Every community wants to provide safe water and meet all
    drinking water standards. After all, local water systems are operated
    by people whose families drink the water every day, who are locally
    elected by their community, and who know, first-hand, how much their
    community can afford.
        Numerous studies have concluded that a majority of non- compliance
    with EPA regulations is not due to actual water contamination, but is
    caused by the complexity of the regulations. Also, studies by the
    National Rural Water Association and EPA have shown that small towns
    will quickly remedy any water problems when provided understandable
    education and additional resources. More regulations won't help poor
    communities which can't afford the current regulatory regime, much less
    a new set of regulatory hurdles. What works in small towns is providing
    common-sense assistance in a form they can understand and afford. It
    takes someone sitting down with them evening after evening, and working
    with them through the ENTIRE process. Giving them a copy of the federal
    register and a phone number to call is not helping. Attached is a list
    of the over one thousand on-site visits carried out in the State of
    Missouri last year.
        Each time we help a community we educate them on their resources so
    that they can solve their problem on their own next time. THIS IS KEY .
    . . ENCOURAGING LOCAL responsibility and building local know-how. If
    the community does not accept and support measures to protect their
    water, no amount of regulation will protect it. The TA program promotes
    this kind of local initiative.
        The need for technical assistance is increasing with the dramatic
    increase in new federal regulations including: consumer confidence
    reports, radon, ground water rules, operator certification, source
    water protection, disinfection byproducts, etc. Our rural water
    technical assistance staff will get thousands of the calls for help
    from each of these regulations.
        When local communities take responsibility for protecting their
    environment they do it more effectively and economically than
    governmental regulations. This has been documented in our groundwater/
    wellhead protection program's rapid expansion to small communities all
    over the state in the last four years, a list of affected communities
    is attached to my testimony. My reason for pointing this out is that we
    are facing the same challenge in source water/non-point source
    pollution in rural areas.
        As the Congress provides additional EPA funding (under the Safe
    Drinking Water Act and the Clean Water Action Plan) for source water
    protection, clearly we need a grassroots source water protection effort
    that will do for source water what the grassroots groundwater
    protection program did for groundwater. To this end, we urge you to
    expand the ground water initiative to include source water. Last year
    this House Committee provided $7.5 million for an innovative grassroots
    source water protection program. We urge you to again provide this
    funding and to specifically designate the National Rural Water
    Association to carry out this program in each state. This will ensure a
    bottom up, locally supported element as contrasted with EPA's proposed
    top down regulatory approach.
        Mr. Chairman, I will close with our request that the Committee
    include $8.6 million in the EPA's budget for all state rural water
    technical assistance and our groundwater protection initiatives and to
    again provide $7.5 million for an innovative grassroots source water
    program. Thank you for your past support and the opportunity to appear
    before you today.
                                     ______

        Prepared Statement of the Passaic Valley Sewerage Commissioners
        Chairman Bond and Members of the Committee, my name is Robert
    Davenport and I am the Executive Director of the Passaic Valley
    Sewerage Commissioners in Newark, New Jersey. I would first like to
    thank you for the opportunity to testify today.
        PVSC owns and operates one of the largest wastewater treatment
    plants in the nation. We treat wastewater from 1.3 million people in 47
    towns and cities and from over 300 large industries in Northern New
    Jersey.
        When I addressed this distinguished committee last year our Passaic
    River/Newark Bay Restoration Program was just getting started. This
    year I'd like to thank you for your past support and update you on the
    progress and the achievements of the program we've made in the last
    year.
        New Jersey is distinguished as being the birthplace of industry and
    manufacturing in the United States. The industrial centers of Newark,
    Jersey City and Paterson developed and thrived in the 1800's;
    generating the goods and capital that contributed to the building of
    our state and nation.
        Unfortunately, the engineering standards at the time of this great
    development called for the combining of both storm water and sanitary
    sewers into one system. Therefore, when it rains, storm water enters
    the combined sewer systems and the capacity of the sewer lines is
    exceeded which causes a mixture of untreated wastes and rainwater
    runoff to discharge into the local waters. This, as you know, is called
    a Combined Sewer Overflow, or CSO. Engineers were simply unaware of the
    environmental detriment caused by combining both systems into one.
    Science followed the principle that dilution of wastewater by
    stormwater runoff in a combined sewer system would have minimal impact
    upon the environment. We have since learned that this is not the case.
    The Passaic River and Newark Bay are now faced with swimming
    prohibitions due to elevated coliform bacteria concentrations and
    fishing and shellfishing bans due to the contaminated river sediments.
    Dredged material disposal options are limited due to toxic contaminants
    such as heavy metals and organic compounds in the river sediments.
    Floatable debris impacts the aesthetic qualities of these water bodies.
        While in the process of discovering the impact of CSOs on the
    environment, the economic base of Passaic Valley's combined sewer
    communities has experienced dramatic erosion. The cities of Newark,
    Jersey City, Paterson, Harrison, East Newark, Bayonne and Kearny are
    among the poorest communities in New Jersey, and each has a combined
    sewer system which continually threatens the water quality of the
    Passaic River and Newark Bay during wet weather events.
        The traditional solution for reducing CSOs is to separate the storm
    water from the sanitary sewers. The estimated cost of this traditional
    solution will be well over $5 billion. This has never been and will
    never be a feasible solution.
        For the last 30 years New Jersey has been struggling to find a
    solution that is both economically viable and environmentally
    acceptable to the problem of CSOs. PVSC found just such a solution. The
    Passaic River/Newark Bay Restoration program has a three pronged
    approach to alleviate the ongoing pollution to these NJ resources.
        The first element of the program is the implementation of plant
    wide improvements to increase the treatment plant's wet weather
    capacity from 368 million gallons per day to 700 million gallons per
    day. Combined sewer discharges will be reduced by 332 million gallons
    per day to attain 106 percent of EPA's Long Term Control Requirement
    for wet weather flow pollutant removal. The program will result in the
    removal of 4,000 lbs/year of Organic Compounds, 90,000 lbs/year of
    toxic heavy metals, and 12,000,000 lbs/year of Conventional Pollutants
    which is now discharged to the Passaic River and Newark Bay during wet
    weather.
        The second element is a trackdown of toxic discharges to the sewer
    system. This work is being implemented in conjunction with the NJ
    Department of Environmental Protection. The goal is to locate and
    identify unknown sources of ongoing discharges of toxic chemicals of
    concern.
        The third element is the Shoreline Cleanup portion of the program.
    We provide coordination and support to municipalities, counties,
    citizens, service groups, and local businesses to remove trash along
    the riverbanks in their communities. Gloves, trash bags, trash disposal
    and other supplies are given to volunteer groups to help them with
    their clean up efforts.
        During the month of August 1998, PVSC's summer employees removed
    trash on a daily basis in urban parks along the River. Due to the
    success of last year's summer program, we anticipate covering more of
    the river's banks during the months of June, July and August.
        I'd now like to share the results of last year's efforts with you.
    Last summer we assisted in 42 cleanups and helped remove more than 226
    tons of trash from the Passaic River. So far, this year in two Earth
    Week cleanup projects we assisted over 500 volunteers whom we presented
    with a clean-up crew tee shirt as a thank you for their efforts.
        We are looking forward to the June launching of a 50-foot skimmer
    vessel which will remove floating debris from the waterways in our
    district. Funds for the vessel's purchase were provided by the Port
    Authority of New York and New Jersey, and the cost of operation will be
    borne by PVSC.
        PVSC is working with the State of New Jersey, the State of New
    York, and the USEPA on a bi-state program to reduce discharges of toxic
    materials throughout the New York/New Jersey Harbor Estuary. Led by
    PVSC, ten NJ wastewater agencies were awarded over $300,000 to sample
    for toxic materials in combined sewer, stormwater and treatment plant
    effluents. An additional $600,000 will be spent by NJ to test the
    samples for toxic material. We have applied to the State of NJ for an
    additional $2 million to enable us to track down the sources of the
    toxic compounds.
        The real key to improving the water quality of the Passaic River
    and Newark Bay is to reduce Combined Sewer Overflows. PVSC's solution
    will cost $82 million compared to the traditional solutions cost of
    over $5 billion.
        The State of NJ awarded PVSC $15 million for the engineering design
    for the plant improvements needed to implement the program. An
    application was submitted to the USEPA for three projects to be funded
    by a grant authorized by your committee in the fiscal year 1999
    Appropriations Bill. Local funds will be used to provide the match for
    the special appropriations grant. In an effort to accelerate the
    program, PVSC has applied for a $25 million state revolving loan to
    finance the construction of a major component of the plan. We look
    forward to a late summer ground breaking for these projects.
        In spite of all the progress we've made, the program is just
    beginning PVSC has exhausted its ability to fund additional work
    without continued Federal assistance. We are respectfully requesting
    $10 million in Federal funds for this year to begin construction of the
    next elements in the plant improvements program. The completion of the
    next element will get us half way to our goal of doubling our wet
    weather flow.
        Once again, I would like to thank you and the committee for your
    continued support for the Passaic River/Newark Bay Restoration Program.
    We strongly believe that this program will restore the Passaic River
    and Newark Bay as a recreational and economic resource for the region.
                                     ______

     Prepared Statement of the El Paso Water Utilities Public Service Board
        Thank you Chairman Bond and Members of the Committee for the
    opportunity to provide testimony in support of $13.5 million for the
    design and engineering phase of the New Mexico/Texas Water Commission's
    Regional Sustainable Water Project. My name is Ed Archuleta, and I am
    the General Manager of the El Paso Water Utilities Public Service Board
    and the Program Manager of the El Paso-Las Cruces Regional Sustainable
    Project.
        The City of El Paso, Texas, and the City of Juarez, Mexico, rely on
    the water from the Hueco Bolson aquifer for the majority of their
    drinking water supply. This aquifer will be fully depleted within the
    next twenty-five years if an alternative year-round surface water
    supply is not found. It is the objective of the sustainable water
    project to create an alternative long-term surface water supply for the
    entire region.
        This cooperative project will reverse the depletion of the major
    groundwater aquifers in our area and will provide a long-term, high-
    quality sustainable water supply for our rapidly growing bi-state/bi-
    national region.
        To allow for the proper coordination and timely completion of the
    project, we urge the Committee to provide this specific funding as part
    of the Border Environment Infrastructure Fund (BEIF). The BEIF was
    utilized to fund the initial environmental and water resource studies
    for the project ($3 million in fiscal year 1998) which are now being
    completed. By specifically designating these funds for the sustainable
    water project it has enabled the project to move forward with a minimum
    of bureaucratic interference. This approach to funding has the support
    of the EPA officials, Border Environment Cooperation Commission, and
    NADBank staff responsible for the implementation of the BEIF programs.
        Project benefits include:
      --Improving and protecting the quality of the region's ground and
            surface water;
      --Preserving the Hueco and Mesilla groundwater bolsons;
      --Implementing a year-round delivery system of surface water, which
            will enhance agricultural and municipal water supplies and the
            riverine ecosystem;
      --Increasing surface water supply through efficient delivery and
            water treatment; and
      --Continuing to meet treaty and compact requirements for delivery of
            Rio Grande Project water.
        The El Paso-Las Cruces Regional Sustainable Water Project will
    benefit more people on the Texas/Mexico border than any other project
    that might be funded under the North American Free Trade Agreement
    (NAFTA). The affected region includes El Paso, TX, Las Cruces, NM and
    Ciudad Juarez, Chihuahua, Mexico. The current regional population is
    over 2 million, and is expected to more than double by 2025. Chronic
    unemployment is over 10 percent, yet the region's future economy,
    environment and quality of life is dependent on a reliable supply of
    water.
        As mentioned above, concurrent with the region's population boom is
    the depletion of its local aquifers. Those underground water sources
    provide Las Cruces and Ciudad Juarez with 100 percent of their water,
    and El Paso with 57 percent. The Hueco Bolson, designated a Priority
    Groundwater Management Area by the Texas Natural Resources Conservation
    Commission, is expected to be depleted by 2025. The Sustainable Water
    Project will assure the long term preservation of this groundwater
    source.
        This sustainable water supply project is the top environmental
    priority for this heavily populated El Paso region of the border. The
    $13.5 million will design water plants in New Mexico and a plant in El
    Paso. The project includes an aqueduct system, storage tanks, pump
    stations, and aquifer storage and recovery system for the Hueco Bolson
    (to store water during periods of high runoff for use during periods of
    drought). The detailed phasing plan for these facilities will be
    completed by the end of the year.
        Without federal assistance the project cannot move forward. State
    and local monies are difficult to obtain because the scope is regional
    and multi-jurisdictional and if any participant decides to use its
    funding as leverage then cooperation becomes more difficult. However,
    the availability of BEIF funds allows the process to proceed under the
    guidance of the New Mexico/Texas Water Commission. Attached is a list
    of participants in this process. We believe this is exactly what the
    Congress intended when NAFTA passed and the BEIF program was funded.
        We thank you again very much for your past support for this
    project. We urge you to specifically designate the $13.5 million from
    the BEIF program so that the next phase of the program can proceed
    immediately.
                                     ______

          Prepared Statement of the Brownsville Public Utilities Board
        Good afternoon Chairman Bond and Members of the Committee. Thank
    you for the opportunity to testify before you today. My name is Robert
    Lackner and I am Chairman of the Public Utilities Board in Brownsville,
    Texas.
        Our purpose for testifying is to first thank you for your
    assistance last year in providing $2.5 million to allow for the initial
    studies and regional coordination needed to initiate the Brownsville
    Weir and Reservoir project and, second, to request an additional $3.5
    million from the Border Environmental Infrastructure Fund to provide
    the federal share of the design and engineering for the next stage of
    implementation for the Brownsville Weir and Reservoir Project. The lack
    of a stable long term water supply in Brownsville and other lower Rio
    Grande communities is the top environmental need in the entire south
    Texas region.
        The Brownsville Weir and Reservoir Project is the most feasible way
    to meet this need. It provides a means for capturing Rio Grande water
    that has passed all other river water users and which now flows
    directly into the Gulf of Mexico. The Weir is the most efficient way to
    conserve water for the use of the local communities.
        The Weir would release adequate water to satisfy all local
    environmental and downstream uses. The Project uses the existing river
    channel for storage and will be accessible to numerous communities
    within the United States and Mexico. The alternative is for Brownsville
    to construct currently authorized off-channel reservoirs which are
    remote to existing water supply facilities, accessible to only a
    limited number of municipal users, susceptible to excessive evaporation
    losses and potential contamination by saline groundwater and provide no
    benefit to Mexico.
        The Project promotes water conservation at the highest level
    because under current water management conditions, a significant
    portion of the water flowing into the Lower Rio Grande goes unutilized
    and flows into the Gulf of Mexico. Absent the Project, the
    International Boundary Water Commission must release water from Falcon
    Reservoir up to seven days in advance of the anticipated downstream
    diversions and needs. If the released water is not diverted due to
    unexpected reduced demands, mechanical pump failures, or climactic
    changes, any uncaptured or unused water flows into the Gulf of Mexico.
    The Weir solves this problem, and, as stated above, it avoids the
    environmental and cost problems of building an off-site reservoir. The
    Project is the ultimate water conservation strategy for our region and
    can conserve more water than any other alternative available. Every
    acre foot of water conserved by the Project will result in an
    unreleased acre foot of water remaining in storage behind Falcon Dam
    for the benefit of all downstream users, municipalities, industries and
    agriculture.
        The Project has the strong support of the State of Texas. In fact,
    the Texas Water Development Board has incorporated the Project as its
    top priority in the current Texas Water Plan. There is also written
    support from City of Matamoros, Mexico and from the Mexican State of
    Tamaulipas. In addition, the Project has the broad support of local
    governments, citizens, and, increasingly, local environmental
    organizations. For the record, we have attached a list of the many
    individuals and groups that have expressed support for the Brownsville
    Weir and Reservoir Project.
        We cannot build the Project without federal environmental funding
    assistance. The Brownsville Public Utility has spent $3 million on
    hydrology and preliminary environmental studies for this project. As a
    multi-jurisdictional bi-national effort, we need one source of funding
    for this initial design and engineering phase. This is exactly the type
    of project that the Border Environmental Infrastructure Fund (BEIF) was
    designed to help, but we have found that in order to move this project
    along in a timely manner, there must be Congressional direction given
    on the expenditure of the funding in the appropriations bill. We
    believe that EPA, NADBANK and the Border Environment Cooperation
    Commission staff agree that a Congressionally mandated provision is the
    most effective approach. Thus, we are asking you to earmark $3.5
    million out of the BEIF $100 million in funding requested by the
    Administration.
        Thank you again for your kind support. This Committee has already
    done more to assure a long term water supply for the over 500,000
    persons in the South Rio Grande area than any other organization or
    resource. We urge you again to assist us in completing the engineering
    and design for the Weir.
                                     ______

    Prepared Statement of the California Industry and Government Coalition
                                on PM-10/PM-2.5
        Mr. Chairman and Members of the Subcommittee: On behalf of the
    California Industry and Government Coalition on PM-10/PM-2.5, we are
    pleased to submit this statement for the record in support of our
    fiscal year 2000 funding request of $1.25 million in the EPA budget for
    the California San Joaquin Valley Regional PM-10/PM-2.5 Air Quality
    Study.
        The San Joaquin Valley of California and surrounding regions exceed
    both state and federal clean air standards for small particulate
    matter, designated PM-10/PM-2.5. The 1990 federal Clean Air Act
    Amendments require these areas to attain federal PM-10/PM-2.5 standards
    by December 31, 2001. Attainment of these standards requires effective
    and equitable distribution of pollution controls that cannot be
    determined without a major study of this issue.
        According to EPA and the California Air Resources Board, existing
    research data show that air quality caused by the PM-10/PM-2.5 problem
    has the potential to threaten the health of more than 3 million people
    living in the region, reduce visibility, and impact negatively on the
    quality of life. Unless the causes, effects and problems associated
    with PM-10/PM-2.5 are better addressed and understood, many industries
    will suffer due to production and transportation problems, diminishing
    natural resources, and increasing costs of fighting a problem that begs
    for a soundly researched solution.
        PM-10/PM-2.5 problems stem from a variety of industry and other
    sources, and they are a significant problem in the areas that are
    characteristic of much of California. Typical PM-10/PM-2.5 sources are
    dust stirred up by vehicles on unpaved roads, and dirt loosened and
    carried by wind during cultivation of agricultural land. Soil erosion
    through wind and other agents also leads to aggravation of PM-10/PM-2.5
    air pollution problems.
        The importance of this study on PM-10/PM-2.5 is underscored by the
    need for more information on how the federal Clean Air Act Amendments
    standards can be met effectively by the business community, as well as
    by agencies of federal, state and local government whose activities
    contribute to the problem, and who are subject to the requirements of
    Title V of the Clean Air Act. There is a void in our current
    understanding of the amount and impact each source of PM-10/PM-2.5
    actually contributes to the overall problem. Without a better
    understanding and more information--which this study would provide--
    industry and government will be unable to develop an effective
    attainment plain and control measures.
        Our Coalition is working diligently to be a part of the effort to
    solve this major problem, but to do so, we need federal assistance to
    support research and efforts to deal effectively with what is
    essentially an unfunded federal mandate.
        Numerous industries, in concert with the State of California and
    local governmental entities, are attempting to do our part, and we come
    to the appropriations process to request assistance in obtaining a fair
    federal share of financial support for this important research effort.
    In 1990, our Coalition joined forces to undertake a study essential to
    the development of an effective attainment plan and effective control
    measures for the San Joaquin Valley of California. This unique
    cooperative partnership involving federal, state and local government,
    as well as private industry, has raised more than $24 million to date
    to fund research and planning for a comprehensive PM-10/PM-2.5 air
    quality study. Our cooperative effort on this issue continues, and our
    hope is that private industry and federal, state and local governments
    will be able to raise the final $4.6 million needed to complete the
    funding for this important study.
        To date, this study project has benefited from federal funding
    provided through EPA's, DOT'S, DOD's, USDA's, and Interior's budgets--a
    total of $13.3 million in federal funding, including $7.6 million in
    EPA appropriations. State and industry funding has matched this amount
    virtually dollar for dollar.
        With the planning phase of the California Regional PM-10/PM-2.5 Air
    Quality Study complete, a number of significant accomplishments have
    been achieved. These interim products have not only provided guidance
    for completion of the remainder of the Study and crucial information
    for near-term regulatory planning, they have also produced preliminary
    findings which are significant to the Environmental Protection Agency's
    (EPA) interests.
        The Study is significant to EPA interests for a number of reasons.
    The San Joaquin Valley experiences some of the most severe PM episodes
    in the nation. The Valley is currently classified as one of five
    serious PM-10 non-attainment areas, and is likely to exceed both the
    new annual and 24-hour national ambient air quality standards (NAAQS)
    for PM-2.5. Exceedances of the PM-10 and PM-2.5 standards span many
    seasons and are influenced by a broad cross-section of sources. The
    information being collected by the PM study is essential for
    development of sound and cost-effective control plans. A number of the
    Study work products however will also have applicability to other areas
    of the nation. Products such as evaluation of monitoring methods and
    improved air quality and meteorological modeling techniques will assist
    the will assist the EPA in addressing PM non-attainment problems in
    areas outside of California as well.
        To this end, the PM study is expending significant resources to
    provide an improved understanding of the nature and causes of PM
    exceedances within the San Joaquin Valley and surrounding regions. One
    of the major recent efforts was a preliminary field monitoring program
    that was conducted during the fall and winter of 1995/96. Extensive air
    quality, meteorological, and fog measurements were collected. This
    database is being analyzed to address a number of questions including:
    (1) the sources contributing to elevated PM-10 and PM-2.5
    concentrations, (2) the zone of influence of specific sources, (3) the
    spatial representativeness of a monitoring site, (4) the adequacy of
    current monitoring methods, and (5) wind flow patterns and transport
    routes between the Valley and surrounding areas. The database produced
    as a part of this study is unparalleled in the nation, and results from
    the study are already providing a substantive base of understanding
    about PM-2.5. Preliminary results indicate that PM-2.5 constitutes 70
    percent to 80 percent of the PM-10 mass during the wintertime.
    Secondary ammonium nitrate is often the largest fraction of PM-2.5
    mass, and concentrations of ammonium nitrate tend to be very uniform
    throughout the study region. Site to site variability in PM-2.5 mass is
    primarily due to local variations in carbon, superimposed on the
    regional background of ammonium nitrate.
        The results of these analyses are being used to design large scale
    field monitoring programs to be conducted in 1999 and 2000. These field
    programs will address both the annual and 24-hour PM-10 and PM-2.5
    standard. Surface and aloft monitoring of air quality, meteorology,
    fog, and visibility will be conducted at a cost of over $12 million.
    Final plans for these field studies are being developed, which will be
    carried out by numerous contractors over a broad area encompassing
    Central California, the Sierra Nevada Mountains, and the Mojave Desert.
    Substantial resources will also be devoted to developing improved
    emissions estimates. A database of the field study results will be
    completed in 2001, with air quality modeling and data analysis findings
    available in 2002. This timeline is ideally positioned to provide
    information for federal planning requirements as a part of the new PM-
    10/PM-2.5 NAAQS.
        The Environmental Protection Agency's prior funding and strong
    support for the Study have enabled projects to occur. Continued support
    by EPA is essential to implement the major field programs and
    subsequent modeling and data analysis and ensure that effective control
    can be developed to meet the PM-10 and PM-2.5 NAAQS.
        For fiscal year 2000 our Coalition is seeking $1.25 million in
    federal funding through the U.S. Environmental Protection Agency to
    support continuation of this vital study in California. We respectfully
    request that the Appropriations Subcommittee on VA, HUD and Independent
    Agencies provided this additional amount in the EPA appropriation for
    fiscal year 2000 and that report language be included directing the
    full amount for California. This will represent the final year of
    funding requested from EPA.
        The San Joaquin Valley PM-10/PM-2.5 study will not only provide
    this vital information for a region identified as having particularly
    acute PM-10/PM-2.5 problems, it will also serve as a model for other
    regions of the country that are experiencing similar problems. The
    results of this study will provide improved methods and tools for air
    quality monitoring, emission estimations, and effective control
    strategies nationwide. Consequently, the beneficial results of this
    study will contribute to national policy concerns as well.
        The Coalition appreciates the Subcommittee's consideration of this
    request for a fiscal year 2000 appropriation of $1.25 million for EPA
    to support the San Joaquin Valley Region PM-10/PM-2.5 Air Quality
    Study. EPA's past contributions have helped ensure the success of the
    study. The coalition thanks you for your support of this important
    program.
                                     ______

                 Prepared Statement of the University of Miami
        Mr. Chairman and Members of the Subcommittee, I appreciate the
    opportunity to submit testimony on behalf of the University of Miami.
    The University is seeking your support for several important
    initiatives within your purview, through the Army Corps of Engineers,
    the Environmental Protection Agency, and the National Aeronautics and
    Space Administration. It is our firm belief, Mr. Chairman, that these
    projects can provide substantial benefit to the nation.
        Headquartered at the University of Miami, the Rosenstiel School is
    recognized as one of the premier academic oceanographic research
    facilities in the world. Located on a 16-acre tract on Virginia Key in
    Miami's Biscayne Bay, the Rosenstiel School provides the only sub-
    tropical marine research facility in the continental United States. It
    located adjacent to and coordinates daily with the national NOAA lab
    and research facility. Also, the Rosenstiel School because of its
    unique location--the Gulf Stream is immediately offshore; just to the
    south lies a vast of expanse of the only living coral reef off the
    shores of the continental United States; and just to the east the
    Florida-Bahamas Carbonate Platform--is a unique resource for the
    nation, as well as for Florida and the southeast region.
        There are close to 100 recognized scientists, researchers, and
    educators at the Rosenstiel School who collaborate closely with other
    Florida institutions and whose distinct expertise is vital in
    addressing critical national, regional, and Florida natural,
    environmental, and climatic challenges.
        The Rosenstiel School has long been recognized as a major national
    research institute focusing on the living coral reef as a unique and
    critical national and international resource, critical to the vitality
    and health of the marine life and coastal marine environment of Florida
    and the southeast. Florida's coral reefs are the only living coral
    reefs off the continental United States. The environmental, climatic
    and man-made challenges to and stress on these precious resources are
    extensive. To preserve and protect our reefs requires the organization
    and coordination of the broadest range of talent and resources.
        Coral reefs are the only ecosystems on Earth constructed entirely
    by the secretions of a complex assembly of marine animals and plants.
    They are economically important resources to humans as sources of food,
    medicinals, building materials, and coastal protection. They are
    especially invaluable, in our increasingly crowded world, for the
    spiritual relief they provide the millions of people that journey to
    visit them each year. Unfortunately, changes in water quality due to
    coastal development, environmental changes potentially related to
    global climate change, and over-exploitation of coral reef fisheries
    resources, are contributing to world-wide coral reef deterioration at
    an alarming pace, especially in the Caribbean region. U.S. coral reefs
    in Florida are down-stream of the entire Caribbean coral reef system,
    and are thus dependent on Caribbean reefs for larval recruits and
    maintenance of fisheries stocks. Florida reefs could also be affected
    by pollutants released into marine waters by nations in the region, and
    from our own rivers via discharge into the Gulf of Mexico.
        Symptoms of deterioration are manifested by losses in coral
    diversity and percent cover, increases in the biomass of fleshy
    seaweeds, and the absence of larger predatory fishes and invertebrates.
    In some cases it is simple to determine the immediate cause(s) of these
    ecosystem changes [and their solution]. But with increasing frequency,
    these changes are being found at locations distant from human
    populations of any size, and we do not know enough to discriminate
    between the effects of far-reaching anthropogenic activities and
    natural processes. Scientists are hampered in helping government make
    critical and socially difficult management decisions by our rudimentary
    understanding of coral reef ecosystem processes. U.S. coral reef
    research has historically been piece-meal and under-funded, with few
    attempts at interdisciplinary, process-oriented research. Synthesis of
    existing information to produce new approaches for process-oriented
    research is greatly needed, but the means to bring appropriate groups
    of scientists together does not exist in the U.S.A. In this regard the
    United States of America lags behind other nations, such as Australia,
    that are stewards of major coral reef resources. As the most developed
    country in the region, the U.S. must a role of leadership in coral reef
    conservation and research in the Caribbean.
        The National Center for Atlantic and Caribbean Coral Reef Research
    seeks to coordinate U.S. coral reef policy and research, and assemble
    major national and international initiatives pertaining to coral reefs.
    The Center fosters organization and collaboration within the U.S.
    scientific community, leads the development of a new level of
    understanding of the processes and environmental conditions necessary
    for the establishment, survival and sustainable use of coral reef
    ecosystems public.
        We seek to continue the support provided last year through the
    Environmental Protection Agency for the National Center for Atlantic
    and Caribbean Coral Reef Research. We have launched a targeted and
    broadly constructed southeastern regional focus that can parallel and
    complement the well-funded and structured approach the Congress has
    established in the state of Hawaii. The long-term implementation
    strategy involves all of the core Florida institutions and agencies
    already working, along with the Rosenstiel School, on one or more
    components of the overall reef challenge. For fiscal year 2000, we
    request $2 million from the Subcommittee through the Environmental
    Protection Agency to continue the implementation and expand the reach
    of this vital coral reef research program.
        Also through the Environmental Protection Agency, the University of
    Miami's Rosenstiel School of Marine and Atmospheric Sciences and its
    School of Medicine seek to establish a Joint Center for Pediatric
    Asthma and Respiratory Disease. The objective is to establish a center
    for the Southern United States to conduct, promote, and support
    research into the effects of ambient particulate matter (PM) and other
    airborne constituents on human health to formulate future environmental
    regulations with a strong scientific foundation.
        The Center will focus on airborne-particle/health issues in the
    southeastern United States--a region that is subjected to a wide range
    of airborne pollutant impacts. The levels of ozone and oxidants are
    seasonably very high over large regions and the rate of noncompliance
    with the ozone standards is increasing, resulting in a number of large-
    scale, atmospheric, chemistry/pollution studies. Populations in coastal
    regions are impacted by other types of particles whose health-related
    properties have not been well characterized or understood, including
    the impact of wind-blown sea-salt; marine toxins, bacteria, and various
    marine micro-organisms. The Center will also provide expertise on
    matters relating to air quality and human health in the Southeastern
    U.S.
        There are seven specific objectives of the proposed research that
    will test the hypothesis that exposure to ambient (indoor and outdoor)
    PM significantly affects the cardiopulmonary response of susceptible
    populations of children and seniors. The Center activities involve the
    participation of many different groups associated with six different
    institutions, the activities of which are organized into research
    themes.
        Through the Rosenstiel School, the School of Medicine and a
    partnership with other institutions, the Joint Center for Pediatric
    Asthma and Respiratory Disease will provide a broad-base of expertise
    in atmospheric chemistry (indoor and outdoor), exposure assessment,
    cardiopulmonary medicine, epidemiology and public health. We are
    seeking $2 million through the Environmental Protection Agency for this
    important scientific and medical initiative.
        Next, Mr. Chairman, my colleagues are seeking to use Synthetic
    Aperture Radar (SAR), a powerful remote sensing system operating at
    microwave frequencies where the atmospheric transmission is high. SAR
    is able to operate in all weather, day or night and, because SAR
    artificially synthesizes an aperture or antenna which is hundred of
    meters long in space, it will provide multi-parameter high-resolution
    observations in the microwave spectrum.
        Space-based satellite SAR systems are able to monitor the movement
    of targets on land and ocean in near real-time, map topography with
    unprecedented accuracy, access storm and flood damage to urban and
    rural infrastructure. SARs provide data that can be used to forecast
    major volcanic eruptions and understand the earthquake process, and a
    host of other civilian, and scientific applications.
        Unfortunately, the current infrastructure in South Florida
    precludes most of these applications. Florida lacks its own ground
    receiving station, so even though satellites frequently pass over
    targets of interest, the data must be downlinked to a station in either
    Canada or Oklahoma. This downlink request must be made months in
    advance, as large numbers of users are requesting time on a limited
    facility. It takes so long to obtain and process raw SAR data into a
    usable image that the ``window of opportunity'' is usually lost by the
    time the data are ready.
        The University of Miami uses SAR data for a variety of terrestrial
    and oceanographic applications, and has a large amount of experience in
    the analysis and use of SAR data, and expertise in the operation of
    satellite downlink facilities. The proposed ground station would
    greatly enhance SAR-based research and operational monitoring in the
    Caribbean Basin and Gulf of Mexico. Through this partnership a broad
    range of terrestrial and oceanographic research, civil monitoring, and
    other applications research would provide vital information for the
    region.
        We propose that Subcommittee provide $3 million through NASA so
    that the agency and the University of Miami can cooperate in the
    construction and operation of a SAR ground facility, the Advanced
    Tropical Remote Sensing Center of the National Center for Tropical
    Remote Sensing Applications and Resources. This unique facility would
    be located at the former Richmond VLBI site, a secure facility with
    good satellite visibility.
        Finally, Mr. Chairman, we ask that you consider a joint request
    from the University of Miami and the City of Miami Beach, Florida to
    support an effort to counter coastal erosion along the southeast
    Florida coast. The effects of coastal erosion in South Florida are
    acute. Replenishing our beaches--an economic necessity--consumes
    millions of dollars annually. The Rosenstiel School is seeking to
    determine cost-effective methods for halting the coastal erosion
    process. Our scientists are joining the ongoing effort of the City of
    Miami Beach to establish an innovative demonstration project which
    would enhance continuous beach erosion prevention efforts and establish
    an effective sand recycling system. For fiscal year 2000, the
    Rosenstiel School seeks $2 million through the U.S. Army Corps of
    Engineers for this important effort.
        Mr. Chairman, we understand how difficult year this will be for you
    and the Subcommittee. However, we respectfully request that you give
    serious consideration to these vital initiatives. All of them have
    great implications and will provide exceptional benefits to the well-
    being of the nation.
        Thank you for allowing me to appear here today.
                                     ______

          Prepared Statement of the American Society for Microbiology
        The American Society for Microbiology (ASM), the largest single
    life science organization in the world, comprising more than 43,000
    members, welcomes the opportunity to testify before the Senate
    Appropriations Subcommittee on VA, HUD and Independent Agencies and
    provide comments and recommendations for the fiscal year 2000
    appropriations for the scientific research programs within the United
    States Environmental Protection Agency (EPA) and the National Science
    Foundation (NSF).
        The ASM is comprised of scientists who work in academic,
    governmental and industrial institutions worldwide. Microbiologists are
    involved in research on problems related to human health, the
    environment and agriculture. The mission of ASM is to enhance the
    science of microbiology to gain a better understanding of basic life
    processes, and to promote the application of this knowledge for
    improved health, and for economic and environmental well being.
        The NSF provides the main source of funding for scientists in the
    United working in many areas of biological research. Programs supported
    by the NSF are critical to microbiologists, especially as they relate
    to the exploration of biodiversity and the roles of microorganisms in
    global biogeochemical cycling reactions that maintain the environmental
    quality of the earth. The EPA also funds important basic research
    activities in focused areas related to the agency's mission of
    protecting the environment. This testimony will outline the ASM's
    funding recommendations for both the EPA and NSF research and
    development programs for fiscal year 2000.
                        environmental protection agency
        The EPA's scientific research and development programs are of
    interest to many of ASM's members who work in the fields of applied and
    environmental microbiology. Research on environmental microbiology is
    essential for maintaining air, water, and soil quality; for assuring
    the safety of potable water supplies; and for providing safe means for
    waste disposal. Support of applied research in the field of
    environmental microbiology can lead to enhanced environmental quality
    and help protect human health. The ASM believes that sound public
    policy for environmental protection depends on adequately funded
    programs of intramural and extramural research based on a system of
    peer review to assure that support is awarded to research programs
    having both quality and relevance. The EPA, which has partnered with
    the NSF in recent years for peer review of some extramural research
    programs, has begun its own peer review system based upon the NSF
    model. Critical peer review of both the intramural and extramural
    research programs of the EPA are necessary for ensuring the quality and
    scientific validity of studies that are funded.
    Science to achieve results program
        The EPA's Science to Achieve Results (STAR) program is an important
    mission-driven, extramural research initiative. This program is
    targeted to receive $110 million for fiscal year 2000, a $14 million
    increase over last year's budget of about $96 million. This program
    funds important environmental research proposals from scientists
    outside the federal government and is a valuable resource for the EPA
    in finding solutions to many of the complex environmental problems we
    face today. Grants made under the STAR program last from two to three
    years and provide about $150,000 of scientific support per grant year.
    The STAR program funds projects in specific focal areas including
    drinking water, ecology of harmful algal blooms, water and watersheds,
    ecological indicators, and pollution prevention, which have significant
    microbiological components. The ASM urges the Congress to fully fund
    the STAR program at the requested level of $110 million. ASM is
    concerned, however, that the exploratory grants program, as opposed to
    targeted RFAs, has dropped to only 10 percent of the STAR budget. This
    portion is too small to meet the many needs within EPA's mission that
    are not targeted in a limited number of RFAs.
    Clean and safe water
        The ASM supports the Administration's request of $3.4 billion for
    Clean and Safe Water. The ASM applauds the EPA's support of such
    program initiatives as drinking water safety standards, cost-effective
    water treatment technologies focusing on microbes, improved water
    safety guidelines and pollution indicators, and a federal database of
    beach advisories and closings across the United States. ASM also
    supports the EPA Research Plan for Microbial Pathogens and Disinfection
    By-Products in Drinking Water focusing on Cryptosporidium and Giardia
    and urges Congress to ensure that adequate funding is secured from
    within the $41.5 million, targeted for Safe Drinking Water Research, to
    allow this plan to be carried out. In addition, the ASM believes that
    the next step in this research plan should be to focus on additional
    pathogens such as microsporidia and Helicobacter pylori. ASM strongly
    believes that there should be improved coordination among several
    federal and state agencies in dealing with microbial pollutants in the
    nation's drinking and recreational water.
    Graduate environmental fellowship program
        The ASM urges Congress to fully fund the EPA's Graduate Fellowship
    Program at the requested level of $10 million for fiscal year 2000. The
    EPA's Graduate Environmental Fellowship Program is one of the many
    initiatives the federal government must fully support to ensure that
    the nation is prepared to answer the complex scientific questions of
    the future. Both the public and private sectors will benefit from a
    steady stream of well-trained environmental specialists. The fellowship
    program has had a major impact in attracting exceptionally talented
    young people to pursue careers in environmentally related fields. With
    environmental challenges facing the nation including cleaning up toxic
    waste, ensuring cleaner air and water, and providing safe drinking
    water, there is a clear need for highly skilled, well-trained
    environmental experts to find solutions to these pressing issues.
    However, it is essential that once EPA receives funding for this
    important program, the agency support fellowships in areas related to
    microbial risks in the environment including water quality and
    bioremediation technologies to clean up toxic waste.
                          national science foundation
        The ASM, a member of the Coalition for National Science Funding
    (CNSF), supports the coalition's recommendation to provide the NSF with
    an increase of $562 million or 15 percent over its fiscal year 1999
    funding level. This would raise the NSF's overall budget from $3.773
    billion in fiscal year 1999 to $4.335 billion in fiscal year 2000.
    NSF's mission is to promote and advance scientific, mathematical, and
    engineering research and education in the United States by funding the
    highest quality academic research and education programs. A 15 percent
    increase would enable NSF to support additional excellent research
    projects in pursuit of important discoveries and innovations. Enhanced
    support for the NSF's efforts to improve education will help expand our
    nation's intellectual capital. Strong links between research and
    education are essential to a healthy research enterprise, an educated
    public, and a well trained future workforce.
        Microorganisms surround us and affect our lives in many ways. They
    play key roles in processing our wastes, recycling the nutrients that
    support our agriculture, forests and fisheries, yield new
    pharmaceuticals, provide key tools for biotechnology, affect the
    quality of our food and water, control some pests (biocontrol), and
    cause disease. NSF is to be complimented for recognizing a few years
    ago the important role microorganisms play in our well-being and in
    opportunities for basic science advances through its Microbial Biology
    initiative. This led to new programs such as LExEN (Life in Extreme
    Environments), Microbial Observatories which focus on the discovery of
    important but uncultured microorganisms, and the first Biocomplexity
    Program which is focused on microbially-based ecosystems. ASM applauds
    these new initiatives. Microorganisms do present very different types
    of research challenges and opportunities than those for macroorganisms.
    Hence we encourage NSF to maintain its momentum in Microbial Biology
    programming to ensure that basic discoveries for this group of
    organisms is realized.
        New advances in science have provided new opportunities and needs
    in microbiology research which should be considered in NSF programming.
    These areas are the following.
    Genomics research
        More than 20 microbial genomes have now been completely sequenced
    and many more are underway. This information fundamentally changes the
    approach to research and what can be learned about an organism.
    Microorganisms, being the simplest forms of life, are the first in
    which the roles of all genes can potentially be understood. To maximize
    the value of the genome sequencing effort, NSF should expand its
    research in functional genomics and associated genomic areas. This
    should extend beyond the more obvious areas of molecular biology and
    genetics to the areas of ecology, taxonomy and population biology for
    example, so that the value of genomics is more fully realized. ASM
    strongly endorses NSF's functional genomics research under its Division
    of Molecular and Cellular Biosciences (MCB) and encourages the Division
    of Environmental Biology (DEB) to more aggressively encourage genomics
    technology to be used in their research. The ecological and population
    fields hold great opportunities for a more comprehensive understanding
    of the genome and hence cutting-edge advances to understanding biology.
    Microbial biodiversity
        Only a few percent of the microorganisms on earth are known,
    leaving microorganisms as the largest untapped source of biodiversity.
    New drugs, enzymes, biocontrol and bioremediation agents are examples
    of the economic potential in the discovery of this biodiversity. The
    NSF's Microbial Observatories Program is focused on observing,
    recovering, and understanding microbes in diverse environments and is
    an important introductory effort towards this goal. Efforts are also
    needed to advance the systematic, ecological, biochemical, and
    evolutionary understanding of particularly unique, newly discovered
    microbes as well as new strategies to recover more difficult to culture
    organisms. The tremendous opportunity in microbial diversity discovery
    will hopefully be realized under NSF's proposed initiative on discovery
    of new species and builds on the President's Committee of Advisors on
    Science and Technology (PCAST) Report, ``Teaming With Life''. ASM
    strongly supports this initiative.
    Microbial systematics and databases
        Microbial systematics research has not kept pace with research and
    application needs. Organism characterization is key to a proper
    taxonomy which in turn is vital to efficient research as well as to a
    host of application sectors such as proper diagnosis of diseases,
    quality control of a variety of products, safety of our foods and
    waters, patent descriptions and novel biotechnologies. Advances in
    molecular techniques have revolutionized our understanding of the
    relationships among microorganisms and provided new tools for more
    specific and rapid identification of microorganisms. The proper
    systematic study of many important microorganisms is needed to underpin
    much of the microbial research and its application. NSF is the
    appropriate agency to support microbial systematics research on the
    many organisms that do not cause human disease. We ask that NSF address
    this fundamental gap in microbial knowledge in its future programming.
        Because of the small size of microorganisms, information of all
    types, including sequence, phenotype, function, chemistry and habitat
    is needed to efficiently understand and identify an organism. The jobs
    of the many practitioners of microbiology would be more efficient if
    microbial data were available in an integrated electronic database and
    new insight about the most numerous organisms in our universe could be
    more readily realized. NSF needs to recognize that biological
    databases, such as microbial databases, are a central and vital
    infrastructure need to modern day biological research and should be
    treated as a central national facility. NSF's information technology
    programs (IT) appear to also provide for advances useful in future
    biology research, including microbiology. With more intensive and
    extensive data, we need better ways to analyze, visualize and compute
    the information. ASM looks forward to the benefits from IT and IT\2\.
        Members of the ASM, whose activities include research concerned
    with the impact of microorganisms on the well-being of humans, animals,
    plants, and the environment, are very supportive of NSF's increased
    focus on microbial biology and the diversity of microorganisms, an
    initiative begun in fiscal year 1996 under the auspices of the NSF's
    Directorate for Biological Sciences (BIO). For years, research efforts
    have concentrated on the study of microbes in human and animal health.
    The unknown microbial biomass provides opportunities to discover new
    knowledge about microbial life forms and their potential application in
    industry, medicine and agriculture. In addition, microbiological
    research continues to provide the foundation for today's advances in
    biotechnology. These advances are based on understanding the molecular
    basis of microbial physiology and the genetics of viral, yeast and
    bacterial plasmid vectors. Future accomplishments and their application
    to increased agricultural productivity (an important by-product of
    biotechnology) will not be possible without NSF funded basic research.
        The NSF is one of the few government agencies that support
    fundamental basic research. United States leadership in science and
    technology is dependent on sufficient funding for basic research. Most
    of today's scientific achievements in areas such as bioremediation,
    technology to clean up oil spills and industrial pollution, the
    development of new antibiotics and drugs, biopesticides, and
    biotechnology all have their roots in basic research. The many future
    public health and environmental challenges the United States will face
    can only be overcome through the potential of basic research to
    generate crucial new scientific knowledge and advancements that lead to
    new technologies for the future.
        Mr. Chairman, on behalf of the American Society for Microbiology,
    thank you for the opportunity to submit testify to your Committee on
    the fiscal year 2000 appropriations for the EPA and the NSF. I would be
    pleased to answer any questions from you in writing at a later date.
                                     ______

     Prepared Statement of the State Agricultural Experiment Stations and
                            State Extension Service
        Mr. Chairman, members of the subcommittee: On behalf of the members
    of the State Agricultural Experiment Stations (SAES) and State
    Extension Service (ES), we as chairs of the Experiment Station
    Committee on Organization and Policy (ESCOP) and Extension Committee on
    Organization and Policy (ECOP) appreciate the opportunity to appear
    before you to discuss the importance of research, extension, and
    education in environmental and natural resource programs. ESCOP and
    ECOP are non-profit organizations representing a partnership that
    includes the SAES and the USDA-Cooperative State Research, Education,
    and Extension Service (CSREES).
        A primary goal of these organizations is to broaden the
    partnerships with other agencies involved in environmental and natural
    resource management programs and research. These organizations are
    committed to improving environmental decision making at the local level
    by capitalizing on the comparative advantages in research, education,
    and extension that the Land Grant Universities (LGU) can provide. In
    working with federal agencies ESCOP and ECOP aim to focus additional
    attention on the national environmental research agenda and to attract
    new resources for environmental research activities conducted through
    LGU programs. Furthermore, our LGU institutions have a critical mass of
    scientific infrastructure and facilities and a history of long-range
    research.
        ESCOP and ECOPs major focus in the areas of environment and natural
    resources include:
      --Environmental modeling and forecasting (e.g., carbon
            sequestration);
      --Water and watershed management (e.g., nutrient/waste management);
      --Land-use planning and management (e.g., community-based
            environmental protection);
      --Environmentally and economically sound agriculture (e.g., precision
            agriculture); and
      --Environmental education and outreach.
                         partnering with other agencies
        ESCOP and ECOP share similar research priorities and goals as other
    agencies, such as EPA. Although many initiatives target specific
    agendas, a thorough inventory of research priorities and pooling of
    resources can be achieved through collaborative discussions. In
    recognition of these similarities, many agencies have targeted program
    areas for pooling resources to address these common initiatives and
    programs. One such organization to unfold in these efforts links the
    organizational structure of the SAES and USDA-CSREES into a national
    environmental initiative. A primary goal of this initiative, named
    SUNEI (SAES/USDA-CSREES National Environmental Initiative) is to
    facilitate teaching, research, and extension activities in the
    environmental sciences as they relate to agriculture and natural
    resource issues through traditional and new federal-state partnerships.
    This organization is committed to improving environmental decision
    making at the local level by capitalizing on the partnerships at the
    national level.
        ESCOP & ECOP promote LGU partnerships with EPA and other agencies
    that will increase:
      --the exchange of scientists between LGU institutions and Agencies
            for collaborative projects.
      --the amount of LGU participation in Agency peer review processes;
      --the quantity/quality of proposals submitted by the LGUs for Agency
            funded competitive grants
      --the number of funding awards from agencies going to LGUs;
                           examples of collaboration
        Recently USDA and EPA joined efforts to draft the Unified Strategy
    for Animal Feeding Operations (AFOs). ESCOP & EPA applaud these
    agencies for their collaborative efforts. It is this and similar
    efforts which make meaningful partnerships. The nation is eager to see
    implementation of voluntary policies, which establish incentives to
    change or modify management practices. This Unified Strategy will
    protect and preserve the priceless assets of our nation's water
    resources in our coastal, surface, and groundwater. EPA has developed
    competitive funding programs to address waste management that are
    multidisciplinary and multistate driven. Programs such as this, which
    are aimed at protecting the quantity and quality of our water in the
    face of increased demands from population growth, should continue to be
    encouraged by decision makers at the national level. This institutional
    support by the various agencies solidifies and provides incentives for
    local level resource managers from different agencies to work together
    with local producers and state level nutrient managers.
                         role of cooperative extension
        Under the AFO Strategy, we are pleased to see that USDA and EPA
    have identified Cooperative Extension Specialists as qualified nutrient
    management planners to assist owners/operators in meeting requirements.
    Our university system accommodates rapid advances in information
    technologies to extend outreach and education programs which are based
    on sound research and understanding of the public learning process. The
    LGU system offers a full environmental portfolio in its research,
    education, and extension programs, and provides the technical
    innovation and new management ideas to implement sound nutrient
    management plans. Therefore, LGUs can serve as a valuable resource when
    developing standards and providing technology transfer to owners and
    operators who manage production facilities in our nation's watersheds.
                       office of research and development
        EPA's Office of Research and Development (ORD) has demonstrated a
    strong commitment in working with the LGU System. In 1996, ORD policy
    makers held a workshop for LGU and EPA officials to discuss common
    research priorities and agendas. ECOP and ESCOP would like to encourage
    a strong continued commitment by ORD to collaborate with universities
    through a variety of competitive grants, investigator-initiative
    exploratory research grants, personnel exchanges, graduate fellowships,
    and environmental research centers.
        Overall, the LGU System appreciates and supports the continuation
    of the Science To Achieve Results (STAR) program to fund core and
    problem solving research. In particular, the joint Water and Watershed
    Research program has provided increased opportunities for LGU
    scientists to submit proposals, participate within the ORD peer review
    process, and obtain needed funding to engage in watershed research
    programs. One EPA priority, Integrated Ecological Economic Modeling and
    Valuation of Watersheds, will assess the impact of future land use--
    such as agriculture, forestry, and urban development--on the watershed.
    Under this project, LGU faculty could provide valuable research and
    extension capacity to EPA by educating local decision-makers with the
    sound scientific information on the impacts of different land use
    strategies on water quality.
        Human activity has arguably caused changes to the earth's ecology
    in ways that threaten sustained agricultural and forestry production.
    Elevated levels of carbon dioxide from the burning of fossil fuels,
    increased exposure of crops and livestock to harmful Ultra Violet-B
    radiation, and the unknown consequences of elevated temperatures on
    crop, forest, and livestock production are just some of the emerging
    concerns for global changes on food and fiber production. ECOP and
    ESCOP realize that EPA is one of the many contributing agencies to the
    U.S. Global Change Research Program (USGCRP). We encourage USGCRP
    studies that not only investigate the impacts of global change on the
    environment and economy, but also research to develop the core science
    knowledge about the carbon cycle and how problem-oriented research can
    help mitigate excessive levels of CO2 and develop
    agriculturally-based remediation methods for the changing global
    environment.
                        sound science based-regulations
        One of the critical issues that ECOP and ESCOP would like to
    address is the need for sound-science based regulations. Both the
    Unified Animal Feeding Operation (AFO) Unified Strategy and the Food
    Quality Protection Action (FQPA) have the potential to dramatically
    change the way agricultural and natural resource managers do business.
    The Land-Grant community is therefore very concerned that the EPA
    engage in credible research and outreach endeavors that provide a
    sensible background for any major regulations that may negatively
    impact agricultural producers during this ``farm crisis.''
        LGUs encourage USDA and EPA to collaborate on the Integrated Risk
    Information System (IRIS). It is very important that the public is
    aware and educated about true risks of chemicals and contaminants,
    rather than purely reacting to perceptions of danger. Therefore, LGU's
    are supportive of EPA-ORD's Goal 8 for Sound Science. One area for
    emerging risk research is endocrine disrupters which ORD addresses
    under Goal 8. This is another example for potential participatory
    research by land-grant scientists with EPA's STAR Exploratory Grants
    program, since agricultural and natural resource faculty provide
    critical expertise in studying the effects of agricultural chemicals
    and fertilizers on endocrine disrupters.
       the synergistic effect of interdisciplinary research and education
        LGUs have an interdisciplinary mix of persons to address complex
    interdependencies of environmental systems. LGUs also integrate
    research and education. Thus, they can apply new knowledge to solve
    environmental problems in the field and improve the rate of adoption of
    new technologies. In particular, the Land-Grant community has existing
    capacity, expertise, and resources dedicated in the following areas
    that are consistent with ORD's over all goals for advanced integrated
    ecosystem monitoring and analysis.
        Water and watershed management including:
      --Nutrient management
      --Harmful algal Blooms
      --Animal waste management
        Land-use planning and management including:
      --Riparian/buffer zones
      --Coastal zone management
      --Sustainable development/openspace/conservation
        Environmentally and economically sound agriculture including:
      --Integrated pest management
      --Alternative pest management and sustainable agriculture
      --Precision agriculture/forestry/range
        Environmental modeling, monitoring, and forecasting including:
      --Natural disasters and hazards
      --Climate change (especially, carbon sequestration)
      --Bio-fuels and renewable resources
        Environmental education and outreach including:
      --Improved environmental decision-making at the local level community
            based environmental protection (CBEP)
      --Geospatial and land-use extension specialists
      --AFO-nutrient management planning assistance
        ECOP and ESCOP also encourage EPA-ORD to work collaboratively with
    other federal agencies on environmental challenges in the future and
    with existing projects including:
      --USDA-CSREES/National Research Initiative on basic environmental
            science questions;
      --USDA-CSREES on integrated research and education needs and
            opportunities in the environmental area;
      --The National Science Foundation, USDA-CSREES, and others on the
            joint Waters and Watersheds research program; and
      --NOAA, NASA and others on the ECOHAB research program.
        The Administrator of ORD, Norine Noonan stated that ORD intends to
    ```work smart' by leveraging our investments in all of this work
    through expanded partnerships with stakeholders in both the public and
    private sector.'' ESCOP especially appreciates ORD's willingness to
    collaborate with other federal agencies to better coordinate national
    priorities, reduce redundancy, and leverage resources. Under the
    Integrated Science for Ecosystem Challenges (ISEC), the Mid-Atlantic
    Integrated Assessment (MAIA), and the Coastal Initiative, EPA has a
    demonstrated need for geographically distributed monitoring and
    continuity of data. LGUs are logical partners to meet the needs of a
    geographically distributed environmental monitoring network (i.e.,
    coastal and estuary water quality) and consistency of long-term data
    collection. This is one area where SUNEI may encourage new federal-
    state partnershipping.
                            additional collaboration
        ESCOP and ECOP continue to build its relationships with various
    other agencies such as DOE, NASA, NOAA, and NSF in support of the
    nations agricultural and natural resource system. We plan to encourage
    interagency communication and to broaden the LGUs federal participation
    within USDA and other agencies. SUNEI also hopes to better unify
    representatives from the Natural Resource Conservation Service (NRCS),
    the Forest Service, and the Agricultural Research Service. This goal is
    aimed at enhancing the collaboration that is occurring at the local
    level between LGUs and USDA agencies.
        The LGUs will continue to provide an ``on-the-ground'' and ``in-
    the-field'' role on environmental and natural resources issues and
    research. Under ESCOP & ECOP, the SUNEI initiative provides an
    environmental and natural resource point of contact for Federal
    agencies to reach the System. Furthermore, through the excellent
    electronic communications network of the LGU System, the appropriate
    administrators, scientists, academic program personnel, and extension
    representatives can be reached almost immediately as circumstances
    demand.
        Mr. Chairman and members of the subcommittee, thank you for the
    opportunity to testify on behalf of the LGU research, extension and
    education system. We will continue to build collaborative partners to
    provide for a sustainable agriculture and natural resource environment.
    We stand ready to work with you in these efforts.
                                     ______

      Prepared Statement of the Associated General Contractors of America
        The Associated General Contractors of America (AGC) appreciates the
    opportunity to submit testimony in strong support of the State
    Revolving Fund (SRF) programs--the Clean Water State Revolving Fund
    (CWSRF) and the Drinking Water State Revolving Fund (DWSRF). These two
    revolving funds, based on assessments taken before they started, have
    been tremendously successful programs that were established to meet
    federal mandates.
        The 1972 Clean Water Act created a federal grant program that was,
    in 1987, transformed into the Clean Water State Revolving Fund program
    to fund the construction and modernization of municipal sewage plants.
    Low-cost loans are provided to local governments to finance needed
    facilities. The loans are then repaid and new loans are made from the
    CWSRF.
        The Drinking Water State Revolving Fund originated in the Safe
    Drinking Water Act Amendments of 1996. The program, which operates like
    the Clean Water State Revolving Fund, assists public water systems to
    finance the costs of infrastructure needed to achieve or maintain
    compliance with the Safe Drinking Water Act requirements and to protect
    public health.
        AGC is proud of the role the construction industry has played in
    improving water quality. Our members build and rehabilitate the
    facilities financed by these two programs, both of which have been
    responsible for significant water quality improvement. Since enactment
    of the Clean Water Act in 1972, water quality has improved
    significantly on over 50,000 miles of waterway. Streams and lakes, once
    devoid of fish and other aquatic life, now support abundant and varied
    populations. The foundation for many of these environmental
    improvements is in the construction grants program and the SRF
    programs.
        The needs, however, are still staggering. In the Environmental
    Protection Agency's (EPA) first report to Congress in January, 1997
    entitled ``Drinking Water Infrastructure Needs Survey,'' the EPA
    reported that the nation's 55,000 community water systems must invest a
    minimum of $138.4 billion over the next 20 years to install, upgrade,
    or replace the infrastructure. Of this total, $12.1 billion is needed
    immediately to meet current Safe Drinking Water Act (SDWA) mandates.
    The EPA's report is a conservative estimate because many of the systems
    surveyed were unable to identify all of their needs for the full 20-
    year period.
        In fact, a more complete and independent study released in October
    of last year by the American Water Works Association (AWWA) found that
    the capital investment needs for the water supply community over the
    next 20 years is $325 billion.\1\ The EPA's emphasis in their survey
    was on identifying the utility investment needed to comply with the
    federal mandates issued under the Safe Drinking Water Act Amendments
    (SDWAA), so that Congress could better understand the costs imposed by
    federal drinking water regulations. The objective of the AWWA
    investigation, on the other hand, was to examine the longer-term
    infrastructure investment requirements of U.S. water utilities,
    regardless of whether they are directed at current or future needs over
    the twenty-year period.
    ---------------------------------------------------------------------------
        \1\ American Water Works Association: Infrastructure Needs for the
    Public Water Supply Sector, October, 1998.
    ---------------------------------------------------------------------------
        Even if we use EPA's estimates, the water infrastructure needs are
    overwhelming. EPA's report indicates that the largest category of need
    is installation and rehabilitation of transmission and distribution
    systems--$77.2 billion. Aging, deteriorating pipes can allow water in
    the distribution system to become contaminated, leading to illnesses
    from ingestion of waterborne pathogens as well as interruptions in
    water service. Most needs in this category involve the extraction and
    replacement of existing pipe.
        The second largest category is treatment, constituting a total 20-
    year need of $36.2 billion. Storage needs are the third largest
    category at $12.1 billion. The fourth category of need is source
    rehabilitation and development, estimated at $11.0 billion. An
    additional $1.9 billion in need is categorized as ``other.''
        In addition to the extensive capital needs, the American public is
    very concerned about water quality and supports the federal government
    investing in the effort to clean up our water supply. In a recent
    survey commissioned by the Rebuild America Coalition, 66 percent of the
    American people from all regions and areas of the country describe
    spending on America's infrastructure as a ``strong investment in
    America.'' 74 percent are even willing to pay 1 percent more in taxes
    if it meant you could guarantee a safe and efficient sewage and water
    treatment system. The support transcends party lines, carrying
    overwhelming support from Republicans, Independents and Democrats.
        Despite the extensive needs and tremendous support from the
    American people, President Clinton's fiscal year 2000 budget proposed
    cutting the Clean Water State Revolving Fund from $1.35 billion to $800
    million, a $550 million reduction. It is unthinkable that when needs
    are so severe President Clinton would cut the funding by 41 percent.
        Equally disturbing is a new proposal by Senator Ron Wyden to direct
    ``a significant portion'' of the CWSRF funding to promote ``smart
    growth'' of cities and suburbs. Senator Wyden has said the plan would
    ``set aside a portion of clean water dollars and then invite applicants
    to produce creative homegrown solutions to urban sprawl.'' \2\ With the
    mounting wastewater needs, it is hardly the time to divert the precious
    and limited funding from these important state revolving funds. This
    program is too important to short-change in favor of the latest
    political campaign fad.
    ---------------------------------------------------------------------------
        \2\ Senator Ron Wyden's comments to the Environmental Media
    Services news breakfast.
    ---------------------------------------------------------------------------
        AGC believes that the nation's clean water program should be viewed
    for what it truly is--an investment in the future health and economic
    viability of the nation. Each one billion dollars invested in the
    construction of wastewater facilities generates some 52,000 new jobs.
    Even more importantly, wastewater treatment creates opportunities for
    economic development in communities by allowing new industries and new
    homes to locate there. These facilities are fundamental elements of the
    nation's environmental infrastructure. At this time, when our global
    competitors are recognizing the importance of infrastructure as the
    vital foundation on which future economic growth is based, the United
    States must provide the needed capital investment to allow our nation
    to thrive.
        AGC believes in these times of economic prosperity and with the
    increasing needs in our nation's drinking water and wastewater, now is
    not the time for the federal government to lessen its commitment to
    clean water. Toward that end, AGC urges Congress to appropriate stable
    annual funding of at least $1.5 billion for the Clean Water State
    Revolving Fund and $1.2 billion for the Drinking Water State Revolving
    Fund.
        Again, AGC appreciates the opportunity to submit testimony in
    support for the two state revolving funds. We look forward to working
    with you to ensure that the necessary investment is provided to improve
    the quality of our nation's drinking and wastewater.
                                     ______

                      FEDERAL EMERGENCY MANAGEMENT AGENCY

      Prepared Statement of the Association of State Dam Safety Officials
        The Association of State Dam Safety Officials is pleased to have an
    opportunity to comment on the fiscal year 2000 budget request for the
    National Dam Safety Program within the Federal Emergency Management
    Agency.
        The Association of State Dam Safety Officials (ASDSO) is an
    association of over 1,700 federal, state, and local dam safety
    officials and private sector individuals and was established in 1984 in
    response to a need for stronger coordination of dam safety programs on
    state and federal levels. This need was made apparent after several
    devastating dam failures in the late 1970s focused national attention
    on the lack of regulatory authority over the safety of these
    structures. The goal of ASDSO is to save lives, prevent damage to
    property, and maintain the benefits of dams by preventing failures.
        Last year, the Subcommittee supported the National Dam Safety
    Program to the fullest extent possible as authorized in the Water
    Resources Development Act of 1996. The total amount was $2.9 million in
    fiscal year 1999. This small but vital amount of money took the new
    National Dam Safety Program into its second year of progress toward
    improved dam safety nationwide(progress that will be characterized
    later in this testimony.
        But, there is no progress without continued funding. ASDSO,
    therefore, respectfully requests this Subcommittee's support for the
    authorized level of $5.9 million to fully fund the National Dam Safety
    Program in fiscal year 2000. We would also request that the $400,000
    authorized for staff to administer the Program within FEMA be
    specifically earmarked for that purpose.
        The following activities will be funded through this appropriation:
      --$4 million for incentive grants to state to upgrade their dam
            safety programs,
      --$500,000 for training state dam safety staff,
      --$1 million for research to improve the techniques and equipment for
            rapid and effective dam inspections and dam engineering, and
      --$400,000 for salaries and expenses for FEMA to administer the
            program.
        This modest, yet vital funding would help reduce the risks to life
    and property due to dam failures by providing states with resources to
    improve their dam safety programs. It is an investment in public safety
    that will reduce loss of life, property damage and large federal
    expenditures that are a result of payments for disaster assistance
    through the Disaster Relief Fund and the National Flood Insurance
    Program.
              dam safety, regulation and the extent of the hazard
        According to the National Inventory of Dams housed at the US Army
    Corps of Engineers, there are approximately 74,935 dams \1\ in the
    United States. Sixty percent of these dams are privately owned.
    Federal, state and local governments own the other 40 percent.
    ---------------------------------------------------------------------------
        \1\ These are structures meeting the federal definition of a dam.
    There are still thousands of smaller dams in the United States that are
    regulated and/or inventoried by the states.
    ---------------------------------------------------------------------------
        Dams are an essential part of our national infrastructure. They
    serve a multitude of functions including the following: Flood control;
    Hydropower; Water Supply; Fire and Farm Uses; Irrigation; Recreation;
    Mine Tailings Retention; and Navigation.
        But, failures of these structures can affect thousands of lives and
    cost millions of dollars. Safety is essential to all dams, but most-
    importantly to the approximately 9,300 dams determined by regulators to
    be high-hazard, meaning they threaten human life and could cause
    significant downstream damage should they fail.
        Even more significant are the 1,800 dams that are considered
    unsafe. This means they have deficiencies that leave them more
    susceptible to failure. Many of these unsafe dams are also high-hazard.
    Every member of this Subcommittee has high-hazard dams operating within
    his or her state. Nearly every member on this Subcommittee has an
    unsafe, high-hazard dam in their state. North Carolina, Pennsylvania
    and Texas have over 500 high-hazard dams each.
        Other state statistics include the following:

    ------------------------------------------------------------------------
                                                    High hazard     Unsafe
    ------------------------------------------------------------------------
    Arizona.......................................           73           23
    Montana.......................................          153           13
    New Jersey....................................          183           32
    West Virginia.................................          248           49
    ------------------------------------------------------------------------

        A complete chart of states' dam inventory data is included at the
    end of this written testimony.
        For these reasons, safety regulation is essential to reduce the
    hazards involved with dams. That responsibility rests almost entirely
    with the states. States have responsibility for safety regulation over
    about 95 percent of the nation's dams. The federal government regulates
    the other 5 percent.
        Although many thousands of dams have responsible owners and are
    maintained safely, there are still many thousands more where the
    potential for disaster grows as time passes. These dams are
    deteriorating, downstream development is increasing and owners face
    rehabilitation costs that they cannot meet.
        Furthermore, support for state regulatory programs is lacking in
    many states. According to the National Inventory of Dams, 35 percent of
    high-hazard dams have a last inspection date of 1990, when it is
    generally agreed that high-hazard dams should be inspected every year.
    (Inspection being a function of a regulatory program.) A handful of
    states have exemptions in their law leaving thousands of dams not
    regulated across the nation. Lack of enforcement power in some states
    has given irresponsible owners the ability to ignore orders to repair
    their dams or to abandon their dams altogether; leaving a serious
    safety threat when these structures are determined to be high- or
    significant-hazard.
                             costs of dam failures
        It has been said that few man-made structures have the potential
    for causing catastrophic devastation, as do dams should they fail. Here
    are some historic examples:
      --The Buffalo Creek Dam failure of 1972 killed 125 in West Virginia.
      --The Teton Dam failure in 1976 caused the deaths of 14 and $400
            million in property damage.
      --The Laurel Run Dam failure in 1977 killed 40 in Pennsylvania
      --The Kelly Barnes Dam in Taccoa Falls, Georgia killed 39 and caused
            $2.5 million in damages in 1977.
      --The Georgia Floods of 1994 caused the failure of over 200 dams and
            millions of dollars in property damage.
        Failures and devastation still occur and threaten lives and
    property today. According to the National Performance of Dams Program
    at Stanford University, there were approximately 20 dam failures and
    about 200 incidents in 1998. Included in the costs for these failures
    are:
      --Emergency evacuation costs
      --Downstream property damage
      --Clean-up costs
      --Loss of dam infrastructure and revenue generated from the dam
            operation
      --Environmental impacts
      --Economic losses to nearby communities
                  successes of the national dam safety program
        The National Dam Safety Program is currently into its second year.
    With the funding made available to FEMA, an enormous amount of progress
    has been made toward improving dam safety.
        Thirty-nine states have taken advantage of the training assistance
    to send state inspectors to needed continuing education courses. Forty-
    six states received incentive grants in fiscal year 1999 to improve
    their dam safety programs. Here are some success-stories from these
    state recipients:
    Florida
        ``Florida is holding a series of simulated failures to test
    emergency action planning procedures. A part-time data entry person has
    been hired to update Florida's dam inventory database.''
    Hawaii
        ``The Flood Control & Dam Safety Section has expanded by hiring
    eight new personnel. Hawaii will have a full time person and two part
    time persons on dam safety. The maintenance crew will also be available
    for emergency operations. Additionally, a maintenance facility will be
    constructed.''
    Kansas
        ``Thanks in part to the FEMA State Assistance Grant Program, the
    State of Kansas has begun a regular inspection of all dams that were
    rated ``unsafe'' and all dams that are classified as ``c'' (high)
    hazard dams. The inspection focuses on ensuring that all these dams
    meet regulatory requirements pertaining to hydrologic adequacy and that
    they have acceptable Emergency Action Plans. The department is also
    enhancing its computer equipment and software to perform its regulatory
    functions credibly and efficiently.''
    Kentucky
        ``Kentucky is coordinating with federal agencies, with jurisdiction
    over dams in the Commonwealth, to better inform the public of state
    regulations.''
    Missouri
        ``The NDSP funding has allowed the Missouri Program to send 3
    engineers to much needed training. The training attended includes a
    Concrete Rehabilitation Course, HEC-RAS, and a course on how to detect
    seepage around conduits. Efforts are currently underway to purchase a
    remote controlled camera to use in inspecting conduits in dams. This is
    especially important due to the amount of Corrugated Metal Pipe that
    was used for primary spillways 30 years ago. Much of this pipe is now
    at the end of its useful life and the pipe has deteriorated to the
    point that the integrity of the dams is being threatened. Due to the
    high cost of this type of equipment, purchase of this equipment using
    the state budget allotment was impossible.''
    Montana
        ``Montana put on a Flood Hydrology Seminar on March 30, and 31,
    1999 in the state. We used $3,000 of the $3,800 available for
    individual state training needs from the National Dam Safety Act. The
    seminar was about the flood hydrology techniques used in Montana for
    spillway design for dams. The seminar included an illustration of the
    recent USGS extreme storm unit hydrographs and a recent study of runoff
    parameters.''
    Nevada
        ``As a result of the federal grant money given to Nevada, we have
    purchased a notebook computer. By having the notebook computer in the
    field, we will now be able to write up our inspection reports at the
    site so that when the engineer returns to the office, the report can be
    printed and sent out. We are currently revamping our inspection
    checklist so that it can be filled out easily on the computer and be
    ready for mailing. The computer also houses our inventory database and
    will allow the database fields to be automatically inserted into the
    inspection forms. Without the federal grant money, there is no way the
    dam safety section would've gotten a notebook computer to do this type
    of work. And this is only the tip of the iceberg. We are planning on
    purchasing an outlet camera so that visual inspections can be done on
    old, small diameter conduits. The money is helping Nevada's dam safety
    program immensely.''
    New York
        ``New York is receiving $103,089 in incentive grants from FEMA in
    fiscal year 1999. Thanks to the training funding, each of the three
    state inspectors have been able to attend training that they would not
    have otherwise been able to attend.''
    North Carolina
        ``Several state dam safety engineers have been taking advantage of
    the new training opportunities at Emmitsburg, Maryland and at ASDSO
    regional workshops.''
    Washington
        ``The FEMA assistance money will be used for equipment and a summer
    intern, mproving productivity. It will result in a reduction in the
    time elapsed between inspections.''
    West Virginia
        West Virginia is receiving $20,944 from FEMA to improve its dam
    safety program.
        Other progress in 1998:
      --Eleven states increased the number of dam inspections in 1998 over
            1997
      --Twelve states increased the number of emergency action plans filed
            with the state for those dams requiring them
      --Six states said they executed quicker turn-around times on issuing
            permits
      --Fifteen states reported improvement in remediation of deficient
            dams
      --Fourteen states said they improved their coordination with state
            emergency preparedness officials
      --Nine states reported better quality technical reviews at dams
                                   conclusion
        Dams are a critical part of our national infrastructure. They
    provide benefits upon which our communities and industries depend.
    However, safety is essential to the efficient operation of the dam and
    to the people and property surrounding the structure. Safety cannot be
    realized without adequate regulatory programs at the state and federal
    levels.
        To strengthen the effort, a strong, centralized national
    program(such as the one at FEMA, geared toward assisting the states
    through leadership, public awareness, and technical assistance(is
    imperative. It is, therefore, increasingly essential, as we will surely
    continue to face natural disasters and as our infrastructure ages, to
    place a high priority on mitigating risk associated with all types of
    disasters, whether natural or manmade.
        Full funding of the National Dam Safety Program would continue to
    provide the needed tools to assist state dam safety programs, to
    increase the knowledge base and technical understanding through
    research and to strengthen the partnership between the federal, state
    and private sectors.
        In closing, ASDSO strongly urges this Subcommittee to recognize the
    benefits of this modest investment in public safety by providing the
    authorized level of $5.9 million in fiscal year 2000 to FEMA.
        Thank you to this Subcommittee for its support in years past for
    the National Dam Safety Program at FEMA. ASDSO looks forward to working
    with the Subcommittee and its staff on this important public safety
    issue.

                                              1998 STATE DAM INVENTORY DATA
     [Inventory sizes vary from state-to-state because of number of dams, but also because state laws vary on which
                                       dams are included under their jurisdiction]
    ----------------------------------------------------------------------------------------------------------------
                                                   Total
                      State                       national     Total state   State high-   State reg.    Government
                                               inventory \1\  regulated \2\   hazard \3\   unsafe \4\  ownership \5\
    ----------------------------------------------------------------------------------------------------------------
    Alabama..................................         1,570          1,704           184          150            25
    Alaska...................................            99             87            18  ...........            55
    Arizona..................................           315            214            73           23           173
    Arkansas.................................           927            427            98           25           363
    California...............................           523          1,238           392  ...........           536
    Colorado.................................         1,648          1,808           292          189           428
    Connecticut..............................           707          3,230           236        (\6\)           251
    Delaware.................................            73             98             9        (\6\)            75
    Florida..................................           572          (\6\)         (\6\)        (\6\)            15
    Georgia..................................         4,853          3,311           366           57           634
    Hawaii...................................           129            129            56  ...........            29
    Idaho....................................           343            431           100           13            80
    Illinois.................................         1,232          1,232           157        (\6\)           387
    Indiana..................................         1,463          1,414           243        (\6\)           317
    Iowa.....................................         2,465          2,514            66            2         1,437
    Kansas...................................         6,077          9,899           200           51         1,363
    Kentucky.................................           955            924           147  ...........         (\6\)
    Louisiana................................           381            311            12  ...........            90
    Maine....................................           617            694            23           59            57
    Maryland.................................           273            361            56            6           162
    Massachusetts............................         1,528          2,921           333           21           685
    Michigan.................................           909          1,191            83        (\6\)           378
    Minnesota................................           932            852            40        (\6\)           532
    Mississippi..............................         3,191          3,328           238           10           121
    Missouri.................................         4,032            614           195           20           206
    Montana..................................         3,517          3,219           153           13           795
    Nebraska.................................         2,029          2,029            92  ...........         1,027
    Nevada...................................           323            577           106            8            74
    New Hampshire............................           613          3,148            88        (\6\)           364
    New Jersey...............................           806          1,580           183           32           350
    New Mexico...............................           501            521           162            6           182
    New York.................................         1,633          5,645           372           57           676
    North Carolina...........................         2,699          4,646           874           40           199
    North Dakota.............................           770          1,308            26            5           191
    Ohio.....................................         1,766          2,703           502          450           505
    Oklahoma.................................         4,510          4,380           145            5           150
    Oregon...................................           833          3,733           122  ...........           186
    Pennsylvania.............................         1,315          2,886           735            7           501
    Puerto Rico..............................            36             36            33  ...........            31
    Rhode Island.............................           185            506            17  ...........            80
    South Carolina...........................         2,252          2,242           149            3           283
    South Dakota.............................         2,392          2,252            48            4           140
    Tennessee................................         1,044            593           136           28           382
    Texas....................................         6,838          7,247           818          403         2,734
    Utah.....................................           654          1,948           214           41           198
    Vermont..................................           343          1,001            51        (\6\)           141
    Virginia.................................         1,581            482           103           50           360
    Washington...............................           653            865            94           13           238
    West Virginia............................           537            354           248           49           233
    Wisconsin................................         1,291          1,080           192        (\6\)           618
    Wyoming..................................         1,216          1,332            64            3           221
                                              ----------------------------------------------------------------------
          Total..............................        74,935         93,913         9,280        1,840        19,037
    ----------------------------------------------------------------------------------------------------------------
    \1\ Includes federal and non-federal dams over 25' in height or 50 acre-feet in volume; or anything above 6' ft
      in height with downstream damage potential should it fail.
    \2\ Includes all dams under state regulatory control.
    \3\ High-Hazard by state definition derived from state inventory in column 2.
    \4\ Dams with identified deficiencies by state definition (varies state to state) derived from state inventory
      in column 2.
    \5\ Derived from national inventory in column 1.
    \6\ Not Reporting. Some states do not keep data on ``high-hazard'' and/or ``unsafe'' categories.

                                     ______

          Prepared Statement of the American Public Works Association
        My name is Robert H. Miller, and I am Director of Public Works for
    the Village of Schaumburg, Illinois. I submit this statement regarding
    fiscal year 2000 appropriations for the U.S. Environmental Protection
    Agency and the Federal Emergency Management Agency as President of the
    American Public Works Association.
        The American Public Works Association (APWA) represents 1,700
    public agencies and 25,000 professionals nationwide charged with the
    planning and daily management of local public services and the
    construction, operation and maintenance of the public infrastructure.
    APWA members are responsible for providing a safe drinking water
    supply, collecting and treating sewage and implementing federally
    mandated urban stormwater management programs, and for the proper and
    safe collection and disposal of municipal solid waste. Public works
    agencies also manage the nation's flood control infrastructure and play
    an important role in communities' work to mitigate for and recover from
    disaster.
        In determining fiscal year 2000 appropriations for VA, HUD and
    Independent Agencies, APWA urges the Congress to:
        1. Restore funding to the water and wastewater state revolving loan
    funds.--Appropriate a combined minimum of $2 billion to the U.S. EPA
    for the clean water and drinking water state revolving loan funds
    (SRFs). The SRFs help capitalize local investment in drinking water and
    wastewater infrastructure. Retain caps on state administration expenses
    drawn from the SRF so that the maximum possible funds reach local
    governments to support actual water quality programs.
        2. Retain funding for brownfields assessment, cleanup and
    redevelopment.--Appropriate the approximately $92 million proposed for
    U.S. EPA's budget and the additional funds for brownfields programs
    requested for the U.S. Department of Housing and Urban Development.
    Brownfields grants to local governments are playing an important role
    in encouraging the efficient cleanup of low-level hazardous waste sites
    and spurring economic development in the nation's cities.
        3. Provide funding for the FEMA flood mapping program, Project
    Impact, and domestic anti-terrorism programs.--APWA also supports
    creation of the National Flood Mitigation Fund, so long as other
    activities currently eligible for flood loss reduction project grants
    are not sacrificed.
                       water & wastewater infrastructure
        The great majority of costs associated with providing drinking
    water and wastewater services are borne by local governments. However,
    by providing access to interest-free and low interest loans, federal
    funding for the drinking water and clean water SRFs plays a vital role
    in helping local governments to build and maintain water and wastewater
    infrastructure. Continued water quality improvement can only be assured
    with the continued support of the federal government.
        The public overwhelmingly supports federal investment in water
    quality infrastructure. A January 1999 poll conducted by the The Luntz
    Research Companies on behalf of the Rebuild America Coalition found
    that three-quarters of Americans are willing to pay an additional one
    percent in taxes to guarantee a safe and efficient sewage and water
    treatment system. Meanwhile, in a 1998 survey, 40 percent of APWA
    members identified the top challenge facing public works as the funding
    and financing issues associated with maintaining infrastructure. With
    this backdrop, the U.S. EPA proposed a combined $500 million cut in
    funding for the drinking water and clean water SRFs in 2000. Thus,
    local governments are under increasing pressure to expand water quality
    programs, largely due to federal regulations, with shrinking federal
    dollars available to support those programs.
        The Cost of Clean, a study released in March 1999 by the
    Association of Metropolitan Sewerage Agencies and Water Environment
    Federation puts the price tag at $330 billion for wastewater
    infrastructure needs over the next 20 years. Even EPA, in its most
    recent Clean Water Needs Survey, identified a wastewater funding gap of
    $139.5 billion. These needs are driven by increasing federal regulation
    under the Clean Water Act aimed at controlling pollution from urban
    runoff, combined sewer overflows and sanitary sewer overflows, and from
    the capital improvement needs of an aging American infrastructure.
    Later this year, EPA is expected to finalize new regulations to require
    the nation's small municipalities to implement stormwater quality
    programs. Thus, the need continues to grow, and APWA urges the Congress
    to fully fund the clean water SRF to help meet those needs.
        As the Safe Drinking Water Act Amendments of 1996 are implemented,
    drinking water agencies must make capital improvements to meet new,
    stricter federal standards. Changes to the surface water treatment
    rules and new regulations for removing the byproducts of conventional
    treatment will require major infrastructure investments by water
    suppliers. To comply with forthcoming new limits for arsenic, for
    example, the American Water Works Association projects a cost of as
    much as $1 billion nationwide. Water agencies also are making new and
    increased investments toward protect drinking water at its source under
    the sourcewater protection program. The drinking water SRF, authorized
    by the 1996 amendments at $1 billion per year, is an indispensable tool
    to help local governments achieve new standards.
        APWA supports full funding of the drinking water and clean water
    SRFs, with a minimum combined appropriation of $2 billion for 2000.
                              brownfields programs
        Federal funding for the assessment, cleanup and redevelopment of
    low-level hazardous waste sites known as ``brownfields'' is playing a
    key role in spurring economic development in many of the nation's large
    and small cities. The brownfields program provides an efficient
    alternative to clean up and encourage investment in disturbed sites,
    instead of pushing new development into undeveloped green space.
        APWA supports continued funding for the federal brownfields
    program, administered by the U.S. EPA and the Department of Housing and
    Urban Development.
                          disaster mitigation & relief
        Given our responsibilities as the keepers of America's
    infrastructure, public works agencies play a broad and critical role in
    supporting the functions of emergency management, including delivering
    sand bags for flood fighting, repairing roads and bridges in the
    aftermath of an earthquake, and cutting-off and restoring utilities in
    the wake of a terrorist incident. On many occasions, public works
    departments have been applicants for disaster relief, and we are
    grateful for FEMA's presence and assistance. For all these reasons,
    APWA has given keen attention to the proposed fiscal year 2000 budget
    for the Federal Emergency Management Agency (FEMA).
        In particular, APWA supports FEMA's efforts to improve the
    integrity of flood insurance rate maps. Because of their function, many
    public works facilities, particularly water and sewage treatment
    plants, are located in special flood hazard areas. To minimize the
    flood hazard risk, it is imperative that public works agencies have
    accurate flood maps to guide the planning, construction,
    rehabilitation, and retrofitting of public works facilities. While APWA
    supports efforts to increase funding for the map modernization program,
    the association harbors doubts regarding the viability of the proposed
    mortgage fee. APWA would welcome the opportunity to partner in FEMA's
    modernization efforts and work to identify other funding sources.
        In its proposed budget, FEMA has identified the mitigation of
    repetitive flood loss properties as a high priority. APWA recognizes
    how costly repetitive loss properties are to the National Flood
    Insurance Program--to American tax payers--but is concerned that the
    creation of the National Flood Mitigation Fund would divert or
    eliminate Flood Mitigation Assistance funds currently available for
    other flood loss reduction projects, such as enlarging culverts and
    creating small retention basins. These types of projects can be very
    effective in reducing flood losses and protecting insurable property
    and are worthy of funding, as well. APWA would support the creation of
    the National Flood Mitigation Fund so long as other activities
    currently eligible for project grants are not sacrificed.
        The rising costs of disasters underscore the need for a pre-
    disaster mitigation program--resources jurisdictions can use to redress
    natural hazards outside of a presidential disaster declaration. APWA
    supports the initiative behind Project Impact and hopes that FEMA will
    move toward defined program eligibility criteria and performance
    measurements. APWA is concerned that without these metrics, support and
    funding for a pre-disaster program will diminish. APWA, along with
    other FEMA stakeholders, would gladly assist in this effort.
        On the subject of domestic terrorism, APWA will work to expand the
    definition of ``first responders,'' currently defined as police, fire,
    and rescue personnel. The role of public works departments in preparing
    for and responding to incidents of domestic terrorism continues to be
    overlooked. Currently, there are no resources or programs to train
    public works personnel in crisis and consequence management, or how to
    self protect. Following the Oklahoma City bombing, it was public works
    officials that suspended utilities in the affected areas, preventing
    additional damages and devastation. Public works officials also ensured
    the delivery of community services--water, electricity, refuse
    collection, traffic control--to areas not directly impacted by the
    bomb.
        APWA would like to work with FEMA to infuse public works into
    domestic preparedness activities, supplementing the role of first
    responders. APWA supports FEMA's efforts to secure an additional $13.2
    million in funding for anti-terrorism planning, training, and exercise
    activities with the hope that these funds will be coordinated with
    resources already available through the Department of Justice. APWA
    also hopes that the role of public works agencies in domestic terrorism
    will be recognized and that necessary training will be forthcoming.
        Thank you for your attention and consideration. APWA would be
    pleased work with you to provide additional information upon request.
                                     ______

       Prepared Statement of the National Flood Determination Association
        Mr. Chairman, Senator Mikulski and Members of the Subcommittee: The
    National Flood Determination Association strongly supports the Federal
    Emergency Management Agency's plan to fully modernize its mapping
    program. The NFDA is a professional association of leading companies,
    both large and small, which make determinations on whether or not a
    property is in a special flood hazard area. Our clients are primarily
    lenders and also insurance agents or companies. The NFDA members play
    an important role in furthering the program compliance and floodplain
    management objectives of the National Flood Insurance Program. The
    Association represents the flood determination industry on FEMA's
    Technical Mapping Advisory Council.
        Accurate flood zone determinations depend on accurate and up-to-
    date maps. The maps were required for implementation of the National
    Flood Insurance Program, enacted in 1968, but since that time, their
    uses have expanded while the maps have grown older and technology has
    advanced. Some 100,000 map panels have been produced by FEMA, but 33
    percent of them are more than 15 years old and another 30 percent are
    between 10 and 15 years old. Development and changed land use patterns
    significantly alter flood risk over a period of 10 to 15 years. Some
    areas are mapped with more accuracy and detail than others, often
    depending on the quality and age of the base map upon which other
    information is superimposed. Often those maps reflected old engineering
    analyses or approximate methods that do not provide sufficient data.
    Also, some flood prone communities have never had a map study done.
        The problem with access to good quality, up-dated flood maps was
    recognized by the Congress in the Flood Insurance Reform Act of 1994,
    which required a Five Year Map Update Needs Assessment. The Federal
    Emergency Management Agency has found that the results of that process
    make the importance of regular updating very clear because flood hazard
    conditions are dynamic. NFDA members and FEMA are very much aware of
    calls from frustrated lenders, property owners, insurance agents,
    developers and community officials for maps that can be used to
    interpret the effects of growth, construction and prior flooding
    events.
        The Flood Insurance Reform Act of 1994 also included measures
    designed to improve program compliance. New tools such as the ability
    of lenders to force-place flood insurance on a property have resulted
    in much greater program participation, but have also led to more
    awareness of map inaccuracies and age. The 1994 law requires FEMA to
    respond promptly to appeals of map determinations. Appeals and requests
    for Letters of Map Amendment (LOMA) or Letters of Map Revision (LOMR)
    have grown from about 4,000 annually to about 12,000 annually. The
    process of changing and reissuing the paper maps is cumbersome and time
    consuming. LOMAs and LOMRs respond to a particular property inquiry and
    do not immediately result in a changed flood map. despite issuance of a
    number of LOMAs in a community, for example, the map in current use
    would still have to be used for new flood zone determinations, but may
    not reflect these changes. In many cases, this is due to lack of funds.
        Digital technology now makes it possible to keep maps in a form
    that can be readily updated as new information becomes available. Use
    of modern technology is essential to facilitate effective functioning
    of the NFIP and to promote wise community planning and good development
    decisions. Yet, digitizing alone is not sufficient since the base maps
    themselves must be of a higher quality.
        FEMA's Mitigation Directorate has developed a well conceived plan
    to update and modernize flood maps over a seven year period. The plan
    is costly, as investment in efficiency and longer term objectives often
    is. FEMA's benefit-cost analysis for the modernization plan is 2 to 1.
    At the present time, all of the costs of FEMA's mapping are borne by
    flood insurance policy holders. Some 40 percent of overall mapping
    activities funds are now spent to respond to map appeals, brought on
    largely because of map inaccuracies. There are many users of FEMA's
    flood maps, ranging from lenders to engineers, surveyors and community
    officials and emergency response professionals. It seems inappropriate
    for flood insurance policy holders to absorb the cost when so many
    others benefit.
        NFDA fully supports FEMA's timely effort to begin the major task of
    improving and modernizing flood maps for the nation. It is critical
    that funds be provided for this task which is already overdue. Improved
    maps will save the federal government in disaster relief monies and in
    the cost of unnecessary LOMAs and LOMRs. Less directly, it will save
    money in promoting better community and development decisions.
        This is a wise investment. While other funding proposals are being
    examined and, later, in addition to funds which may eventually become
    available by some other means, the appropriation of funds for map
    modernization is appropriate. This is an urgent need. NFDA strongly
    urges the Committee to appropriate funds to make sure that flood map
    modernization can get underway promptly.
                                     ______

      Prepared Statement of the Association of State Floodplain Managers,
                                      Inc.
        Mr. Chairman and Members of the Subcommittee: The Association of
    State Floodplain Managers, Inc. is pleased to have the opportunity to
    share with you our thoughts relating to three initiatives in the fiscal
    year 2000 budget request of the Federal Emergency Management Agency. We
    support the initiatives to (1) begin a major overhaul and update of the
    flood maps that provide the basic information for hazard reduction
    across the country; (2) address the problem of repetitive claims
    against the National Flood Insurance Program; and (3) fund the pre-
    disaster mitigation concept of public-private partnerships targeted to
    specific communities with a goal of becoming ``disaster resistant''.
        The Association of State Floodplain Managers and its 10 Chapters
    represent over 3,500 state and local officials as well as other
    professionals who are engaged in all aspects of floodplain management
    and hazard mitigation. All are concerned with reducing our nation's
    flood related losses. Our state and local officials are the federal
    government's partners in implementing programs and working to meet our
    shared objectives. Many of our members are their states' coordinators
    for the National Flood Insurance Program.
                            flood map modelnization
        FEMA's Flood Insurance Rate Maps have been developed over the life
    of the National Flood Insurance Program, using technologies of varying
    sophistication and reliability. Early maps were produced quickly, using
    readily available resources, when there was pressure under the
    emergency phase of the program to make maps available. More advanced
    technology has often been superimposed on differing qualities of base
    maps. Full engineering studies to update maps have often not been
    possible due to financial and time constraints.
        Accuracy questions are often settled through Letters of Map
    Amendment (LOMA) or Letters of Map Revision (LOMR). In this process,
    changes are not made to the map itself, but only to the map's
    application to an individual property, so continued and repetitive
    questions of accuracy arise. Approximately 45 percent of the maps are
    10 years old and about 33 percent are at least 15 years old.
        Accurate and up-to-date maps are important so that banks and
    lenders can make good decisions about what properties do and do not
    require flood insurance. Good maps are also important for community
    planning and development decisions as well as emergency evacuation
    planning. Flood maps are used by for state and local floodplain
    management for the purpose of preventing future losses to homes and
    public facilities. Flood maps are widely used by engineers, developers,
    community planners, state and local emergency management officials
    federal officials. Flood maps are used by HUD, EPA, the Army Corps of
    Engineers and FEMA's Mitigation Directorate, its Response and Recovery
    Directorate as well as in the Federal Insurance Administration. The
    Flood Insurance Rate Maps are widely recognized as being critical to
    efforts to reduce loss of life and property, to reduce insurance and
    disasters costs and to protect and utilize the natural and beneficial
    functions of our nation's floodplains.
        Since flood maps serve so many purposes for our society, it is
    appropriate for American taxpayers to support modernization and
    updating of FEMA's mapping capabilities. Since 1990 and passage of the
    Omnibus Reconciliation Act, the cost of FEMA's mapping program is
    funded only by flood insurance policy holders through their servicing
    fees. The budget request seeks $65 million, including only $5 million
    in appropriated funds to fund the beginning of a multi-year effort. The
    remainder of the funds would come from a mechanism that has not been
    authorized.
        About 40 percent of the current mapping budget pays for evaluating
    and responding to dramatically increasing numbers of requests for LOMAs
    and LOMRs. This shows the need for better maps, but it also makes clear
    the importance of beginning map modernization now so as not to
    ``waste'' more money on the much less efficient LOMA and LOMR process.
    ASFPM believes that it is fitting and proper for this Committee to
    approve the appropriation of general funds for flood map modernization.
    Indeed, ASFPM would urge an annual general fund contribution
    commensurate with the value of the flood maps for all taxpayers.
                                repetitive loss
        Repetitive loss properties are those that have filed numerous flood
    insurance claims. This has emerged as a problem that demands attention.
    While most cases of repetitive loss are hardly as egregious as those
    featured in national news coverage this past year, the losses do
    represent a drain on the Flood Insurance Fund. The drain has
    contributed to the need for more borrowing from the federal Treasury,
    representing a cost to taxpayers.
        The NFIP was established so that flood-prone citizens would
    contribute to their own recovery. It saves the federal government and
    the taxpayers the cost of disaster relief every time a flood strikes.
    It provides a means to encourage communities to plan and implement
    effective floodplain management strategies.
        Most properties subject to repetitive loss are older structures,
    built before the Flood Insurance Rate Maps (FIRMs) were developed. The
    NFIP has shown itself over its 30 years to be an effective vehicle for
    addressing recovery needs of flood-prone property owners rather than
    repetitive payment of disaster relief from the general Treasury. Some
    form of federal assistance will likely always be provided after major
    floods, therefore, it does not seem useful to deny insurance to
    repetitive loss properties. ASFPM believes it is more effective to
    address the problem through mitigation to prevent future flooding.
        FEMA has proposed to combine a new appropriation of $12 million
    with the Floodplain Management Assistance program (FMA) in a focused
    effort to deal with the most problematic cases of repetitive loss. The
    NFIP, now funded entirely by premiums from policyholders, has lessened
    disaster relief costs to taxpayers. It is, therefore, reasonable to
    appropriate $12 million in general funds to assist in managing this
    serious drain on the National Flood Insurance Fund.
                                 project impact
        Project Impact is FEMA's disaster loss prevention initiative which
    fosters partnership between the federal, state and local governments as
    well as with the private sector, including businesses and non-profit
    entities. The objective is to mobilize a community's members to plan
    and implement their own disaster loss reduction plans, programs and
    projects. Success at the local level, where disasters' impact is most
    felt, requires full local participation. Local public and private
    generation and implementation of plans is an important pilot concept to
    support. ASFPM supports the requested $30 million for this effort.
        The Association of State Floodplain Managers would be very glad to
    respond to any questions from Subcommittee Members or staff. I can be
    reached at the South Carolina Department of Natural Resources at (803)
    734-9120 and the ASFPM Executive Director, Larry Larson, can be reached
    in Madison, Wisconsin at (608) 274-0123.
                                     ______

       Prepared Statement of the International Association of Emergency
                                    Managers
        Mr. Chairman and Members of the Subcommittee: The International
    Association of Emergency Managers (IAEM) would like to comment for the
    subcommittee's record on the proposed fiscal year 2000 budget for the
    Federal Emergency Management Agency (FEMA). IAEM urges Congress to
    fully fund the FEMA budget request for fiscal year 2000.
        IAEM is a 1,700-member organization which represents the interests
    of emergency management professionals in local, state and federal
    governments, the military, private business and the non-profit sector,
    both in the U.S. and in other countries. Most of its members, however,
    serve local governments within the U.S. borders.
        Comprehensive emergency management encompasses the entire public
    safety and service community, with a mission that includes mitigation,
    planning, response and recovery. On a daily basis, our members help
    their communities or their organizations plan for, respond to and
    recover from a wide variety of emergencies hurricanes, winter storms,
    floods, fires, droughts, earthquakes, chemical spills, transportation
    accidents, infrastructure breakdowns and others. Lately we've added
    terrorist activities, cyber-terrorism and Y2K.
        For many years, there has been a recognized emergency management
    partnership that encompasses local, state and federal governments.
    Although the federal partner (FEMA) acknowledges the primary importance
    of that local component, budget pressures in recent years have meant a
    dwindling amount of federal dollars passed through to the local level,
    which is the first line of defense in any emergency.
                                  full funding
        IAEM urges Congress to fully fund the FEMA budget request for
    fiscal year 2000. Many of the initiatives to be funded by the proposal
    are long overdue, including continued attention to pre-disaster
    mitigation and flood mitigation in particular, a start on modernization
    of floodplain maps, the focus on repetitive flood losses, and money for
    enhanced training and planning for anti-terrorism efforts at the state
    and local level.
                              consolidated grants
        FEMAs budget request calls for consolidating the bulk of FEMA grant
    programs for state and local jurisdictions into a single, more flexible
    funding stream, called Emergency Management Performance Grants (EMPG).
    One of the grant programs to be put under this new umbrella is State &
    Local Assistance (SLA).
        While IAEM believes the new grant mechanism may mean fewer
    complications and greater ability for states to target their particular
    needs, members have serious concerns about what the change will mean
    for funding at the local level--especially when coupled with the new
    requirement that all SLA funding be a 50-50 federal/state match.
    (Previously, parts of the SLA money was 100 percent federal funds.)
    Aside from direct funding of local jurisdictions, there is a second
    concern: continuation of state-provided training, which is among the
    most important services that state emergency management agencies
    provide to local governments, and unfortunately is also the first
    service they cut when funding is cut.
                               local requirements
        Emergency management happens at the local level. If there is no
    local program, an emergency situation quickly gets out of control, and
    there is no focal point for coordination of outside help from the
    state, the federal government or private relief agencies.
        In the pre-Stafford Act, Civil Defense days, FEMA distributed SLA
    funds to states and required them to pass through two-thirds of the
    money to local jurisdictions. This requirement helped to ensure a
    floor-level local capability in many jurisdictions. Not all states
    strictly observed the requirement, and the federal pass-through funds
    in recent years typically provided only 15-30 percent of program
    budgets for most localities which received SLA funds. Nevertheless, it
    was a commitment by the federal and state governments to the local-
    state-federal partnership so crucial to effective emergency management.
        There is no longer a pass-through requirement, and states are free
    to pass funds through or not. Its not hard to understand how the
    increasing demands on emergency management lead to a great temptation
    to keep more funds within state programs.
        IAEM believes it is essential that FEMA develop and maintain
    standardized minimum program requirements relative to state
    administration of funds in support of local programs, should the
    proposed Emergency Management Performance Grants (EMPG) concept be
    approved. These requirements should include a formula by which local
    jurisdictions are assured an equitable portion of FEMA dollars.
                             importance of training
        For emergency managers at the local level, one of the greatest
    direct benefits derived from federal funding to states is the provision
    of training and exercise programs. These were among the 100 percent
    federally-funded SLA programs, and we fear that the move to a 50-50
    match will result in degradation of these programs. We already have
    seen that training for local jurisdictions is one of the first items to
    suffer a hit when state budgets are squeezed either there is less
    training offered, fees are tacked on, or state employees become the
    major beneficiaries instead of local-level practitioners.
        In the best of all worlds, IAEM would like to see the continuation
    of 100 percent funding for training and exercise programs that directly
    benefit all local jurisdictions within the state. At the least,
    Congress should require that FEMAs rules for its new performance grant
    program include requirements to maintain a certain level of training
    and exercising to benefit local jurisdictions.
        IAEM members thank you for the opportunity to comment on the
    proposed FEMA budget. Our members and staff are available if you have
    any follow-up questions.
                                     ______

                 Prepared Statement of Florida State University
        Mr. Chairman, thank you and the Members of the Subcommittee for
    this opportunity to present testimony. I would like to take a moment to
    acquaint you with Florida State University. Located in the state
    capitol of Tallahassee, we have been a university since 1950; prior to
    that, we had a long and proud history as a seminary, a college, and a
    women's college. While widely known for our athletics teams, we have a
    rapidly emerging reputation as one of the Nation's top public
    universities. Having been designated as a Carnegie Research I
    University several years ago, Florida State University currently
    exceeds $110 million per year in research expenditures. With no
    agricultural or medical school, few institutions can boast of that kind
    of success. We are strong in both the sciences and the arts. We have
    high quality students; we rank in the top 25 among U. S. colleges and
    universities in attracting National Merit Scholars. Our scientists and
    engineers do excellent research, and they work closely with industry to
    commercialize those results. Florida State ranks fourth this year among
    all U.S. universities in royalties collected from its patents and
    licenses, and first among individual public universities. In short,
    Florida State University is an exciting and rapidly changing
    institution.
        Mr. Chairman, let me describe several projects that FSU is pursuing
    this year. The first is a joint project with the City of Tallahassee
    involving an economic development initiative with the arts.
        Florida State University and the City of Tallahassee propose to
    jointly seek funding to stimulate economic development in an area of
    Tallahassee that is adjacent to the FSU campus. The Frenchtown
    community, a redevelopment priority for the city, is one of the highest
    priorities of the City and is the University's highest capital
    construction project. The vehicle for providing this boost to the
    economic revitalization of this area will be a performing arts center
    that will be housed on the edge of the FSU campus adjacent to the
    Frenchtown area. That area, once a thriving resource to the Tallahassee
    area has, in recent years, become a high crime area consisting of
    deteriorating buildings, empty lots and abandoned housing. Such a new
    facility would provide a location that would allow for over 400
    performances a year with audiences drawn from the surrounding
    communities throughout the Panhandle region of Florida, and including
    portions of southern Georgia and western Alabama. Audiences for the
    Center's performances will be drawn to commercial establishments
    created as part of the Frenchtown Revitalization Project. Small shops
    and restaurants, immerging as part of this revitalization effort, would
    be the catalyst for further development and enhanced opportunities for
    residents.
        Private funds would be available to match the federal portion
    several times over. We will be requesting $3 million in fiscal year
    2000 for this effort as an Economic Development Initiative grant.
        Next, I would like to discuss a project involving Digital Emergency
    Broadcasting. Since 1995, FSU has delivered emergency information to
    citizens of northwest Florida as they have endured floods, hurricanes,
    tornadoes, and wildfires. These experiences have not only enhanced our
    awareness of the need to pass on accurate information to the general
    public but has also strengthened the ties between our stations and
    Florida's Department of Emergency Management and their Emergency
    Operations Center (EOC). Because of the success of our broadcasts, the
    FSU stations have recently entered into an agreement to act as the
    television production entity for the EOC during emergencies.
        FSU and their broadcasting stations recognize a genuine need for
    additional emergency services and propose a partnership with the
    Federal Emergency Management Agency (FEMA) to explore the possibility
    of broadcasting emergency information to FEMA field personnel and/or to
    the general public during emergencies in the stations' coverage area
    using this new technology. We believe that there can be great
    advantages in the ability to broadcast the latest information available
    directly to PCs using DTV at times when other telecommunications
    infrastructure may be inoperative. With FEMA's investment into this
    initiative, a partnership could be formed with the FSU stations and
    Florida's Department of Emergency Management to better serve the
    citizens of the North Florida area during a disaster, which could
    eventually be duplicated nationwide. This is a worthwhile project will
    save lives in the areas where implemented.
        We are requesting $600,000 from FEMA in fiscal year 2000 for basic
    infrastructure costs for this initiative.
        Another project, Mr. Chairman, that Florida State University is
    pursuing is related to the creation of a Challenger Learning Center in
    Tallahassee and located at the FSU-Florida A&M University College of
    Engineering building. That Center, which will have 34,000 square feet
    of exhibit space, will house a space mission simulator with a mock-up
    of ``Mission Control'' and the laboratory node of a ``Space Station''
    as well. Between 10-15,000 middle school students will visit the Center
    each school year, having been drawn broadly from 66 counties in north
    Florida, south Georgia, and southeastern Alabama. As a member of the
    Florida Space Grant Consortium, Florida State University is one of the
    seventeen public and private members of this association. Collectively,
    the Consortium serves more than 230,000 university students and also is
    involved in substantial outreach work with K-12 students as well.
        Our request, Mr. Chairman, is that you and your Subcommittee
    consider funding NASA's Space Grant Consortium program at a level above
    the level requested by NASA. This is an important national program and
    deserves greater funding, The Florida Space Grant Consortium will be
    approached to provide additional funds for the FSU-FAMU Challenger
    Learning Center project. It is our hope that at least $100K could be
    made available to the Challenger Learning Center of any additional
    Florida funding that might be available. It would greatly enhance our
    outreach efforts throughout Florida, Georgia, and Alabama to K-12
    students.
        Finally, Mr. Chairman, I would like to thank this Subcommittee for
    its interest last year in your report and the conference report on the
    concerns expressed about orimulsion and its potential environmental
    impact. The Environmental Protection Agency (EPA) will be issuing some
    program guidance resulting from similar concerns about environmental
    impacts this and other heavy fuels might have and how those impacts
    might affect water quality and how could these various fuels be
    mitigated in case of a spill. We here at FSU are persuaded we have a
    unique approach to a examine such impacts in a total biological
    community approach. We are persuaded we have a unique and much more
    effective means of assessing impacts on the marine environment and will
    be discussing this further with EPA. We will keep the Subcommittee
    informed of our progress in this arena.
        Mr. Chairman, as you can see, Florida State University has numerous
    projects and proposals pending before several of the agencies and
    departments within your jurisdiction. I would like to discuss one final
    activity that is preparing its renewal proposal to NSF. I call it to
    your attention because the decision made in the early 1990's by the NSF
    and its Board was an excellent one and one that has been borne out to
    have been highly successful. Florida State University's National High
    Magnetic Field Laboratory was awarded its first five-year contract in
    the early 1990's following a highly-publicized competition and decision
    by NSF and its Board. The NHMFL was renewed for another five years in
    1996 and is preparing for its third proposal to NSF in the fiscal year
    2000 budget year. I would only like to call your attention to this
    extraordinary facility which is an excellent example of partnerships
    between both the federal government and the State of Florida, a
    national laboratory, and Florida State University. It has developed
    state-of-the-art magnet technologies and systems in collaboration with
    numerous industries. It has attracted a world-class faculty to
    Tallahassee. It is doing research, development, and education at all
    levels including an extremely active K-12 outreach effort with the
    children of Florida and the southeastern U.S. It is a success story
    that your Subcommittee and the National Science Foundations should be
    proud to claim.
        Mr. Chairman, I would like to conclude with a discussion of the
    overall budget of the National Science Foundation. NSF provides support
    for scientific and engineering research and educational activities at
    colleges and universities around the Nation. Their support and the
    quality of their programs and staff are unparalleled in the federal
    government. They provide approximately $30million per year to Florida
    State University so selfishly they are incredibly important to this
    university. I am asking that your Subcommittee look at the NSF request
    as the base and make every effort to secure additional funds that you
    could invest in the NSF and its programs. There can be no better return
    on investment than in research and development.
        Related to NSF is a concern that is becoming broadly shared by the
    research community. That concern relates to the disproportionate share
    of federal R&D being appropriated to the biomedical sciences and
    substantially lesser amounts for other R&D activities that truly
    provide the foundation for new knowledge and breakthroughs in all
    sciences, including the medical sciences. While many of our scientists
    are less articulate in making the case for basic scientific research
    support like that provided by NSF, it clearly is incredibly important
    for our Nation's future.
        I hope that your Subcommittee, as it makes its very difficult
    decisions regarding priorities for spending those resources allocated
    to your Subcommittee, please consider this issue of balancing federal
    R&D. This might require coordination among several of the key
    Appropriations subcommittees to ensure that investments which can
    benefit several scientific areas be considered appropriately. For
    instance, there are recent funding precedents that have seen NIH
    supporting the upgrades of synchrotrons which have been the
    responsibility of the Department of Energy. The OSTP Director, in a
    January 1999 report on this subject, indicated that this type of
    multipurpose funding by NIH of broader scientific instruments and
    facilities should be considered. Nuclear Magnetic Resonance (NMR) was
    one area noted as a possible candidate for such NIH funding because
    such funding by NIH would benefit broader scientific areas like
    biology, materials sciences, and others. I would request that your
    Subcommittee consider working with other key Appropriators to determine
    if utilization of certain NIH funds might be designated for
    instrumentation that has multidisciplinary benefit. While NSF clearly
    has successful programs to manage such large instrumentation projects,
    the NIH does not. Yet NIH has consistently garnered funding increases
    that the NSF has never seen previously. Seeking creative ways to
    redress the balance among scientific fields might assist in
    ``rebalancing `` federal funding among agencies and functions.
        Mr. Chairman, I have described just a few of the exciting
    activities going on at Florida State University that will make
    important contributions to solving some key problems and concerns our
    Nation faces today. Your support would be appreciated, and, again,
    thank you for an opportunity to present these views for your
    consideration.
                                     ______

      Prepared Statement of the National Emergency Management Association
        Please accept these comments from the National Emergency Management
    Association (NEMA) regarding the Federal Emergency Management Agency
    Year 2000 budget request. NEMA represents the emergency management
    directors in the 50 states and territories responsible to their
    governors for emergency preparedness, mitigation, response and recovery
    activities. The FEMA budget provides critical dollars to support state
    and local emergency management programs. NEMA urges your strong support
    of the budget as presented with consideration for additional dollars
    above the request in the State and Local Assistance program.
        The FEMA Year 2000 budget request reflects the incredible growth of
    all-hazards emergency management activities in recent years--from
    domestic terrorism preparedness to Y2K to international disaster relief
    and now planning for school safety. Emergency management programs at
    all levels of government face difficult challenges today including the
    expectation to do more with less, increased competition for resources,
    increased frequency and destructiveness of disasters and increased
    public expectations for services. In addition, there is an expectation
    by Congress to reduce disaster costs.
        NEMA is proud to inform you that states are rising to meet these
    challenges. They are committing greater resources than ever before to
    emergency management. According to a recent survey by NEMA, states
    spent $2.77 billion on emergency preparedness, mitigation, response and
    recovery in fiscal 1997, which is nearly double the amount spent only
    five years ago. And while emergency management once focused on
    responding to and recovering from disasters, states are now clearly
    focusing their efforts and resources on mitigation or prevention
    efforts to reduce the costs of future disasters. The NEMA survey
    revealed that states spent $1.24 billion on mitigation activities in
    fiscal 1997 which is 45 percent of spending on all four phases of
    emergency management. This is an 80 percent increase over the previous
    year.
        The budget request includes a new Emergency Management Performance
    Grant (EMPG) that will consolidate separate funding streams and replace
    the current Performance Partnership Agreement. NEMA understands the
    benefits of the consolidated grant will include flexibility for the
    states to meet emergency management priorities, and more efficiently
    use state staff end financial resources. The increased flexibility
    promised by FEMA will help to enhance the professionalism of state and
    local emergency management programs and build a decentralized
    capability for preparedness and response. NEMA has been working in
    cooperation with FEMA to develop program goals and objectives. We are
    excited about the opportunities the consolidated grant provides for
    states.
        The proposed Emergency Management Preparedness Grant includes a
    request of $141 million for grants to states with an increase of
    approximately $4 million for State and Local Assistance funding. The
    SLA funds are pass through grants to state and local governments and
    provide the very foundation upon which basic emergency management
    capabilities are built. The $4 million increase in SLA funds over the
    previous year is sorely needed. In fact, a significantly larger
    increase in SLA funding is needed to bring the program up to the
    intended 50/50 match between the federal government and states. States
    reported that shortfalls in SLA grants totaled more than $152 million
    in fiscal 1997. This is $27 million more than fiscal 1996 and $68
    million more than fiscal 1992. As you can see, funding has not kept
    pace with increased emergency management responsibilities and public
    expectations for a world class emergency management system. In
    addition, the cost share for the SLA program will shift to 50/50 in the
    Year 2000. This has had a negative impact on budgets and staffing
    levels in several states with limited financial capacity. Other states
    have been able to secure the necessary matching fund requirements.
    Regardless of their states' current financial capacity, all state of
    finials share the common concern that the future of basic emergency
    management programs and capabilities will be in jeopardy if we continue
    to shift costs to state and local governments and piecemeal funding for
    emergency management through special programs that may or may not be
    national priorities in future. With this in mind, we urge you to
    seriously consider providing additional SLA funds over and above the
    FEMA request.
        Other FEMA budget initiatives supported by NEMA include the request
    for $30 million for pre-disaster mitigation. This is truly the only way
    we can reduce disaster costs. As I mentioned earlier, states have
    followed FEMA's lead and focused their efforts on prevention. Ninety
    percent of spending for emergency management in fiscal 1997 occurred
    before disasters could strike. NEMA is working in partnership with FEMA
    to collect mitigation success stories and to document the cost-
    effectiveness of such activities as property buyout and relocation
    projects. FEMA's request for an additional $12 million to focus on
    removing repetitive loss structures from floodplains is very important
    and will prove to be a wise use of federal and state dollars.
        A critical initiative that has been significantly under-funded
    within FEMA is the domestic preparedness program. FEMA has a critical
    role to play as the lead federal agency for consequence management, but
    hasn't received the funds to appropriately support that lead role. In
    turn, states have received little funding to adequately plan, train and
    exercise for potential terrorist incidents. NEMA fully supports FEMA's
    request for additional anti-terrorism funds $8 million of which is
    targeted to go to states for planning and exercises. This is critical
    if states are to develop comprehensive state terrorism strategies that
    build upon the existing capabilities of local, state and federal
    government already in place as part of the nation's all hazards
    emergency management system. It is important to note however, that
    special program funds such as these cannot be used to support day-to-
    day emergency management functions and should not be viewed as a source
    of funding to replace critical State and Local Assistance dollars.
    Having said that, the nation's domestic preparedness program is of
    great importance to NEMA and there are many coordination issues that
    must be addressed if we are to be successful in this endeavor.
        In closing, NEMA would like to express its continued support and
    appreciation for FEMA Director James Lee Witt. He remains a good friend
    to state and local government, but more importantly a strong advocate
    for all our citizens when they become victims of disasters.
        Please feel free to call on NEMA at any time as a resource on
    emergency management issues. Thank you for your strong interest and
    work in the emergency management arena.
                                     ______

      Prepared Statement of the Association of State Floodplain Managers,
                                      Inc.
        Mr. Chairman and Members of the Subcommittee, The Association of
    State Floodplain Managers, Inc. is pleased to have the opportunity to
    share with you our thoughts relating to three new initiatives in the
    fiscal year 2000 budget request of the Federal Emergency Management
    Agency. We support the new proposed initiatives to (1) address the
    problem of repetitive losses in the National Flood Insurance Program;
    (2) begin a major overhaul and updating of the flood maps produced and
    used by FEMA; and (3) fund the concept of public-private partnerships
    targeted to specific communities with a goal of becoming ``disaster
    resistant''. The Association of State Floodplain Managers and its
    Chapters represent over 3,500 state and local officials as well as
    other professionals who are engaged in all aspects of floodplain
    management and hazard mitigation. All are concerned with working to
    reduce our nation's flood related losses. Our state and local officials
    are the federal government's partners in implementing programs and
    working to achieve effectiveness in meeting our shared objectives. Many
    of our members are their states' coordinators for the National Flood
    Insurance Program.
                                repetitive loss
        Repetitive loss, the filing of numerous flood insurance claims on
    the same property, has emerged as a problem in the functioning of the
    NFIP that demands attention. While most cases of repetitive loss are
    hardly as egregious as those featured in national news coverage this
    past year, the losses do represent a drain on the Flood Insurance Fund.
    Such a drain on the Fund can result in the need for more borrowing from
    the federal Treasury, representing a cost to taxpayers. The NFIP was
    established to help citizens with the cost flooding in a manner in
    which those at risk paid into their assistance, to save the federal
    government and its taxpayers the cost of disaster relief every time a
    flood struck and to provide a means of encouraging communities to plan
    and implement effective floodplain management strategies. Often,
    properties subject to repetitive loss are older structures, in place
    before the Flood Insurance Rate Maps (FIRMs) were developed. The
    program considers pre-FIRM properties to be those built before 1974.
    Since the NFIP has shown itself over its 30 years to be a useful
    vehicle for addressing recovery needs of flood-prone properties rather
    than repetitive disaster relief payments from the general Treasury.
    Since it is unlikely that some form of federal assistance would not be
    provided in the face of a natural disaster, it does not seem useful to
    deny insurance to repeat claims, but perhaps to address the problem
    through increased premiums or through steps to prevent future flooding.
    Unfortunately, many policyholders do not have sufficient savings or
    income to take often expensive steps to mitigate future flooding. FEMA
    has proposed to combine an appropriation of $12 million with its funds
    for the Floodplain Management Assistance program (FMA) in a new effort
    to assist the most problematic cases of repetitive loss through
    elevation, floodproofing or buyout of the property. Since the NFIP,
    funded largely by premiums from policyholders, has lessened disaster
    relief costs to taxpayers, it seems very appropriate to appropriate $12
    million in general funds to assist in removing the most serious drains
    from the National Flood Insurance Fund.
                            flood map modernization
        FEMA's Flood Insurance Rate Maps have been developed over the life
    of the National Flood Insurance Program, using technologies of varying
    sophistication and reliability. Early maps were produced quickly, using
    readily available resources, when there was pressure under the
    emergency phase of the program to make maps available. Later, more
    advanced technology has often been superimposed on differing qualities
    of base maps. Full map studies to update maps have often not been
    possible due to financial and time constraints, so accuracy questions
    have often been settled through Letters of Map Amendment (LOMA) or
    Letters of Map Revision (LOMR). In this process, changes are not made
    to the map itself, so continued and virtually repetitive questions of
    accuracy arise. Approximately 45 percent of the maps are 10 years old
    and about 70 percent are at least 5 years old. Accurate and up-to-date
    maps are important to making proper decisions about what properties do
    and do not require flood insurance, but they are also important to
    community planning decisions. Flood maps are used by our members in
    floodplain management for the purpose of preventing future losses to
    homes and public facilities. Flood maps are tools widely used by
    engineers, developers, local community planners, state and local
    emergency management officials and federal officials, both in FEMA's
    Mitigation Directorate and its Response and Recovery Directorate as
    well as in the Federal Insurance Administration. The Flood Insurance
    Rate Maps(FIRMs) are widely recognized as being critical to efforts to
    reduce loss of life and property, to reduce insurance and disasters
    costs and to assist in utilizing the natural and beneficial functions
    of our nation's floodplains. Since flood maps perform so many functions
    for our society, it seems entirely appropriate for American taxpayers
    to support modernization and updating of FEMA's mapping capabilities.
    At present, the cost of FEMA's mapping program is funded only by flood
    insurance policy holders through their premiums and servicing fees. The
    budget request seeks $65 million, including only $5 million in
    appropriated funds to fund the beginning of a multi-year effort. The
    remainder of the funds would come from a mechanism that has not been
    authorized. Apparently about 40 percent of the current mapping budget
    pays for evaluating and responding to dramatically increasing numbers
    of requests for LOMAs and LOMRs. This shows the need for better maps,
    but it also makes clear the importance of beginning map modernization
    now so as not to ``waste'' more money on having to issue more LOMAs and
    LOMRs. It is the view of ASFPM that it is fitting and proper to
    contribute general funds to flood map modernization.
                                 project impact
        Project Impact is an important disaster loss prevention initiative
    which fosters partnership between the federal, state and local
    governments as well as with the private sector, including businesses
    and non-profit entities. The objective is to mobilize a community's
    members to plan and assist in funding their own disaster loss reduction
    plans, programs and projects. Success at the local level, where
    disasters' impact is most felt, requires full local participation.
    Local public and private generation and implementation of plans is an
    important pilot concept to support. We hope that the requested funding
    for this effort can be provided. It is my hope that these comments on
    aspects of FEMA's fiscal year 2000 budget request will be helpful to
    the Subcommittee. The Association of State Floodplain Managers would be
    very glad to respond to any questions from Subcommittee Members or
    staff. I can be reached at the South Caroline Department of Natural
    Resources at (803) 734-9120 and the ASFPM Executive Director, Larry
    Larson, can be reached in Madison, Wisconsin at (608) 274-0123.
                                     ______

                 NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
      Prepared Statement of the State Cooperative Extension Services and
                     State Agricultural Experiment Stations
        Mr. Chairman, members of the subcommittee: As the respective Chairs
    of the Extension Committee on Organization and Policy (ECOP) and the
    Experiment Station Committee on Organization and Policy (ESCOP) of the
    National Association of State Universities and Land Grant Colleges
    (NASULGC), we appreciate the opportunity to discuss the importance of
    inter-agency partnership in education and research in space and
    agricultural programs.
        As components of NASULGC, a non-profit organization, ECOP and ESCOP
    represent a national network of Land Grant University-based State
    Cooperative Extension Services (CES) and State Agricultural Experiment
    Stations (SAES). The Land Grant University system (LGU) and the USDA-
    Cooperative State Research, Education, and Extension Service (CSREES)
    have had a thriving partnership of many years, providing the technology
    which has made American agriculture the most productive and efficient
    in the world. Our organization is committed to advancing
    scientifically-based decision making at the local level by capitalizing
    on the LGU comparative assets in extension, education, and research.
    Furthermore, our Land Grant University institutions have a critical
    mass of educational and scientific infrastructure and facilities.
        We believe technology transfer models are crucial to the ultimate
    success of any proposed joint venture. Joint venture partners must be
    able to integrate their intellectual assets and science infrastructures
    efficiently, and then move-out the products of the joint effort quickly
    into practical applications to be used in the real world.
        As a key anchor in the real world of agriculture, the State
    Cooperative Extension Services would be the cornerstone of our proposed
    space-based technology and education delivery model to the ultimate end
    user--the American Farmer.
        The Land Grant University system can contribute significantly to
    such a model with NASA as the partner. The Land Grant system has a
    knowledge base about the way agriculture is practiced and can readily
    find opportunities within agriculture for fruitful space research
    partnerships. We believe Agriculture can be made a solution to many of
    the problems the nation faces.
        CES and SAES's major focus in the space and related food and fiber
    production and natural resource management areas include: NASA Remote
    Sensing Applications Research in Agriculture, Forestry and Range
    Resource Management and Precision Agriculture; Risk and damage
    assessment caused by a variety of physical, biological, chemical and
    anthropogenic stresses; Vegetation Mapping, Inventory, Characterization
    and Monitoring; Earth science applications and technologies; The
    National Agricultural Weather Information System, and Environmental
    education and outreach.
        In not recreating the wheel, the Land Grant University system aims
    at partnering with NASA, and where helpful by also including the
    supplemental contributions of agencies such as NOAA and NSF, to
    collaborate on numerous space and food and fiber production and natural
    resource management initiatives. Many agencies share similar public
    education priorities and research goals that can be utilized to develop
    partnerships and collaboration. Many initiatives and goals are targeted
    to specific agendas, however a more thorough inventory of extension,
    education and research priorities can be assessed through collaborative
    discussions and pooling of resources.
        Through a variety of means, a partnership between NASA and the Land
    Grant University system as well as NOAA and NSF and other agencies
    would increase: The rate of technology transfer and development between
    the partners; the amount of LGU participation in agency peer review
    processes; the quantity/quality of proposals submitted by the LGUs for
    government funded competitive grants in related space/agricultural
    areas; the exchange of scientists between LGU institutions and the
    government for collaborative projects.
        For example, the USDA (through the Land Grant System) and NASA have
    already jointly developed the Space Grant Geospatial Extension
    Specialist Program. The National Space Grant College and Fellowship
    Program--in short: the Space Grant Program--has begun an effort to
    bring the benefits of NASA's Earth Science Enterprise and of Remote
    Sensing to the American public in partnership with the Land Grant
    Cooperative Extension System.
        The Space Grant Program, modeled after Land Grant and Sea Grant
    university programs, is administered by NASA and consists of a
    nationwide network of universities, aerospace and related industries,
    state and local government organizations and other institutions
    dedicated to education, research and public service, including
    outreach, in aerospace science and technology. There are 52 Space Grant
    Consortia in each of the 50 states, the District of Columbia, and
    Puerto Rico, with over 700 affiliates. A large part of the more than
    $19M allocated yearly to Space Grant go to scholarships and fellowships
    for university students and are matched with university and other
    funds. A smaller percent of Space Grant funding is used to build new
    research infrastructure. The partnership with Extension is a more
    recent effort and is presently in a pilot phase.
        Space Grant Consortia are led in each state by exceptionally
    dedicated administrators who strive to better help educate our youth in
    science and technology, to bring the benefits of Aerospace Science and
    Technology to the public, to build local programs benefiting their
    states, who utilize NASA seed funding to leverage opportunities, create
    partnerships between universities, industries, state agencies, non-
    profit organizations, local government and schools, and build high
    technology research infrastructure at colleges and universities. They
    are a bridge between the public and youth on one side and NASA and
    aerospace industry on the other side.
        Four years ago Space Grant began exploring the possibility of
    partnering with the Cooperative Extension System to bring the benefits
    of NASA space products one step closer to the taxpaying public. The
    obvious NASA Enterprise chosen to work with is the Earth Science
    Enterprise (formerly Mission to Planet Earth). In the process it became
    clear that many applications of Earth imagery from space would result
    from commercial remote sensing. For example, a marriage of sorts could
    be envisioned between data and information technology on one hand and
    user communities on the other hand. The Space Grant Extension
    Specialist will have expertise in remote sensing and associated
    technologies, strong ties to the NASA Earth Science Enterprise and be
    part of the Cooperative Extension System.
        The Specialist will act as a two-way conduit for information
    between NASA and user communities. He or she will: (1) Assess state
    needs for remote sensing research, value-added products, training,
    information and technology; (2) Initiate pilot research projects for
    remote sensing applications and extend their results to the users
    communities in the state through the network of county agents; (3)
    Involve commercial remote sensing data providers and value-added
    companies in his/her activities; (4) Facilitate the development of
    training curricula for professionals, Agents and other extension
    specialists; and (5) Support the education, research and outreach
    efforts of the State Space Grant Consortium in Earth Science and Remote
    Sensing.
        Three Land-Grant universities, Utah State University, the
    University of Arizona, and Mississippi State University will serve as
    pilot programs to test and further develop the concept this year. It is
    expected that future NASA funding will allow additional Space Grant
    State Consortia to become involved in the project. Linking Space Grant
    and Extension networks is a very worthwhile and promising endeavor
    which may provide NASA an effective-vehicle for technology and
    information transfer to the user communities.
        The Land Grant University system would like to see the formation of
    a partnership between these agencies for an expanded effort. It is
    efforts like these that make for meaningful partnerships. Such a
    partnership should be formed and accelerated, given the U.S. and world
    population growth, and its future need for food both in quality and
    sustainability as well as the nation's need to maximize new space-based
    technologies to maintain our global competitiveness in food and fiber
    production and natural resource management on public lands.
        It is just these kinds of partnerships with the Land Grant
    Universities that can be developed which utilize the expertise that has
    been established over many years of striving to achieve rather
    different goals, i.e., increased productivity, and can now be focused
    on different but related problems.
        Over the many scores of years they have been operating, the Land
    Grants also have developed a system of technology transfer that is the
    envy of the world. It is this kind of expertise which may be used to
    disseminate the progress made through extension and research and is not
    necessarily limited to farmers but can be used to educate the general
    public.
        Thus the partnership approach maximizes the effective use of
    established skills to solve new sets of problems and in the overall
    scheme can be expected to solve them more efficiently and with less
    cost toward factors in an era of constrained resources.
        The Land Grant infrastructure is a proven delivery system.
        NASA and other agencies have existing and new initiatives to
    address many of the nation's agricultural and environmental problems.
    The Land Grant University system continues to build its relationships
    with various agencies in support of the nation's agricultural and
    natural resource system. It plans to encourage interagency
    communication and to broaden LGUs federal participation in USDA. A
    well-planned initiative could unify representatives from the State
    Cooperative Extension and Services the State Agricultural
    Experimentation Stations, Natural Resource Conservation Service (NRCS),
    the Forest Service, and the Agricultural Research Service and extend
    this unified expertise to NASA. This goal is aimed at enhancing the
    collaboration that is occurring at the local level between LGUs and
    USDA and other agencies. CES and SAES have identified existing
    resources in agencies for various programs which are targeted at
    addressing the scientific educational and research infrastructure
    between agriculture and NASA.

    ------------------------------------------------------------------------
                   Endorsed programs areas                 Department/agency
    ------------------------------------------------------------------------
    Precision Agriculture and Forestry...................  NASA/OES
        Remote Sensing Applications......................  USDA/NASA
        Geospatial Extension.............................  DOE/NASA
    Earth Science Enterprise.............................  NASA/USDA
    Risk and Damage Assessment...........................  NASA
        Global Climate...................................  NASA/NOAA
        Socio-economic Dimensions........................  NASA/NOAA
    ------------------------------------------------------------------------

        The Land Grant University system offers a full portfolio in its
    extension, education, and research program. The LGUs offer the
    technical innovation and new management ideas to implement a national
    agricultural/space research and development program. Our scientists
    provide public understanding through our extended outreach and
    educationprograms and provide for rapid advances in information
    technologies through our research portfolio. Additionally the LGUs can
    serve as a valuable resource when developing standards and perhaps most
    critically by providing technology transfer to farmers and communities
    in every county in America and the U.S. territories.
        In the area of small farms, extensive research expertise already
    exists among the Land Grant system's 1890s (traditionally African-
    American) colleges about how agriculture is practiced on small scale
    farms. Jointly developed NASA and Land Grant technology could focus on
    the problems of small farmers and could reverse hopefully recent trends
    enhancing their competitiveness. Tuskegee University has already made
    significant contributions toward NASA-driven technologies in the area
    of precision agriculture. The 1890s as well as many other Land Grant
    Universities could help advance the development of these important
    space-based agriculture technologies.
        CES and SAES would be pleased to provide an expanded ``on-the-
    ground'' and ``in-the-field'' role for the LGU System on energy and
    environmental issues and research. Through the excellent electronic
    communications network of the LGU System, government agency-partners
    can reach the appropriate administrators, scientists, academic program
    personnel, and extension representatives almost immediately as the
    situation demands. We hope we have highlighted the science benefits and
    value of partnerships between the Land Grant system and NASA and other
    agencies to solve some of the nation's pressing agricultural problems.
    We stand ready to help.
                                     ______

                Prepared Statement of the United Space Alliance
        Mr. Chairman, thank you for giving me the opportunity to submit
    testimony for the record before your Subcommittee.
        I am Russ Turner, the President and Chief Executive Officer of the
    United Space Alliance (USA). USA is responsible for the day-to-day
    management of NASA's shuttle fleet under a single prime contract
    awarded by NASA in 1996. The company employs 9,000 people, mostly in
    Texas and Florida and had 1998 revenues of $1.4 billion. USA's primary
    mission is safe operation of the Shuttle; additional duties under our
    contract are: Mission design and planning; flight operations; payload
    integration; logistics; astronaut and flight controller training;
    vehicle processing, launch and recovery; and software development and
    integration.
        Mr. Chairman, we at USA are proud to operate this vital and unique
    national resource. The Space Shuttle is a critical part of the Nation's
    space infrastructure and will continue to fly for at least 10 more
    years. To insure safe and efficient operation of the Nation's Space
    Shuttle fleet, NASA and its industry team have embarked on an upgrades
    road map for the Shuttles.
        The International Space Station (ISS) is critically dependent on
    the Space Shuttle from assembly through the end of the program, and
    today, only the Shuttle can meet NASA's human space flight needs beyond
    ISS. The Shuttle fleet has more than 75 percent of its design life
    remaining so upgrades will maximize the return on our nation's
    investment. Upgrades that combine both the latest technology and the
    most dependable and proven technology benefit the entire program.
        Our central issue to bring to the Subcommittee's attention is this:
    the Space Shuttle Upgrades program is underfunded, and it is imperative
    that NASA continue upgrading the only reusable launch system in the
    world to insure that maintainability and obsolescence issues do not
    jeopardize the Nation's Human Space Flight Program.
        To improve Shuttle safety and productivity, investments need to be
    made in technologies beyond those in NASA's fiscal year 2000 budget
    request. We are asking your Subcommittee to add $25 million above the
    budget request to support the purchase of long-lead items for Phase 3
    upgrades which will further improve Shuttle safety and reliability
    while reducing cost. In addition to those upgrades included in the NASA
    budget request, others have been identified, as follows:
      --Electric Auxiliary Power Units (APUs) will make significant
            improvement in safety as well as, improve the performance and
            reliability of the Space Shuttle's hydraulic systems.
      --SSME Advanced Health Management System (AHMS) will help flight
            safety and ground maintenance checkout of the Space Shuttle
            Main Engines (SSMEs) through advanced monitoring and detection
            systems.
      --Main Propulsion System (MPS) Electromechanical Actuators will
            provide safer and more efficient operation and monitoring of
            propellant valves.
      --Proton Exchange Membrane (PEM) Fuel Cells will reduce operating
            costs while also increasing electrical power for Orbiter
            systems and payloads.
        No other launch vehicle in the world, either in use or in
    development today, possesses the capability or versatility of the Space
    Shuttle. Additionally, the Shuttle program is better than ever with
    improved safety and reliability, better performance, and lower
    operating costs. Additional upgrades will lead to even greater safety,
    reliability, and efficiency.
        Mr. Chairman, the Space Shuttle is safer and more efficient than
    ever and an excellent example of how a major government program can be
    operated more efficiently for less money. Consider the following:
      --In fiscal year 1992, the annual space shuttle budget was $3.9
            billion--today it is $3 billion.
      --Since USA signed the prime contract in 1996, metrics used to
            measure safety have shown a dramatic improvement.
      --At the same time USA has contributed to shuttle cost savings of
            $267 million in 1997 and 1998; plus an additional $192 million
            in savings are projected for this year.
      --USA has invested back into the program its share of contract
            underrun funds for system improvements. The Space Shuttle's on-
            time record is nearly perfect over the last three years,
            building on an outstanding record already started by NASA.
      --Core jobs that required 15,000 people in fiscal year 1992 need only
            8,900 in fiscal year 1998.
        By investing in upgrades, the Space Shuttle will continue to meet
    the challenges in the next century. As has been proven with commercial
    and military aircraft, technology upgrades can extend the life of
    aircraft and return great value to the taxpayer. In this way we can
    assure that the unique capabilities of the Space Shuttle--still
    unmatched in the world for the foreseeable future--are available to our
    country in the next century.
        Therefore, we ask your Subcommittee to support the following
    request: Support the NASA fiscal year 2000 budget request of $13.578
    billion, particularly funding for the Space Shuttle, the International
    Space Station, and Space Shuttle Upgrades; and, provide an additional
    $25 million in NASA Shuttle Upgrades funding to continue investing in
    technology that improves Space Shuttle safety, productivity,
    reliability, and performance.
                                     ______

          Prepared Statement of the American Museum of Natural History
        Good morning Mr. Chairman and Members of the Committee. My name is
    Ellen Futter and I am the President of the American Museum of Natural
    History. I very much appreciate the opportunity to submit to you today
    a summary of our recent activities and our fiscal year 2000 plans and
    objectives. Most of all, I want to thank this Subcommittee for the
    contributions it has made to scientific research and education in this
    nation.
        Founded in 1869, the American Museum of Natural History is one of
    the nation's pre-eminent scientific and educational institutions
    drawing four million visitors on-site annually and another four million
    to our website. For over 129 years, the Museum has pursued a mission of
    examining critical scientific issues and increasing public
    understanding about them. More than 200 active research scientists,
    many with internationally recognized expertise, conduct more than 150
    field projects each year. In fact, since its founding, the Museum has
    sponsored tens of thousands of expeditions, sending scientists and
    explorers to every continent. This rich scientific legacy includes a
    collection of approximately 32 million natural specimens and cultural
    artifacts that together form a record of life on earth.
        Early in the year 2000, the Museum will begin a new chapter in its
    history with the opening of the new Rose Center for Earth and Space,
    including a rebuilt and scientifically cutting-edge Hayden Planetarium
    and a new Hall of the Universe and Hall of Planet Earth. With the
    construction of the Rose Center, the Museum will better join science
    and education to provide a seamless educational journey taking visitors
    from the very beginnings of the universe, to the formation and physical
    processes that exist on Earth to the extraordinary and irreplaceable
    diversity of life and cultures on our planet.
        Consistent with the federal government's stated commitment to an
    interagency and multi-disciplinary direction, the Museum's ongoing
    scientific research and educational programming increasingly emphasizes
    an interagency and multi-disciplinary approach. Under the leadership of
    Congress, the American Museum of Natural History has fostered a close
    scientific and educational partnership with NASA. As you know, unlike
    any other federal agency, NASA has captured the imagination of the
    American public and reinvigorated a national thirst for exploration
    into previously unknown realms.
        The fiscal year 1998 Congressional appropriation enabled the Museum
    to launch the National Center for Science Literacy, Education, and
    Technology (``the National Center'') in cooperation with NASA. In the
    National Center NASA and the Museum joined resources to create programs
    that neither one could do as effectively on its own. This extremely
    productive partnership rests largely on the shared goal of fostering
    scientific literacy nationwide. The National Center creates materials
    and programs that reach beyond our institutional walls into homes,
    schools, museums, libraries, and community organizations around the
    nation. NASA's partnership with the National Center has fueled four
    major components: the Educational Materials Laboratory, Electronic
    Science Bulletins, Digital Galaxy Mapping Project, and the Black Smoker
    Expedition and Educational Initiatives.
        The Educational Materials Lab develops materials and programs to
    bring cutting-edge science to formal and informal science education
    settings across the country. One such program, Biodiversity Counts, is
    now in more than 100 schools nationwide as a middle-school curriculum.
        Three interrelated efforts--the BioBulletin, GeoBulletin, and
    AstroBulletin--gather, interpret, and transform data and images into
    comprehensive, digital ``snapshots'' of events, research, and phenomena
    in global and cosmic systems displayed in the new permanent exhibition
    halls. Information displayed in the Bulletins is reinterpreted for
    dissemination via the World Wide Web, and can be compiled into digital
    almanacs or bulletins distributed on CD-ROMs and in other media. The
    BioBulletin centers on global biodiversity, the GeoBulletin will track
    data about climate systems, and the AstroBulletin will include images
    from NASA and other observatories, as well as updates on NASA missions,
    images and information about astronomical events.
        The Digital Galaxy brings together diverse data sets to create the
    first scientifically accurate three-dimensional map of the Milky Way
    Galaxy. The Hayden Planetarium Space Theater was part of the principal
    motivation for the Digital Galaxy project. The Space Theater will
    feature the most advanced real-time digital dome projection system in
    the world. This project will showcase data from NASA and make it
    available for widespread public use. It will also explore new ways of
    compiling, interpreting, and communicating complex scientific data to
    the public in ways that are engaging, entertaining and highly
    educational.
        A team of Museum scientists and educators has successfully
    participated in an expedition with the University of Washington to
    recover four ``Black Smokers,'' sulfide structures located on the deep
    ocean floor on the Juan de Fuca ridge, off the coast of Washington.
    Nine teachers accompanied scientists on this expedition and experienced
    the process of scientific discovery. They also contributed to the Black
    Smoker Web site journals and will take their experiences back to their
    classrooms. The National Center plans to develop earth-science
    curriculum materials inspired by the themes in the Hall of Planet
    Earth, including the retrieval of and learning from the Black Smoker.
        We have recently expanded our work with NASA to meet our common
    goals of exploring and developing ways to understand the earth, its
    biodiversity, and the history of life in the universe. By joining the
    Museum's massive biological collections, accumulated over the last 129
    years and extending back hundreds of millions of years, with NASA's
    enormous datasets, this partnership will effectively address the goals
    of NASA's new investments in interdisciplinary research in biology,
    earth science, and space science. Our partnership with NASA will
    greatly enhance biological research by focusing on four key areas: (i)
    incorporation of satellite technology into biodiversity conservation;
    (ii) utilization of DNA sequencing in systematics and conservation;
    (iii) improving collections by adding compact storage and a super-cold
    tissue storage for microbial and molecular biology; and (iv) use of
    digital imaging technologies for improved perception of specimens and
    dissemination of research.
        The Museum now seeks to extend and broaden the relationship between
    the American Museum's National Center for Science Literacy, Education
    and Technology and NASA by expanding the role of NASA in the new Rose
    Center with the goal of educating a broader segment of the American
    public. We are seeking, therefore, a fiscal year 2000 NASA investment
    of $5 million to support an expand the Educational Materials Lab, which
    is accessed by millions of Americans, and will include the development
    of additional curriculum modules from prototypes created in the first
    phase of the National Center's NASA grant in the areas of Tools for
    Making Sense, Black Smokers, Hall of the Universe, and Digital Galaxy.
    In addition, we seek to deepen and broaden our partnership with NASA in
    the realm of the Digital Galaxy by bringing this astounding compilation
    of information to teachers, students, and the general public through an
    easily accessible format such as a data archive and coordinated
    website. We plan to develop an on-going Digital Dome visualization
    project that will contain a NASA ``news'' element that will highlight
    current NASA priorities such as progress in the space station and new
    astronomical discoveries. These elements can then be integrated into
    the planetarium space theater presentations for greater public access.
    In partnership with NASA, we seek to implement a second phase of the
    highly successful Electronic Science Bulletins that were instituted
    under the first NASA agreement.
        This is our agenda for the coming years. Much of the support for
    research, exhibition, and education comes from foundations,
    corporations, and individuals. However, it is significant that we have
    been able to leverage federal funding such as that from NASA with the
    result that the support has been matched many times over by private
    dollars. We seek a similar public/private partnership for our further
    federal collaborations. The American Museum of Natural History is
    deeply appreciative of the support of this Subcommittee and looks
    forward to continuing and strengthening this fruitful partnership.
    Thank you again, Mr. Chairman and Members of the Committee, for all of
    your support.
                                     ______

                          NATIONAL SCIENCE FOUNDATION

          Prepared Statement of the National Corn Growers Association
        The National Corn Growers Association, representing 30,000 corn
    growers in 47 states, appreciates the opportunity to provide you with
    our recommendations regarding fiscal year 2000 funding for the National
    Science Foundation's Plant Genome Initiative. We appreciate the
    Chairman's leadership and the support of this Subcommittee for this
    Initiative. This program is laying the foundation for agricultural
    research in the 21st Century.
        We are at a critical juncture in plant genomics, one comparable to
    that faced in human genomics this past year. Last year, two companies
    announced that they were going to sequence the entire human genome and
    obtain patents on the data. In response, the National Institutes of
    Health (NIH) pumped an additional $80 million into the human genome
    project. They accelerated the project to ensure that vital genome data
    and materials remained publicly available.
        Many other countries and companies have announced major initiatives
    in plant genomics and have announced intentions to file patents on
    fundamental plant genomics data. Earlier this month, a company
    announced that it planned to sequence the entire rice genome and to
    create a commercial database for which companies would be required to
    pay $30 million to have five years of access. Because of the
    similarities between crops, the patenting of rice genomic data will
    affect research on every crop, including corn. Most companies and
    public sector scientists at universities and within the Federal
    government will not have the financial wherewithal to have access to
    the data unless Congress acts swiftly to increase the Federal effort in
    plant genomics.
        We urge Congress to respond to the recent announcement in the same
    manner that the NIH did last year by providing a significant increase
    in funding for the NSF Plant Genome Initiative. We urge you to provide
    not less than $70 million for the NSF plant genome initiative. We
    recognize that this will be extremely difficult due to budgetary
    constraints. However, we believe that we cannot be complacent about
    maintaining access to fundamental plant genomic data.
        In January 1998, the National Science and Technology Council issued
    an Interagency Working Group report on the National Plant Genome
    Initiative. The report stated that the time was right for the
    implementation of a comprehensive, five-year National Plant Genome
    Initiative to meet the major challenges that will face mankind in the
    21st Century. In the transmittal letter accompanying the report, the
    President's science advisor, Dr. John H. Gibbons, stated the following:

        ``The timing of this initiative is critical, since our
    international and private sector partners are moving forward
    aggressively. A significant public sector program . . . carried out in
    partnership with industry will ensure plant genome data and materials
    are openly accessible to all scientists. It is a critical step toward
    promoting future scientific breakthroughs in plant biology and their
    practical application.''

        The Interagency Working Group on Plant Genomes estimated that $400
    million in funding was needed, over five years, to accomplish the
    short-term goals of the National Plant Genome Initiative that focus on
    building plant genome research infrastructure. However, funding for the
    initiative has fallen far short of that needed to meet the $400 million
    level. Fiscal years 1998 and 1999 provided only $90 million for the
    effort. If full funding had been provided from the very beginning, it
    is possible that we would not be faced with losing accessibility to
    vital plant data today.
        The Plant Genome Initiative is, critically, important to the
    nation's corn growers and to the nation's consumers. While world
    population continues to expand and protein demand increases
    exponentially, there is an expectation of higher quality, safer, and
    more nutritious food. These accelerating demand pressures mean that
    existing resources of land, water, and nutrients must be used more
    effectively if the supply of food, feed, and fibers is to remain in
    balance with world needs.
        The NCGA believes that the future of the corn industry is written
    in corn's genetic code. The NCGA concurs with Philip H. Abelson's
    statement, in a recent Science editorial, that we are in the early
    phases of the third technological revolution--a genomics revolution and
    that ``. . . the greatest ultimate global impact of genomics will
    result from manipulation of the DNA of plants.'' As he stated,
    ``ultimately, the world will obtain most of its food, fuel, fiber,
    chemical feedstocks, and some of its pharmaceuticals from genetically
    altered vegetation and trees.'' (Science, Vol. 279, p. 2019.)
        The Plant Genome Initiative supports research that advances our
    understanding of the structure, organization and function of plant
    genomes, and accelerates utilization of new knowledge and innovative
    technologies toward a more complete understanding of basic biological
    processes in plants. The primary focus of the PGI is on economically
    significant plants, such as corn. The Plant Genome Initiative will help
    scientists, geneticists, and plant breeders identify and utilize genes
    from corn and other economically significant crops that control
    important traits, such as nutritional value, stress tolerance, and
    resistance to pests. The far-reaching benefits of this Initiative
    include:
      --Protection of U.S. interests and access to important biotechnology
            and gene patents and basic plant genome data;
      --Retention of U.S. leadership in cutting edge research;
      --Revitalization of rural America due to a more robust agricultural
            sector;
      --Expansion of plant-based renewable resources for energy and raw
            materials;
      --Significant reductions in crop losses and reliance on pesticides
            through improved biological methods to control and alleviate
            serious industrial threats and targeted pests;
      --Improved yields and reduced crop losses caused by adverse
            environmental conditions such as heat, drought, and salt;
      --Improved nitrogen-use efficiency, thereby, limiting the potential
            for nitrates in the water supply;
      --Reduced environmental problems confronted by livestock producers,
            such as modifying the digestibility of phosphorous in feed corn
            to reduce the amount of phosphorous that enters our ground
            water;
      --Improved animal nutrition leading to healthier meat and increased
            meat productivity;
      --Reductions in the occurrence of mycotoxin contamination by
            significantly improving resistance to fungal infection;
    Development of tailored hybrids with valuable specialty starches, oils,
            and protein content; and
      --Reduced worldwide malnutrition due to higher yielding and more
            nutritious crops.
        The Plant Genome Initiative is critical to the long-term viability
    of U.S. agriculture. To compete in the global market, the U.S. must
    continually strive to efficiently and economically improve production
    capabilities--to maximize yield and combat serious threats from
    disease, pests, and climate changes--without harming the environment.
    Genomics research holds the key to achieving this goal.
        A significant increase in funds will help the US to remain at the
    cutting edge of plant genomics and will help guarantee that we have
    continued access to fundamental plant genome data. This is the number
    one appropriations issue for the National Corn Growers Association. We
    urge you to provide not less than $70 million for the NSF Plant Genome
    Initiative to ensure that our growers have the tools to meet the
    challenges and demands of the 21st century.
        Thank you for allowing us to share our views on the fiscal year
    2000 VA, HUD appropriations bill.
                                     ______

           Prepared Statement of the American Psychological Society,
        Mr. Chairman, Members of the Subcommittee: Thank you for the
    opportunity to submit this statement on the fiscal year 2000
    appropriations for the National Science Foundation. I am Alan Kraut,
    Executive Director of the American Psychological Society (APS). APS's
    15,000 members are scientists and academics who conduct research in
    cognition; memory; auditory and visual perception; decision-making;
    human development; emotions; and group behavior, to name just a few
    topics. To summarize the main points of my testimony:
      --As a member of the Coalition for National Science Funding, APS
            supports the Coalition's recommendation that the NSF budget be
            increased 15 percent in fiscal year 2000.
      --We ask the Subcommittee to significantly increase the fiscal year
            2000 budget for NSF's behavioral and social science research
            divisions to support the reorganization of those divisions and
            to allow the initiation of programs in emerging areas such as
            cognitive neuroscience.
      --Disparities in the length and duration of NSF grants in behavioral
            and social science compared to other NSF grants mean that the
            behavioral sciences continue to be underfunded. We ask the
            Subcommittee to encourage the elimination of these funding
            disparities at NSF, recognizing this would require some
            ``catch-up'' funding for these disciplines.
      --We ask the Subcommittee to support the establishment of small
            grants at NSF specifically designed to sustain new
            investigators in the behavioral sciences at a critical junction
            in their career.
        I want to begin by expressing our appreciation for the substantial
    increase that Congress provided for NSF in fiscal year 1999. That
    increase has made a difference throughout the agency and particularly
    in the programs that I know best, those that support psychological
    science. It is our position that this general growth needs to continue
    at NSF in fiscal year 2000. As a member of the Coalition for National
    Science Funding (CNSF), APS supports the Coalition's recommended 15
    percent increase for NSF in fiscal year 2000, for a total appropriation
    of $4.3 billion. The President's request this year is a 5.8 percent
    increase, but a substantial portion of that is in information
    technology. We support increased funding for information technology--
    this will benefit science as well as the public. However, it should not
    be at the expense of other areas which also provide essential
    scientific knowledge. The CNSF recommendation would allow a balanced
    distribution of increases in the fiscal year 2000 budget.
        Social and Behavioral Structure and Funding.--I'll talk about some
    of the initiatives that are being funded in fiscal year 1999 in a
    moment, but first, within the context of NSF's overall budget, I'd like
    to discuss some of the agency's policies as they affect basic
    behavioral and social science research. For the past several years,
    this Subcommittee has strongly encouraged these areas at NSF. Your
    support was instrumental in establishing the Social, Behavioral and
    Economic Sciences Directorate--known as SBE--and later in strengthening
    it. You also were instrumental in helping the Directorate expand its
    Human Capital Initiative program. Most recently, this Subcommittee,
    along with your colleagues in the House, expressed strong support for
    the planned reorganization of SBE's single research division into two
    separate divisions. I am pleased to report that the final touches to
    this reorganization have now taken place, and the SBE directorate has a
    Behavioral and Cognitive Sciences Division, and a Social and Economic
    Sciences Division.
        This reorganization will enable NSF to accommodate the explosive
    pace of discovery in the behavioral and social sciences and to promote
    partnership with other disciplines. There was just too much breadth and
    depth in these fields to be contained in one research division.
    However, the reorganization is just a beginning. Providing a critical
    mass of funding is the next step.
        The President's budget request includes a 5.3 percent increase for
    NSF's behavioral and social science research programs, which would
    bring them to just over $106 million for fiscal year 2000. We
    appreciate the proposed increase, but it is also clear that additional
    resources are needed if the two new divisions are to sustain the
    scientific momentum that led to the reorganization. We ask the
    Subcommittee to support a significant increase in the NSF budget for
    behavioral and social science research programs in the SBE directorate.
        In addition, we are asking the Subcommittee to encourage NSF to
    increase the average amount and the duration of awards in the
    behavioral and social sciences. The average length of an award in the
    behavioral and social sciences is only 2 years, compared with the NSF-
    wide average of 2.7 years. Further, the average grant in these areas
    receives $20,000 less than the average NSF-wide grant. These
    disparities exacerbate the underfunding that NSF's behavioral and
    social science research experiences, both in terms of the number of
    grant proposals that are funded compared to the number submitted, and
    in comparison to overall budget levels in other areas of science. We
    ask the Subcommittee to encourage NSF to examine its support for these
    essential areas, and to stress that any plan to provide additional
    equity among the sciences will not be accomplished through a reduction
    in the number of awards made in these disciplines.
        Young investigator mechanisms.--The need to support the next
    generation of scientists is especially acute in basic research in the
    behavioral and social sciences. The underfunding of our fields has an
    impact beyond principal investigators whose proposals aren't being
    funded. It jeopardizes the supply of high-quality future investigators
    who would otherwise receive training under those grants. The beginning
    of an investigator's career is an important juncture; it is a time when
    a relatively new PhD should be collecting initial data and gaining
    experience that is often necessary to later compete for larger grants.
    In order to protect our ``seed corn'' investigators, we suggest that
    NSF use a mechanism such as NIH's B/START (Behavioral Science Track
    Awards for Rapid Transition) grants, which provide small amounts of
    funding specifically to sustain new investigators at that critical time
    in their careers. We ask the Subcommittee to encourage the
    establishment of small grants such as B/START at NSF for new behavioral
    and social science investigators.
                   social and behavioral science initiatives
        The remainder of my testimony describes specific initiatives at NSF
    that are being funded in the current year. These illustrate the
    important work in my own field, psychological science, that is being
    supported by NSF's behavioral and social science programs, and how this
    work is combined with many other disciplines. By expanding NSF's
    capacity in these areas, you would be allowing much more of this kind
    of work to be done. The increase we are requesting will allow NSF to
    increase the number of grants funded under these initiatives, plus the
    agency will be able to launch additional initiatives in fiscal year
    2000.
        Knowledge and Distributed Intelligence.--Research in Knowledge and
    Distributed Intelligence (KDI) is an NSF-wide priority for fiscal year
    2000 and is funded by all six NSF research directorates. Behavioral
    science is a core area of the initiative, which is using
    interdisciplinary research to examine such phenomena as learning and
    memory, social cognition, human-computer interactions, and visual and
    auditory perception. This initiative involves research in areas ranging
    from neuropsychology to cognitive science to social and developmental
    psychology.
        Of the nearly 700 research proposals received by the KDI program,
    40 were funded, and of those 40, about a quarter included a significant
    cognitive, behavioral or psychological science aspect. Here are some
    examples of projects on which psychological scientists are serving as
    principal investigators:
      --At the University of Pittsburgh, investigators on a KDI project
            called Computational Models and Coordinated Neuroimaging of
            Learning and Cognitive Function will be mapping human brain
            function and developing computational models of brain
            structures involved in human cognition.
      --In Virtual Environments and Behavior, a KDI project at the
            University of California, Santa Barbara, scientists will be
            using immersive virtual environment technology (IVET, a state-
            of-the-art research tool which creates illusory physical and
            social surroundings) in four areas of basic research: education
            and learning, visual perception, spatial cognition and social
            psychology. Among other things, they will study social
            interactions in virtual environments and how people develop
            natural interactions under virtual circumstances. IVET is
            already invaluable to many areas of psychological research, and
            one primary goal of the project is to expand the use of IVET in
            social psychology research.
      --In a KDI project at Michigan State University, titled Sequential
            Decision Making in Animals and Machines, investigators from
            cognitive psychology, computer science, and zoology will be
            examining issues that cut across biological and artificial
            intelligence, yielding knowledge that will be relevant to many
            disciplines.
      --In a project with the complicated title of Segmental and Prosodic
            Optical Phonetics for Human and Machine Speech Processing,
            psychologists and others from the House Eye Institute at UCLA
            will be studying fundamental issues in visual speech perception
            and optical speech synthesis. Specifically, they will be
            characterizing optical speech signals and examining how optical
            speech characteristics relate to acoustic and physiologic
            speech characteristics.
        Enhancing Infrastructure for the Social and Behavioral Sciences.--
    In social and behavioral science, the term ``infrastructure'' refers to
    large, innovative and long-running projects that involve data bases,
    technology, some longitudinal research, and other resources useful
    across a wide base of scientific inquiry. NSF has historically
    supported several important infrastructure initiatives in the
    behavioral and social sciences. In fiscal year 1999, the SBE launched a
    new infrastructure initiative that among other things will capitalize
    on the expanding capabilities of the World Wide Web to bring data,
    researchers and experimental facilities together electronically in
    arrangements that are being called ``collaboratories.'' These
    collaboratories will enable scientists from different geographical
    locations to jointly conduct real-time controlled experiments and to
    share the use of expensive experimental equipment. More generally, it
    allows a greater number of scientists to be involved in, and gain
    results from, research in progress. Other infrastructure activities
    will involve large-scale surveys, electronic databases and archives
    that can be accessed through the Web, and interdisciplinary research
    centers that develop innovative methods of collaborative research
    activity.
        The fiscal year 1999 round of proposals have been received, and
    since the review process is under way we don't yet know what specific
    proposals will be funded. But I am sorry to report that with the
    current level of funding, $3 million, only a very few of the 100
    proposals received--perhaps as few as 4 or 5--will be funded under this
    infrastructure initiative.
        Child Learning and Development.--Another initiative to be funded in
    fiscal year 1999 is in the area of child learning and development. This
    multidisciplinary competition will support research that increases our
    understanding of cognitive, social, and biological processes involved
    in learning, with particular emphasis on new theories and methods for
    studying learning and child development. Specific issues to be
    addressed include: the development and transfer of knowledge in
    specific subject areas; the effects of peer relationships, family
    interactions, and other social factors on learning; the impact of
    family, school and community resources on learning and development; and
    the role of demographic and cultural characteristics in learning and
    development. A minimum of $2 million will be available for this
    initiative in fiscal year 1999, and it is anticipated that 15-20 of the
    60 proposals received will be funded.
        Cognitive Neuroscience.--I would also like to briefly highlight an
    area where NSF is seeking to increase its activities. The emerging
    field of cognitive neuroscience combines behavior and biology in a
    multi-disciplinary approach to understanding the mind. The result is a
    new approach to unraveling the complexities of mental processing and
    the underlying biological intricacies. Drawing on theoretical advances
    in cognitive science and technological advances in brain imaging, this
    field has significant implications for our understanding of memory,
    learning, perception, emotion, of virtually any brain-based behavioral
    process. Cognitive neuroscience has potential applications in education
    generally, and in diagnosing and treating learning disabilities and
    assessing cognitive ability in cases of disease and trauma, among other
    things.
        NSF is in an excellent position to expand and strengthen the field
    of cognitive neuroscience. We ask the Subcommittee to support the
    development of a cognitive neuroscience initiative at NSF and to
    provide new funding in fiscal year 2000 to help launch a program in
    this area.
        This concludes my statement. I would be pleased to answer any
    questions.
                                     ______

        Letter From the University Corporation for Atmospheric Research
       University Corporation for Atmospheric Research,
                      National Center for Atmospheric Research,
                                           Boulder, CO, April 22, 1999.
    Hon. Christopher Bond,
    Chairman, Subcommittee on VA, HUD and Independent Agencies,
    Senate Appropriations Committee, Washington, DC.
        Dear Mr. Chairman: On behalf of the University Corporation for
    Atmospheric Research (UCAR) and the university community involved in
    weather and climate research and related support activities, I would
    like to submit this letter for the record of the U.S. Senate Committee
    on Appropriations, Subcommittee on VA, HUD and Independent Agencies.
        UCAR is a university membership consortium composed of 63 U.S. and
    Canadian institutions that grant the Ph.D. in atmospheric, oceanic, and
    related sciences. It is a not-for-profit Colorado corporation
    established in 1959 to support, enhance, and extend the capabilities of
    the university community, nationally and internationally; to understand
    the behavior of the atmosphere and related systems and the global
    environment; and to foster the transfer of knowledge and technology for
    the betterment of life on earth. UCAR manages and operates the National
    Center for Atmospheric Research (NCAR) and the UCAR Office of Programs
    (UOP). UCAR is supported by the National Science Foundation (NSF) and
    other federal agencies including the Department of Energy (DOE),
    National Aeronautics and Space Administration (NASA), the National
    Oceanic and Atmospheric Administration (NOAA), the Environmental
    Protection Agency (EPA), the Department of Defense (DOD), and the
    Federal Aviation Administration (FAA).
        We appreciate the opportunity to submit written testimony on the
    proposed fiscal year 2000 budgets for the following agencies:
                     the national science foundation (nsf)
        We urge the Committee to support the overall proposed budget of
    $3.95 billion for the National Science Foundation (NSF) for fiscal year
    2000, a 5.8 percent or $217 million increase over fiscal year 1999. NSF
    is a critical source of funding for the research and education
    activities of our community and the welfare of the nation. Scientific
    advances funded by NSF over almost 50 years of service have helped to
    fuel the vibrant economy that makes the U.S. the strongest country in
    the world.
        Within the NSF, we would like to provide written testimony on the
    following specific programs:
    New Initiatives
        The new Information Technology for the 21st Century (IT\2\)
    initiative is funded at $146 million, $110 million in NSF's CISE
    Directorate and $36 million in NSF's Major Research Equipment Account.
    IT\2\ has the potential to address the critical supercomputing needs
    for science in the U.S. Our nation has lagged behind other developed
    nations in high-end computing, a situation that will adversely affect
    our economy and has already impacted the atmospheric science
    community's position of scientific leadership. As the atmospheric
    sciences community strives to learn more about the effects of solar
    variability on the earth's atmosphere, space weather that impacts
    satellite communications, climate variability and weather patterns, the
    need for computational power grows. We do not have the computation
    tools to effectively address many of our nation's weather and climate
    policy issues. This is particularly important as we get closer to the
    next round of international climate change assessments in 2004. If
    investments in basic information technology are made in concert with
    the computational science needs of the weather and climate community,
    our nation will get significantly larger return on these IT2
    investments.
        The exciting Biocomplexity in the Environment (BE) initiative,
    funded at $50 million in the new Integrating Activities line, will
    explore the complex interdependencies among living organisms and the
    environments that affect, sustain, and are modified by them. We expect
    that contributions can be made to this effort from across the science
    and engineering community. In fact, we believe the atmospheric and
    related science community is well positioned to contribute, including
    proposing the integration of biogeochemistry, especially the carbon
    cycle, into NCAR's Climate System Model, one of the world's premier,
    fully-coupled, climate system models.
        We urge the Committee to support the new IT\2\ and Biocomplexity
    initiatives.
    Geosciences Directorate
        We urge the Committee to support the proposed fiscal year 2000
    budget of $485.48 million for NSF's Geosciences Directorate (GEO). We
    are concerned, however, that this represents only a 2.6 percent
    increase over the fiscal year 1999 Current Plan of $472.98 million.
    Given inflation factors, this amount allows little or no enhancement of
    the work supported by GEO focusing on the atmospheric, earth and
    oceanic sciences. GEO is the principal source of funding for
    university-based research addressing the nation's ability to
    understand, predict and respond to environmental events and changes. As
    our ability increases to do more complex research on the interactions
    of the earth's systems, so do the costs of research tools such as
    computation time and instrumentation. In future years, we believe that
    the GEO budget should increase in proportion to its key role in this
    critical area of research and that the following components of the GEO
    budget should increase accordingly.
        We urge the Committee to support the proposed fiscal year 2000
    budget of $164.00 million for Atmospheric Sciences (ATM) within NSF's
    Geosciences Directorate, a 2.7 percent increase over the fiscal year
    1999 Current Plan. The ATM Subactivity within GEO funds university
    research activities as well as the country's large research facilities
    that further our understanding of weather, climate, and the solar-
    terrestrial environment. Research studies include understanding the be
    havior of weather and climate on all scales, the chemistry and chemical
    cycles of the earth's atmosphere, and the sun as it relates to the
    Earth's atmosphere and space environment.
        Within ATM, we urge the Committee to support the proposed fiscal
    year 2000 budget of $68.15 million for the National Center for
    Atmospheric Research (NCAR), a 2.7 percent increase over the fiscal
    year 1999 Current Plan. This world-class center for atmospheric
    research supports the broad atmospheric sciences community through
    observational and computer facilities, instrumented research aircraft,
    and an extensive visiting scientist program. In fiscal year 2000, NCAR
    will continue the badly needed refurbishment of the NCAR Mesa
    Laboratory building at a level of $4.0 million. This $12 million,
    multi-year refurbishment was begun in fiscal year 1999 and will ensure
    that NCAR's primary building will continue to serve the scientific
    community at the highest level.
    U.S. global change research program
        We urge the Committee to support the fiscal year 2000 proposed
    budget of $187 million for the U.S. Global Change Research Program
    (USGCRP) within NSF. The USGCRP is an interagency program that
    addresses interactions among physical, biological, ecological, and
    human systems at various scales. Working with national and
    international research institutions, this program allows the
    atmospheric sciences community to improve prediction capabilities for
    climate fluctuations between excessively wet and dry periods, and for
    long-term climate change. This research is a critical investment for
    the future of this nation, its economy, and the health and safety of
    its citizens.
    U.S. weather research program (USWRP)
        NSF and the National Oceanic and Atmospheric Administration (NOAA)
    are partners in the USWRP, a program designed to bring the operational
    and research weather communities together to extend the way in which we
    utilize the technologies of the National Weather Service's $4 billion
    Modernization Program. USWRP was authorized by Congress in 1992 and an
    implementation plan for $130 million over five years was submitted to
    Congress in 1994. According to that plan, the fiscal year 2000 USWRP
    funding level for NSF and NOAA should be $12 million each for a total
    of $24 million. We were discouraged to see that NOAA's proposed fiscal
    year 2000 funding for USWRP is only $1.5 million. The program is
    mentioned in the NSF budget, but no dollar amount is specified. The
    disaster relief savings realized through USWRP research on hurricane
    landfall and heavy precipitation could be many times the initial
    investment. We urge the Committee to fully fund the USWRP in NSF's
    fiscal year 2000 budget.
    High-performance instrumented airborne platform for environmental
            research (HIAPER)
        The atmospheric sciences community were extremely disappointed when
    HIAPER was omitted from NSF's Major Research Equipment (MRE) account in
    the fiscal year 2000 proposed budget. This high-altitude, modern
    research aircraft has been approved by the National Science Board and
    was slated to begin funding in fiscal year 2000. The scientific need
    for HIAPER is well documented. The study of the upper atmosphere is
    vital to the understanding of how severe weather and other climate
    phenomena develop and impact the nation and the globe. The aircraft is
    scheduled to be operational five years after funding begins. Since at
    least one other aircraft currently in service at NSF will end its
    useful lifetime in the next five years, we urge the Committee to
    provide a modest start for HIAPER within NSF's MRE account in fiscal
    year 2000, provided it doesn't significantly impact other NSF
    initiatives.
    The National Aeronautics and Space Administration (NASA)
        We urge the Committee to support proposed funding for Solar B
    within NASA's Solar Research account. Solar B is part of NASA's Solar-
    Terrestrial Probe (STP) program and, from what we understand, is
    recommended at the full funding level for fiscal year 2000. Solar B is
    a collaboration with Japan to carry out a series of highly focused
    satellite missions to study the Sun and its many influences on the
    Earth and other planets. The data gathered should help us understand
    events such as solar flares that can hit Earth's atmosphere with enough
    force to cause extremely expensive and dangerous communications
    disruptions.
        We understand that the High Resolution Dynamics Limb Sounder
    (HIRDLS) instrument is fully funded through the Earth Observing
    System's chemistry mission of NASA's Office of Earth Science and we
    urge the Committee to maintain that support. We are pleased with the
    progress achieved for the HIRDLS instrument, scheduled for flight on
    the Chemistry platform of the Earth Observing System. HIRDLS is being
    jointly developed with the United Kingdom and with extensive
    participation by the U.S. academic community. It will return
    observations with unprecedented detail, notably on the transition
    region between the troposphere and stratosphere. These data will enable
    detailed studies of chemical and dynamical processes that are
    fundamental to improved understanding of global change.
        On behalf of the atmospheric sciences community, I want to thank
    you for the important work you do for U.S. scientific research,
    education, and training. We appreciate your attention to the
    recommendations of our community concerning the fiscal year 2000
    budget.
                Sincerely,
                                             Richard A. Anthes,
                                                             President.
                                     ______

       Prepared Statement of the Board on Human Sciences of the National
           Association of State Universities and Land Grant Colleges
        Mr. Chairman and members of the committee: My name is Patricia
    Knaub. I am Dean of the College of Human Environmental Sciences at
    Oklahoma State University. This testimony is in behalf of the Board on
    Human Sciences of the National Association of State Universities and
    Land Grant Colleges (NASULGC). The Board on Human Sciences (BOHS)
    represents those State Universities and Land Grant Colleges which
    conduct research, extension and education programs on nutrition and
    health, food safety and product development, p K-12 teacher education,
    workforce development, human development, family and community
    viability. Our work is supported by federal, state, and privately
    funded grants as well as CSREES formula funds and USDA competitive
    grants programs. In 1998 member colleges reported $1.5 million in
    projects supported by NSF. Some of our colleges are located in major
    research institutions and several others are located in EPSCoR
    designated institutions.
        The BOHS strongly supports the National Science Foundation
    initiatives outlined in the fiscal year 2000 budget proposal. Our
    member colleges are prepared to carry out work in support of several of
    these initiatives, especially aspects of Information Technology for the
    21st Century (social, economic, and workforce impacts of technology);
    Educating for the Future: A 21st Century Workforce; and encouragement
    of scientific participation of underrepresented groups.
                  information technology for the 21st century
        The IT\2\ initiative places emphasis on enhancing the fundamental
    capacity of technology to support scientific investigation but also
    recognizes the critical need to develop and maintain literacy of the
    workforce at all levels to use current and new technology in the
    application and dissemination of scientific advances. Workers in
    America are being displaced because their jobs become obsolete or
    change with the advent of technology. They must be retrained. Users of
    information available via technology need support in accessing
    information and in verification of its quality.
               educating for the future: a 21st century workforce
        A generation caught between low and high technology must be
    retrained or redirected into economically viable jobs, but the emerging
    generations of workers must be prepared to utilize available and new
    technologies to become employable. The pairing of graduate assistants
    and undergraduates with p K-12 learners and their teachers not only
    provides direct assistance, but reinforces skills being learned by
    these graduate and undergraduate students. A long term technology
    literate workforce is likely to be assured with such pairings.
                human science researchers and educators respond
        Human science researchers and educators in all 50 states are
    conducting programs which directly address the issues identified as
    fiscal year 2000 NSF priorities. Extension educators work directly with
    displaced workers in need of technological skills and teacher educators
    conduct programs to enhance the scientific literacy of p K-12, but also
    conduct programs which increase interest in science as a career.
    Further, all human science faculties are linked through the Board on
    Human Sciences so that interstate and interdisciplinary programs can be
    carried out and information freely exchanged across the country.
        Workforce Transition.--Consortia of human sciences colleges in
    several states are providing coursework, degree programs, or skill
    upgrade workshops to help place-bound workers' transition from jobs
    which no longer exist. These opportunities are being made available by
    distance learning technologies so that learners can remain at home or
    study at times available around work schedules. Not only do these
    opportunities retrain workers with new marketable skills, it
    familiarizes them with the use of technology, enhancing their
    marketable skills.
        Educating for the Future 00 Faculty and p K-12 teachers have
    developed science programs which introduce fundamental science
    knowledge via subjects of interest to students. For example, a program
    based upon food safety has been introduced into biology and chemistry
    classes. Science teachers are introduced in summer sessions to course
    materials on food safety. Similarly, high school students participate
    in textile and polymer science summer courses working with graduate
    students on research projects. A member Human Sciences college is
    currently conducting an NSF funded project teaching textile and polymer
    science to non-science university students.
        Serving underrepresented groups.--Human sciences faculty in 1862
    Land Grant Universities team with Faculty in 1890 and 1994 LGU
    institutions in undergraduate/graduate/faculty exchanges to work on
    joint research projects in nutrition, food product development, and
    dietetics. In several cases these are funded projects resulting in
    enhanced institutional capacity as well as collegial enhancement.
        The Board on Human Sciences welcomes these well targeted
    initiatives for fiscal year 2000. Human Sciences faculties contribute
    significantly to the programs addressed in this budget as outlined
    above. Support for this budget can help assure that contribution. Thank
    you or the opportunity to comment. We urge your support of these
    initiatives.
                                     ______

        Prepared Statement of the State Agricultural Experiment Stations
        Mr. Chairman, members of the subcommittee: On behalf of the State
    Agricultural Experiment Stations (SAES), I appreciate the opportunity
    to appear before you to discuss the importance of research and the
    National Science Foundation (NSF). The SAES comprise a nationally
    coordinated system of experiment stations that serve as the research
    arm of the Land Grant Universities (LGUs). The mission of the SAES is
    to generate knowledge and technology to support a highly diversified
    agricultural and natural resource system that produces, processes and
    delivers a high quality, safe, affordable and abundant supply of food,
    fiber and forestry products.
        In support of its mission, SAES seeks to broaden partnerships with
    other agencies, including NSF, that are involved in agriculture and
    natural resource management programs and research. SAES is committed to
    improving the technology and information base by capitalizing on the
    LGU comparative advantages in research, education, and extension.
                     partnering with nsf and other agencies
        Many agencies such as NSF share similar research priorities and
    goals that can be utilized to develop more effective programs. Many
    initiatives and goals are targeted to specific agendas, however a more
    thorough inventory of research priorities can be assessed through
    collaborative discussions and pooling of resources. Through a variety
    of means, partnerships with NSF and other agencies increase:
      --number of funding awards from agencies going to LGUs;
      --the amount of LGU participation in Agency peer review processes;
      --the quantity/quality of proposals submitted by the LGUs for Agency
            funded competitive grants;
      --the exchange of scientists between LGU institutions and agencies
            for collaborative projects.
                      nsf fiscal year 2000 budget proposal
        The SAES strongly support the priorities outlined in the NSF fiscal
    year 2000 budget proposal including:
    Information technology for the 21st century (IT\2\)
        This initiative requests $146 million across two components: $110
    million for fundamental information technology research (Software
    systems, scaleable information infrastructure, high-end computing, and
    social, economic, and workforce impacts of information technology). An
    additional $36 million is designated for tetrascale computing systems
    allowing researchers access to leading edge computational systems.
    According to NSF, 60 percent of this will go to support university-
    based research. This program will help address the need to better
    manage and utilize information and technologies produced and
    disseminated by the Land Grant University system.
    Biocomplexity in the environment
        $50 million is requested to better understand:
      --Biodiversity and ecosystem dynamics, diversity of life responses to
            changes in land, water and air,
      --Environment and the human dimension, the impact of population
            distribution and human decision-making on environment and
            global change, and
      --global and environmental change including earth system history,
            tectonics, glaciology and hydrology.
        Given that one of the five major goals of the Land Grant University
    system is to address greater harmony between agriculture and the
    environment, the LGUs bring a high level of expertise in the area of
    biocomplexity in the environment to the table. Our system supports this
    investment and stands ready to work with NSF to address these critical
    issues.
    Plant genome research
        NSF proposes a $55 million investment to advance understanding of
    plant structure and function, with emphasis on economically significant
    plants, and advance use of new knowledge and innovation technologies
    toward basic biological processes. The mapping of genomes of
    economically important crops and other plants has tremendous
    implications for agricultural production and processing, food safety
    and quality and environmental protection. Increased investment in this
    area of research it extremely important and the competitive grants
    provided by NSF facilitate continued partnerships between the NSF, Land
    Grant Universities, USDA/ARS, Department of Energy and the private
    sector.
    Experimental program to stimulate competitive research (EPSCoR)
        An investment of $48 million is proposed for the Experimental
    Program to Stimulate Competitive Research (EPSCoR). EPSCoR targets
    those states that have historically received lesser amounts of Federal
    R&D funding and have demonstrated a commitment to develop their
    research bases and to improve the quality of science and engineering
    research conducted at their universities and colleges. EPSCoR is
    successful at identifying, developing, and utilizing a state's academic
    science and technology resources in a way that supports wealth creation
    and a more productive and fulfilling way of life for a state's
    citizenry. This program is particularly important to the 1890's
    institutions. Land Grant Universities in EPSCoR states have built
    important linkages through this program that have resulted in lasting
    improvements to the state's academic research infrastructure and
    increased national R&D competitiveness. Continued investment in this
    program is critical.
        Thank you again for the opportunity to provide testimony to the
    subcommittee regarding the National Science Foundation's fiscal year
    2000 budget. I strongly urge the subcommittee to support the NSF fiscal
    year 2000 budget proposal and I look forward to working with you, the
    NSF, and other agencies to address the science and technology needs of
    the future.
                                     ______

            Prepared Statement of the Council for Chemical Research
                                     issue
        The National Science Foundation (NSF) is the only federal agency
    with the responsibility for research and education in all scientific
    and engineering fields. It is the heart of the Nation's science and
    technology enterprise. Any erosion of this enterprise will impact many
    areas of our Nation. The 9.1 percent increase in the NSF budget for
    fiscal year 1999 provided an opportunity to address the declining
    purchasing power of NSF funding that has occurred since fiscal year
    1995. The fiscal year 2000 budget must continue to address these
    impacts which fall directly on today's researchers, students, and
    population overall.
                                    position
        The Council for Chemical Research (CCR) appreciates the support of
    both the President and the Congress that resulted in a 9.1 percent
    increase in the NSF budget for fiscal year 1999. This increase began to
    address the loss of purchasing power of the NSF budget that has
    occurred since fiscal year 1995. CCR also appreciates the President's
    submission of a 5.8 percent increase for the NSF fiscal year 2000
    budget to a level of $3.954 billion. However, the Council believes it
    is important to go farther than this. Greater support is needed for the
    physical sciences that form the basis for advances in so many other
    areas. In particular, we urge larger increases than the proposed 2.2
    percent to chemistry and 2.1 percent to materials research.
    Additionally, CCR along with other members of the Coalition for
    National Science Funding asks Congress to support a 15 percent increase
    to the overall NSF budget. This increase will enable new discoveries
    and educate the world's best scientists and engineers; it is clearly in
    the best interests of the Nation and crucial to our continued economic
    growth.
                                   rationale
        Not only is NSF the guarantor of basic research for the United
    States, but it has a primary role in building the science and
    engineering workforce of the future and helping to educate the public
    about science in an increasingly technological world. As leaders of the
    Nation's chemical research enterprise, CCR well understands the role of
    NSF funding on scientific research, on kindergarten through post-
    graduate education, and on enhancing public understanding of science
    and technology.
        NSF provides the core research and infrastructure upon which all
    can build. Nearly half the research cited in chemical industry patents
    is from public science, and most of that science was supported by NSF.
    These contributions at the basic end of the R&D spectrum enable the
    science and technology enterprise. In the chemical sciences and
    engineering alone, such research has contributed to the development of
    plastics, synthetic fabrics, cleaning products, fuels, medicine,
    advanced electronics, environmental solutions, and many other
    necessities of modern life.
        The budget decisions confronting government decisionmakers are not
    easy. The case for investing in the future by funding NSF at the level
    requested, or more, must stand up against concerns about spending for
    individual health and security. NSF is only about 0.2 percent of the
    federal budget, but it provides nearly 25 percent of all federal
    support to academic institutions for basic research. Although it is
    classified as part of the discretionary budget, funding for the
    Foundation should be properly viewed as an investment that yields very
    high return to our society. Half our economic growth in the past fifty
    years has come from technological innovation and the science supporting
    it. It therefore follows that decisionmakers must take a long view in
    choices that affect the future capability of the Nation's innovation
    engine.

           LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                                  ----------
                                                                       Page
    Air Force Sergeants Association, prepared statement..............   931
    American Association of Homes and Services for the Aging,
      prepared statement.............................................   934
    American Battle Monuments Commission, prepared statement.........   870
    American Gastroenterological Association, prepared statement.....   928
    American Heart Association, prepared statement...................   912
    American Museum of Natural History, prepared statement...........  1058
    American Psychological Society, prepared statement...............  1062
    American Public Power Association, prepared statement............  1016
    American Public Works Association, prepared statement............  1043
    American Society for Microbiology, prepared statement............  1031
    American Water Works Association, prepared statement.............   998
    Anderson, George, Executive Vice President, Government National
      Mortgage Association, Department of Housing and Urban
      Development....................................................   475
    Apgar, William P., Assistant Secretary for Housing--Federal
      Housing Commissioners, Department of Housing and Urban
      Development....................................................   475
    Armstrong, Spence M., Associate Administrator for Aerospace
      Technology, National Aeronautics and Space Administration......   197
    Asrar, Ghassem, Associate Administrator for Earth Science,
      National Aeronautics and Space Administration..................   197
    Associated General Contractors of America, prepared statement....  1037
    Association of State Dam Safety Officials, prepared statement....  1039
    Association of State Floodplain Managers, Inc., prepared
      statements.................................................1046, 1053

    Board on Human Sciences of the National Association of State
      Universities and Land Grant Colleges, prepared statement.......  1067
    Bond, Hon. Christopher S., U.S. Senator from Missouri:
        Opening statements.......................1, 181, 197, 375, 476, 609
        Prepared statement of........................................   613
        Questions submitted by.............40, 127, 193, 252, 434, 522, 727
        Statement of.................................................    77
    Briggs, Xavier, Deputy Assistant Secretary for Research,
      Evaluation and Monitoring, Department of Housing and Urban
      Development....................................................   475
    Brown, Ann, Chairman, Consumer Product Safety Commission,
      prepared statement.............................................   880
    Brown, Carrye, Administrator, U.S. Fire Administration, Federal
      Emergency Management Agency....................................     1
    Browner, Carol M., Administrator, Environmental Protection Agency   609
        Prepared statement...........................................   629
        Statement of.................................................   625
    Brownsville Public Utilities Board, prepared statement...........  1026
    Burns, Hon. Conrad, U.S. Senator from Montana:
        Prepared statement...........................................   236
        Questions submitted by.................................57, 463, 589
        Statement of.................................................   202
    Byrd, Hon. Robert C., U.S. Senator from West Virginia............    74
        Questions submitted by.......................................   835

    California Industry and Government Coalition on PM-10/PM-2.5,
      prepared statement.............................................  1027
    Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado,
      questions submitted by.........................................   605
    Catlett, Mark, Deputy Assistant Secretary for Budget, Department
      of Veterans Affairs............................................   375
    Cemeterial Expenses, Department of the Army, prepared statement..   886
    Center for Cognition, Learning, Emotion, and Memory at New York
      University, prepared statement.................................   979
    Center for the Engineered Conservation of Energy at Alfred
      University, prepared statement.................................   968
    Chemical Safety and Hazard Investigation Board...................   873
    City of Dayton, Ohio, prepared statement.........................   943
    City of Gainesville, Florida, prepared statement.................   940
    City of Miami Beach, Florida, prepared statement.................  1019
    City of Newark, New Jersey, prepared statement...................   951
    Coalition of Community Development Financial Institutions,
      Community Development Financial Institutions, prepared
      statement......................................................   904
    College of Agriculture and Technology at Morrisville, New York,
      prepared statement.............................................   958
    Committee for the National Institute for the Environment,
      prepared statement.............................................   969
    Consumer Information Center, General Services Administration,
      prepared statement.............................................   894
    Cooper, Cardell, Assistant Secretary for Community Planning and
      Development, Department of Housing and Urban Development.......   475
    Coronado, Gil, Director, Selective Service System, prepared
      statement......................................................   902
    Council for Chemical Research, prepared statement................  1069
    County of Sutter, California, prepared statement.................   939
    County Sanitation Districts of Los Angeles County, prepared
      statement......................................................  1003
    Cowan, Jon, Chief of Staff, Department of Housing and Urban
      Development....................................................   475
    Craig, Hon. Larry, U.S. Senator from Idaho:
        Questions submitted by...........................303, 465, 598, 797
        Statements of..............................................385, 483
    Cuomo, Andrew, Secretary, Department of Housing and Urban
      Develop-
      ment...........................................................   475
        Prepared statement...........................................   489
        Statement of.................................................   485

    D'Amours, Norman E., Chairman, National Credit Union
      Administration, prepared statement.............................   895
    DeCell, Hal, Assistant Secretary for Congressional and
      Intergovernmental Relations, Department of Housing and Urban
      Development....................................................   475
        Prepared statement...........................................   575
    Department of Neighborhood and Community Services, City of
      Tallahassee, Florida, prepared statement.......................   955

    El Paso Water Utilities Public Service Board, prepared statement.  1025
    Executive Board of the Veterans Consortium, prepared statement...   885

    Fleet Reserve Association, prepared statement....................   918
    Florida State University, prepared statement.....................  1049
    Frampton, George T., Jr., Acting Chair, Council on Environmental
      Quality and Office of Environmental Quality, Executive Office
      of the President...............................................   839
        Prepared statement...........................................   840

    Gaffney, Susan, Inspector General, Department of Housing and
      Urban Development..............................................   476
    Gentille, Paul R., Deputy Director, Management and Chief
      Financial Officer, Department of the Treasury..................   181
    Gianni, Gaston L., Jr., Inspector General, Office of the
      Inspector General, Federal Deposit Insurance Corporation,
      prepared statement.............................................   888
    Gibbons, David, Acting Chief Financial Officer, Department of
      Housing and Urban Development..................................   475
    Glickman, Rhoda, Deputy Chief of Staff, Department of Housing and
      Urban Development..............................................   475
    Goldin, Hon. Daniel S., Administrator, National Aeronautics and
      Space Administration...........................................   197
        Prepared statement...........................................   205
        Statement of.................................................   202
    Gross, Roberta, Inspector General, National Aeronautics and Space
      Administration.................................................   197

    Habitat for Humanity International, prepared statement...........   944
    Hampton University, prepared statement...........................   956
    Harkin, Hon. Tom, U.S. Senator from Iowa:
        Questions submitted by.....................................473, 830
        Statement of.................................................   509
    Harper, Sallyanne, Chief Financial Officer, Environmental
      Protection
      Agency.........................................................   609
    Heffernan, Edward, Associate Administrator for Legislative
      Affairs, National Aeronautics and Space Administration.........   197
    Holcomb, Lee, Chief Information Officer, National Aeronautics and
      Space Administration...........................................   197
    Holz, Arnold G., Chief Financial Officer, National Aeronautics
      and Space Administration.......................................   197
    Hutchison, Hon. Kay Bailey, U.S. Senator from Texas:
        Questions Submitted by.......................................   465
        Statement of.................................................   384

    Information Technology Center at Fairfield University, prepared
      statement......................................................   959
    Integrated Petroleum Environmental Consortium (IPEC), prepared
      statement......................................................   983
    International Association of Emergency Managers, prepared
      statement......................................................  1048
    Isbell, David B., Chair, Executive Board of the Veterans
      Consortium, Court of Appeals for Veterans Claims, prepared
      statement......................................................   885

    Jacobs, David, Director, Office of Lead Hazard Control,
      Department of Housing and Urban Development....................   476
    Johnson, Gary, Chief Financial Officer, Federal Emergency
      Management Agency..............................................     1
    Johnson, Jackie, Deputy Assistant Secretary for Native American
      Programs, Department of Housing and Urban Development..........   475
    Jones, Maurice A., Deputy Director, Program and Policy,
      Department of the Treasury.....................................   181
    Jordan, Hon. Luise S., Inspector General, Corporation for
      National and Community Service.................................    77
        Prepared statement...........................................   120
        Statement of.................................................   118
    Joseph M. DeSimone, Ph.D., prepared statement....................  1017
    Joslin Diabetes Center, prepared statement.......................   907

    Kizer, Kenneth W., M.D., M.P.H., Under Secretary for Health,
      Veterans Health Administration, Department of Veterans Affairs.   375
    Knight, George, Executive Director, Neighborhood Reinvestment
      Corporation, prepared statement................................   897
    Koplan, Jeffrey P., Administrator, Agency for Toxic Substances
      and Disease Registry, Department of Health and Human Services,
      prepared statement.............................................   865
    Kraus, Edward, Director, Enforcement Center, Department of
      Housing and Urban Development..................................   475
    Kyl, Hon. Jon, U.S. Senator from Arizona, questions submit135, 467, 603

    Laster, Gail, General Counsel, Department of Housing and Urban
      Development....................................................   475
    Lautenberg, Hon. Frank R., U.S. Senator from New Jersey:
        Prepared statement of,.......................................   622
        Questions submitted by.......................................    73
        Statements of..............................................484, 621
    LaVoy, Donald J., Director, Real Estate Assessment Center,
      Department of Housing and Urban Development....................   475
    Lawing, Jacquie, Deputy Chief of Staff for Policy and Programs,
      Department of Housing and Urban Development....................   475
    Lazar, Ellen W., Director, Community Development Financial
      Institutes Fund, Department of the Treasury....................   181
        Prepared statement...........................................   185
        Statement of.................................................   182
    Leahy, Hon. Patrick J., U.S. Senator from Vermont:
        Prepared statement....................................383, 481, 620
        Questions submitted by................................474, 607, 820
        Statement of.................................................   382
    Lovelace Respiratory Research Institute, prepared statement......   976
    Lucas, Harold, Assistant Secretary for Public and Indian Housing,
      Department of Housing and Urban Development....................   475

    Metropolitan Water District of Southern California, prepared
      statement......................................................  1010
    Metropolitan Water Reclamation District of Greater Chicago,
      prepared statement.............................................  1008
    Mickey Leland National Urban Air Toxics Research Center, prepared
      statement......................................................  1012
    Mikulski, Hon. Barbara, U.S. Senator from Maryland:
        Prepared statements.........................................81, 618
        Questions submitted by............................60, 174, 467, 819
        Statements of.........................7, 79, 182, 200, 380, 505,617
    Missouri Rural Water Association & National Rural Water
      Association, prepared statement................................  1022
    Molnar, Karen, KPMG auditor, Corporation for National and
      Community Service..............................................    77

    National Association for Equal Opportunity in Higher Education,
      letter from....................................................   938
    National Association for Uniformed Services, prepared statement..   916
    National Association of Conservation Districts, prepared
      statement......................................................   964
    National Association of Convenience Stores and the Society of
      Independent Gasoline Marketers of America, prepared statement..   966
    National Corn Growers Association, prepared statement............  1060
    National Credit Union Administration, prepared statement.........   895
    National Emergency Management Association, prepared statement....  1052
    National Flood Determination Association, prepared statement.....  1045
    National Grain and Feed Association, prepared statement..........   993
    Nebeker, Hon. Frank Q., Chief Judge, Court of Appeals for
      Veterans Claims, prepared statement............................   883
    Neighborhood Reinvestment Corporation, prepared statement........   897
    Nicogossian, Arnauld E., Associate Administrator for Life and
      Microgravity Sciences and Applications, National Aeronautics
      and Space Administra-
      tion...........................................................   197
    North American Lake Management Society, prepared statement.......  1005
    Northwest Indian Fisheries Commission, prepared statement........   990

    Passaic Valley Sewerage Commissioners, prepared statement........  1023
    Peppercorn, Ira, Director, Office of Multifamily Housing
      Assistance Restructuring, Department of Housing and Urban
      Development....................................................   475
    Peterson, Malcom, Comptroller, National Aeronautics and Space
      Administration.................................................   197
    Plaza, Eva, Assistant Secretary for Fair Housing and Equal
      Opportunity, Department of Housing and Urban Development.......   475

    Ramirez, Saul, Deputy Secretary, Department of Housing and Urban
      Development....................................................   475
    Rapp, Roger, Acting Under Secretary for Memorial Affairs,
      National Cemetery Administration, Department of Veterans
      Affairs........................................................   375
    Retired Enlisted Association, prepared statement.................   908
    Robertson, Peter, Acting Deputy Administrator, Environmental
      Protection Agency..............................................   609
    Rochester Institute of Technology, prepared statement............   985
    Rothenberg, Joseph H., Associate Administrator for Space Flight,
      National Aeronautics and Space Administration..................   197

    Schumacher, John D., Associate Administrator for External
      Relations, National Aeronautics and Space Administration.......   197
    Shelby, Hon. Richard C., U.S. Senator from Alabama, questions
      submitted by.......................................134, 301, 463, 795
    Smith, Joe, Acting Assistant Secretary for Administration,
      Department of Housing and Urban Development....................   476
    St. Joseph's Hospital Health Center, prepared statement..........   946
    State Agricultural Experiment Stations and State Extension
      Service, prepared statement....................................  1034
    State Agricultural Experiment Stations, prepared statement.......  1068
    State and Territorial Air Pollution Program Administrators and
      the Association of Local Air Pollution Control Officials,
      prepared statement.............................................   995
    State Cooperative Extension Services and State Agricultural
      Experiment Stations, prepared statement........................  1054
    Stevens, Hon. Ted, U.S. Senator from Alaska:
        Questions submitted by.......................................    58
        Statement of.................................................     5

    Texas A&M University, prepared statement.........................  1002
    Thompson, Joseph, Under Secretary for Benefits, Veterans Benefits
      Administration, Department of Veterans Affairs.................   375
    Tubman African American Museum, prepared statement...............   950

    United Space Alliance, prepared statement........................  1057
    University Corporation for Atmospheric Research, letter from.....  1064
    University of Medicine and Dentistry of New Jersey, prepared
      statement......................................................   961
    University of Miami, prepared statement..........................  1029
    University of the Sciences in Philadelphia, prepared statement...   949

    Vietnam Veterans of America, Inc., prepared statement............   926
    Village of Freeport, Long Island, prepared statement.............   948

    Walker, Mike, Deputy Director, Federal Emergency Management
      Agency.........................................................     1
    Weiler, Edward J., Associate Administrator for Space Science,
      National Aeronautics and Space Administration..................   197
    West, Hon. Togo D., Jr., Secretary, Department of Veterans
      Affairs........................................................   375
        Prepared statement...........................................   390
        Statement of.................................................   387
    Western Coalition of Arid States, prepared statement.............  1007
    Westphal, Dr. Joseph W., Assistant Secretary of the Army for
      Civil Works, Cemeterial Expenses, Army, Department of Defense--
      Civil, prepared statement......................................   886
    Witt, James L., Director, Federal Emergency Management Agency....     1
        Prepared statement...........................................    11
        Statement of.................................................    10
    Woerner, Gen. Fred, American Battle Monuments Commission,
      prepared statement.............................................   870
    Wofford, Hon. Harris, Chief Executive Officer, Corporation for
      National and Community Service.................................    77
        Prepared statement...........................................    87
        Statement of.................................................    83

    Zenker, Wendy, Chief Operating Officer, Corporation for National
      and Community Service..........................................    77
        Statement of.................................................   105

                                 SUBJECT INDEX

                                  ----------

                 CORPORATION FOR NATIONAL AND COMMUNITY SERVICE

                                                                       Page
    AmeriCorps:
        Education awards, use of.....................................   107
        Program impact, sustainabillity..............................   110
    Attrition........................................................   109
    Chief Financial Officer..........................................   106
    Financial management, progress on................................    85
    Financial statements.............................................    83
    Full- and Part-time participants, characteristics of.............   114
    Health services and senior services..............................   116
    Independent evaluations..........................................    85
    Material weaknesses, addressing..................................   104
    Monitoring grantees..............................................   114
    National Service Trust.........................................106, 112
    Waste, fraud, and abuse..........................................   112

                  DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

    Affordable housing, need for.....................................   486
    Audit findings...................................................   479
    Community builders...............................................   561
    Disabled:
        Housing for the..............................................   512
        Loss of units for the........................................   513
    EEOC:
        Complaint, cost of...........................................   518
        Complaints...................................................   524
        Costs........................................................   517
        Investigation................................................   524
    Elderly housing..................................................   518
    Emergency CDBG Funding...........................................   566
    Empowerment Zones................................................   529
    Fair Housing:
        Act, Violations of the.......................................   603
        Activities Re: Property Insurance............................   582
        Guidelines: Relating to Group Homes..........................   604
            Available HUD Technical Assistance on....................   601
        Initiatives Program (FHIP) Awards............................   585
        Insurance Investigations.....................................   532
    Fair market rents................................................   511
    Fannie Mae/Freddie Mac...........................................   574
    FHA Single Family Property:
        Disposition..................................................   581
        Property Insurance...........................................   531
    FHIP Funding, Use of.............................................   588
    Fighting Housing Discrimination--Fiscal Year 1998................
    GAO..............................................................   516
        Reviews......................................................   481
    Ginnie Mae Were Privatized, Would Money be Lost If?..............   520
    GNMA, privatization of...........................................   520
    Home Improvement Loans...........................................   533
    Home Warranties..................................................   534
    Homeless Assistance..............................................   527
    Hope VI..........................................................   505
    HUD:
        Accessibility Guidelines.....................................   598
        Accomplishments at...........................................   488
        Fair Housing Education Efforts and Measurement of Its
          Effectiveness..............................................   602
        Fiscal year 1998 Financial Statements, Financial Audit of....   534
        Funds, obligation and monitoring of..........................   517
        Oversight of State Disability Related Enforcement Efforts....   602
        Section 8 Project-Based Inventory............................   573
        Staff, introduction of.......................................   485
        2020 management reform plan..................................   480
    Idaho Fair Housing:
        Complaints...................................................   496
        Council Accessibility Issues.................................   599
    Indian Housing Block Grant Program...............................   589
    Industry and Construction Professions, Fair Housing Educational
      and Technical Assistance to....................................   600
    Lead-Based Paint Grants..........................................   594
    Los Angeles Community Development Bank (CDB).....................   536
    Management reforms...............................................   487
    Mark-to-Market...................................................   579
    NAHASDA...................................................605, 606, 607
    New Initiatives................................................488, 573
    Opt-outs..................................................478, 513, 514
    Property Disposition, Management and Marketing Firms for.........   601
    Public Housing:
        Concentrations of poverty in.................................   506
        Costs........................................................   578
        Issues.......................................................   526
    Real Estate Agents Accessibility Responsibilities................   600
    Rental Assistance Overpayments...................................   525
    Rental subsidy overpayments......................................   516
    Rural Housing..................................................589, 594
    Rural housing and economic development...........................   509
    Section 8:
        Contract Renewal And Incremental Section 8 Assistance........   522
        Contracts, renewal of expiring...............................   476
        Housing......................................................   596
        Incremental assistance.......................................   477
        Opt-Outs.....................................................   523
        Project-Based Contracts......................................   607
        Renewals.....................................................   487
            Flat funding for.........................................   499
    Section 108......................................................   537
    Single Family Property Disposition...............................   580
    Staffing.......................................................565, 577
    State/local decision-making......................................   481
    Total development costs..........................................   508
    Use of FHIP Funds for Homeowners' Insurance-Related Purposes.....   583
    Welfare to Work..................................................   596
    Year 2000........................................................   581

                           DEPARTMENT OF THE TREASURY

                Community Development Financial Institutes Fund

    Bank enterprise awards program...................................   183
    CDFI's...........................................................   183
    Conflicts of interest............................................   191
    Federal investments, impact of our...............................   184
    Fiscal year 2000 budget..........................................   184
    Major points.....................................................   183
    Nonmonetary programs.............................................   183
    Prime proposal...................................................   192

                         DEPARTMENT OF VETERANS AFFAIRS

    Academic affiliations............................................   456
    Albuquerque Regional Office......................................   467
    Asset:
        Disposal.....................................................   420
        Restructuring................................................   439
    Board of Veterans' Appeals.......................................   468
    Boise VA:
        Hospital.....................................................   465
        Medical Center...............................................   465
    Cancer of the Esophagus, acid reflux as a risk factor for........   462
    Capital asset fund proposal......................................   411
    Colorectal screenings............................................   461
    Congressional Commission on Servicemembers and Veterans
      Transition Assistance..........................................   458
    Construction--Murfreesboro.......................................   460
    Contract Services and Outreach Clinics in New Mexico.............   468
    Daily census information.........................................   414
    Department of Veterans Affairs and Department of Defense--
      Computerized medical record systems............................   474
    Enrollment.......................................................   438
    Future Veterans' Homes, construction of..........................   467
    Goals, resources needed to meet..................................   428
    Health care:
        In rural areas, providing..................................418, 419
        Progress and challenges in transforming......................   397
    Hepatitis C Program..............409, 437, 462, 463, 467, 472, 473, 474
    Iowa:
        City, VAMC study.............................................   417
        Community-based outpatient clinics...........................   419
        CBOCs in.....................................................   419
    Kerrville VA Hospital............................................   465
    Long term care...................................................   441
    Market assessment process........................................   422
    Market Assessments...............................................   422
    Medical care.....................................................   422
        Budget formulation...........................................   408
        Cost fund....................................................   439
        Management efficiencies......................................   408
        Needs........................................................   463
        Two-year spending availability for...........................   410
    Medical school affiliations......................................   431
    Medical staffing reductions......................................   432
    Montana, funding for.............................................   414
    National Cemetery, transfer of land for..........................   466
    Outpatient Clinics, community based..............................   458
    Personnel reductions and closing facilities......................   416
    Processing claims................................................   425
        Performance standard in......................................   426
    Quality management...............................................   455
    Restructuring, potential staffing efficiencies through...........   434
    Short-Term Action Plan--April 1999...............................   431
    Specialized services, access to..................................   441
    Telemedicine.....................................................   415
    VA facilities and employment, statistics on......................   413
    VA's:
        Budget, other concerns in....................................   379
        DC Field Office..............................................   468
        Disposal of Capital Assets...................................   470
        Medical care program.........................................   376
        Request to OMB...............................................   435
    VA/DOD sharing...................................................   457
    Veteran Benefits Administration................................378, 459
    Veterans Equitable Resource Allocation (VERA)....................   454
    Veterans Health Administration, a strategic plan for long term
      care provided by the...........................................   441
    VHA Actions, Protocol for Processing.............................   433
    VISNs, integration of............................................   466
    Washington Regional Office.......................................   431
        Plans to solve problems at.................................429, 431
    Washington, DC regional office...................................   428

                        ENVIRONMENTAL PROTECTION AGENCY

    AFO's............................................................   689
    Agency audit policy: Self disclosure of potential violations.....   741
    Agency performance measures......................................   735
    Agency, grant recipients and their litigation records against the   656
    America bonds, better..........................................772, 781
    Animal Waste:
        Livestock permits funding....................................   830
        Regional mechanism for manure management.....................   831
        Research and development techniques for pollution standard...   831
    Aspirations, our.................................................   723
    Budget status....................................................   724
    Carney site, St. Maries, Idaho...................................   817
    Central Information Office, status of EPA's efforts to create a..   632
    Children's health................................................   753
    Clean air partnership fund:
        Grants to cities.............................................   756
        Programs.....................................................   782
    Clean lakes program (section 314): 319 program funding...........   828
    Clean water action plan: USDA and EPA draft strategy on animal
      feeding operations.............................................   789
    Clean water: unmet capital needs.................................   694
    Climate change:
        Climate science..............................................   813
        Global climate issue--EPA outreach...........................   803
        Greenhouse gas emissions credit for early action...........800, 812
        Kyoto protocol implementation................................   797
        Meeting in Kansas City, MO...................................   810
    Coeur d'Alene:
        Basin........................................................   720
        SF...........................................................   719
        Superfund....................................................   816
    Completing financial audits......................................   695
    Compliance assistance..........................................737, 765
        Activities...................................................   726
        Effectiveness of programs....................................   726
    Conferences at which:
        EPA staff have participated as speakers and/or exhibitors....   806
            Will participate as speakers and/or exhibitors...........   808
    Consent decrees..................................................   698
    Contractors' Superfund Program support costs are still high, in
      part, because EPA has too many contracts for its cleanup
      workload.......................................................   637
    Corrective Action Cleanups, while shifting funds could
      accelerate, the impact on Superfund is uncertain...............   639
    CWAP: Added funds................................................   751
    Data quality:
        CERLCIS......................................................   760
        Computer security centralized validation process.............   759
        Empact initiative funding....................................   760
        Error correction plan strategy...............................   758
        Fiscal year 2000 budget request..............................   759
        Grant management.............................................   763
        RCRIS........................................................   761
        Stakeholders involvement.....................................   759
        State water quality assessment report........................   762
        States involvement...........................................   759
    Developments to date.............................................   723
    Dioxin reassessment study........................................   820
    Early action projects............................................   724
    Embedded chip failures, potential impact of......................   652
    Enforcement:
        Accomplishments..............................................   743
        Performance goals and measures...............................   736
    Ensuring grant programmatic and administrative requirements are
      met............................................................   695
    Environmental:
        Information, reinventing.....................................   745
        Justice programs.............................................   773
        Preferable products..........................................   689
        $1 Million Congressional Add.................................   691
    EPA:
        Decentralized organizational structure, overcoming problems
          associated with............................................   635
        New Information Office.......................................   723
            Will face significant challenges.........................   634
        Sponsored and co-sponsored public meetings, upcoming.......805, 808
    Fiscal year 2000 budget:
        Priorities for...............................................   680
        Reduction....................................................   780
        Support for States; justification for 5 percent increase in
          operating programs.........................................   783
    Food funding, Safety of..........................................   734
    Food quality and safety..........................................   681
    Food safety......................................................   791
    GAO:
        Contract capacity program support costs......................   767
        RCRA corrective action program...............................   769
        Reinvention..................................................   770
        Superfund program............................................   766
    Government Performance and Results Act (GPRA)....................   770
        Accountability of managers...................................   777
        Changes to improve link between resources performance goals..   779
        Cost accounting..............................................   780
        Data for performance report..................................   779
        Impact on future funding requests............................   779
        Link between resources and performance goals.................   779
        Performance based management.................................   777
        Program changes to improve performance.......................   778
        Use of performance information...............................   778
            In developing fiscal year 2000 budget request............   778
    Grandfather regulation: Environmental defense fund vs. EPA.......   795
    Grant audits.....................................................   694
        IG's report..................................................   697
    Grantees, outreach and review of.................................   695
    Grants management:
        Post award management policy.................................   764
        Statutory authority..........................................   764
    Grants oversight of assistance agreement:
        Oversight of assistance agreement--Material weaknesses
          correction.................................................   728
        Post award management......................................727, 730
    Hazardous Waste: Observations on EPA's Cleanup Program and Budget
      Management Practices...........................................   636
    Information Management Office....................................   721
    Information plan is needed.......................................   633
    Issues in the 1998 NAS/National Research Council analysis of
      science uncertainties and the October 1998 Hansen NAS paper....   814
    Key Goals, our...................................................   723
    Key issues.......................................................   724
    Known or suspected carcinogens...................................   821
    Lake Champlain:
        Action plan time frame.......................................   827
        Great lakes program..........................................   827
        Survey of fish and great lakes epidemiological study.........   826
    Lawsuits against EPA that have resulted in consent orders that
      led to new requirements, organizations that have brought.......   699
    Litigation, grant money used for.................................   696
    Low sulfur gasoline proposed rule................................   787
    Mercury thresholds and emissions.................................   825
    Missouri:
        Lawsuits.....................................................   725
        Air quality lawsuits.........................................   725
    Need for change..................................................   723
    Needed resources are still unknown...............................   634
    New office, programs coming into the.............................   724
    Nitrogen oxide: State implementation plans.......................   717
    NOX SIP call:
        Analysis or studies on impact of individual air quality......   836
        Imbalance between control burden and nonattainment...........   835
        NOX reductions compliance deadline................   837
    Nonpoint source pollution......................................642, 679
        Projects.....................................................   830
    NPDES:
        Backlog......................................................   749
        Permitting program funding...................................   733
    Observations.....................................................   636
    Office of Information Management.................................   756
        Implementation plan..........................................   756
        Reporting Burden Reduction and REI...........................   757
    Organizational structure is not yet determined...................   633
    Orimulsion:
        Conclusive report on research................................   819
        Research funding.............................................   820
    OSHA carcinogens, TRI on-site and total releases of, by State,
      1993-1997......................................................   825
    Pesticide risks, food safety.....................................   652
    Pollution prevention and the Federal Government: Bio-based EPPS..   832
    Project XL.......................................................   748
    Radon standards:
        Air mitigation-technical assistance to small water systems in
          rural
          areas......................................................   833
        Effect of radon rule.........................................   834
        Impact of radon reduction on small water systems.............   835
        Increased costs for radon abatement in water.................   834
    Reduce reporting burdens, balancing the need to collect more data
      and efforts to.................................................   635
    Regional haze....................................................   682
        Implementation of final regulations..........................   783
        Rules........................................................   817
        Selective burning............................................   693
        Statutory authority..........................................   693
        TEA-21 legislation--integration with NAAQS PM2.5.............   785
        Western Governors Conference.................................   691
    REI: Data Standards..............................................   758
    Resource breakout, specific......................................   691
    Resources and expertise, obtaining sufficient....................   634
    Resources and strategies remain unresolved, progress is being
      made, but key questions on.....................................   633
    Risk management plan rule on propane.............................   785
    Safe Repainting, Sampling tech course, eng. octane additives.....   776
    Small Business compliance assistance centers.....................   739
    Small Business Regulatory Enforcement Fairness Act (SBREFA)......   748
    State counterparts working more effectively with.................   635
    State Grants: Fiscal year 1999 funding increase..................   753
    Superfund:
        Contracting that could be addressed through EPA's contracts
          2000 initiative, recurring problems raise broader questions
          about......................................................   638
        Proposed cleanup actions.....................................   783
    Timeline.........................................................   724
    TMDL:
        Program: Internal cost assessments...........................   751
        Sound Science................................................   752
    Transportation construction projects:
        Impact.......................................................   796
        List.........................................................   796
    Transportation Partners:
        Awards.......................................................   655
        Grants.......................................................   654
        Program....................................................653, 796
    Transportation projects, EPA review of...........................   731
    Tribal support...................................................   794
    Water quality needs, GAP analysis of.............................   640
    Who's involved...................................................   723
    Y2K readiness:
        Of drinking water plants for.................................   643
        Waste water..................................................   642
    Year 2000:
        Preparedness survey summary, community public water systems..   644
        Survey analysis, AMSA........................................   646
        Survey--Addendum, AMSA.......................................   652

                       EXECUTIVE OFFICE OF THE PRESIDENT

      Council on Environmental Quality and Office of Environmental Quality

    Agency comments..................................................   858
    America bond, better.............................................   849
    Board's actions, concerns about the..............................   855
    Business, a new way of doing.....................................   845
    Chemical Safety Board............................................   850
        Status of implementation efforts.............................   850
    Contracting activities...........................................   853
    Council on Environmental Quality:
        Accomplishments of the.......................................   842
        Responsibility...............................................   846
        Coordination role............................................   849
    Current and planned staffing levels, responsibilities, and
      salaries.......................................................   853
    Different purposes...............................................   847
    Dispute resolution...............................................   843
    Fish mitigation process..........................................   847
    Investigations and Recommendations, status of....................   851
    NEPA reinvention.................................................   846
    Partnership Program..............................................   841
    Policy coordination..............................................   844
    Scope and methodology............................................   858
    Statutory integration............................................   842
    Superfund........................................................   848

                    Office of Science and Technology Policy

    Biotechnology....................................................   341
        Educating the public on issues...............................   342
    Community college, importance of.................................   348
    Education Reserach Initiative....................................   346
    Food Safety Council..............................................   345
    Foreign individuals in the United States, education of...........   353
    Information on science in the Federal Government, availability of   337
    Information technology...........................................   333
    Information Technology Initiative................................   352
    NIH, funding.....................................................   333
    R&D, funding.....................................................   335
    Science budget, overall..........................................   351

                      FEDERAL EMERGENCY MANAGEMENT AGENCY

    Anti-terrorism funds, allocation of..............................    31
    Budget priorities................................................    24
    Consequence management...........................................    27
    Disaster:
        Criteria.....................................................    38
        Insurance....................................................     6
        Needs, unmet.................................................    25
        Prevention...................................................     8
        Program, cost savings in the.................................    36
    Emergency supplemental...........................................     5
    Fire Academy:
        In anti-terrorism training, role of..........................    35
        Issues, urgency for addressing...............................    31
    First responders, training for...................................    34
    5-Year historical average, disaster..............................    24
    Flood mapping....................................................    26
    Mortgage transaction needs.......................................    25
    National Fire Academy............................................    30
        Report on the................................................     9
    Professional emergency managers..................................    39
    Stafford Act amendments..........................................    38
    Terrorism:
        Coordination with State and local governments on.............    33
        Interagency coordination on..................................    32
    Y2K:
        And counter-terrorism efforts................................     9
        Disaster relief for..........................................    28
        Hearing......................................................     7
        Informing the public about...................................    29
        State preparedness for.......................................    27

                 NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

    Civilian Space Program, setting goals for the....................   230
    Flood plane mapping program......................................   229
    Goddard Space Flight Center, fiscal year 2000 budget for.........   249
    Hubble:
        Follow-up....................................................   248
        Servicing mission cost for...................................   234
        Space Telescope..............................................   232
    NASA--The millennium.............................................   252
    Primakov, meeting with...........................................   242
    Rankiong minority closing remarks................................   252
    Russian:
        Proliferation activities.....................................   243
        Report.......................................................   234
        Space Agency, monies paid to the.............................   239
    Shuttle or reusable launch vehicles, upgrades to the.............   246
    Solar stereo mission.............................................   251
    Space Hope Instruction Program...................................   248
    Space Station:
        Commercializing the..........................................   244
        Completion...................................................   246
        Hardware and services, Russian delivery of...................   238
        Operation cost...............................................   246
        Overruns.....................................................   231
    Y2K..............................................................   247

                          NATIONAL SCIENCE FOUNDATION

    Biotechnology, benefits and dangers of...........................   340
    Education:
        Needs, addressing future.....................................   349
        Valuing higher...............................................   351
    Educational research.............................................   346
    EPSCOR...........................................................   338
        Funding for..................................................   339
    Experimental program to stimulate competitive research, funding
      for the........................................................   337
    Funding, geographic distribution of..............................   338
    Information technology:
        Funding, priority of.........................................   332
        Plans for....................................................   332
    IT2 initiative, funding breakdown within the..........   334
    K-12 education, graduate teaching fellows in.....................   347
    Middle school learning, innovations for..........................   347
    NSF:
        Award size and duration, increasing..........................   350
        Programs, adequacy of funding for............................   349
    Overall funding priorities.......................................   332
    Plant genome reserach............................................   340
        Distribution of support for..................................   339
    Public education in science, need for............................   342
    Public fears related to science, managing........................   343
    R&D funding across the United States, distribution of............   339
    Scientific disciplines, distribution of funding across scientific   335
    U.S. leadership in the future, maintaining.......................   336
    Work force, preparing tomorrow's.................................   345

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