[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
_______________________________________________________________________
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                           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.
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    \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.
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                               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.
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    \2\ Disaster Assistance: Information on Federal Disaster Mitigation 
Efforts (GAO/T-RCED-98-67, Jan. 28, 1998).
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    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:
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    \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.''
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  --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\
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    \5\ Since these figures are expressed in nominal dollars, they do 
not reflect the effects of inflation over the time periods cited.
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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.
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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.
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    \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 [email protected]. 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
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\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 [email protected].
                                 ______
                                 
 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\
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    \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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